TMI Blog2016 (2) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... ted area up to 31.03.04 was only 8,298 sq. feet, hence the cost of amenities for the year under consideration was to be allocated to the actual area constructed and not to the total area of 12100 sq. feet. There is no justification on the part of the AO to allocate the cost of amenities even to the area which was not constructed/in existence during the year. We, therefore, direct the AO to allocate the cost of amenities of ₹ 1,31,98,017/- directly to the constructed area of 8,298 sq. feet and not to the total area of 12100 sq. feet. Disallowance u/s 14A - Held that:- It is not a case where no exempt income was received by the assessee despite making investments for earning exempt income. It is also not the case of the Revenue that the exempt income earned by the assessee was very less or not in proportion to the investments made by the assessee for this purpose. Under such circumstances the different coordinate benches of this Tribunal have observed that in such cases certain percentage of exempt income can constitute a reasonable estimate for making disallowance for the years earlier to assessment year 2008-09. Hence, considering the overall facts and circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-05 3. The Revenue in this appeal has taken the following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in holding that the rent of ₹ 1,69,29,770/- received from Shoppers' Stop Ltd. and Marine Times was assessee's income from business and not 'Income from House Property' as assessed by the Assessing Officer without appreciating that the assessee was neither engaged in any business activity nor handed over any running business to its tenant but simply received rent from its tenants for the portion of building let out of which assessee was the owner. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in directing to allow the entire claim of depreciation on building by holding that the rental income was 'Income from Business' and not 'Income from House Properties' as assessed in the assessment order. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in directing to allow property tax of ₹ 35,91,302/- and interest on borrowed capital of ₹ 2,22,11,463/- under the head 'Busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal on the same issue in earlier assessment year. Even the Assessing Officer (hereinafter referred to as the AO) also in A.Y. 2012-13 has accepted the income from the business centre/ commercial complex as business income of the assessee. The assessee is accordingly eligible to claim depreciation on the asset and other business expenditure. Therefore we do not find any infirmity in the order of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] in relation to the ground Nos.1 to 3 and the same are accordingly dismissed being covered by the decision of the Tribunal in A.Y. 2003-04. Ground No.4 6. Vide ground No.4, the Revenue has agitated the action of the Ld. CIT(A) in treating the collection of maintenance charges and miscellaneous income under business head. As observed above, since we have already held that the activity of the assessee is a commercial activity of letting of the property and providing services, hence this income has also nexus with the assessee s business activity and the same accordingly is to be assessed as business income of the assessee. We do not find any infirmity in the order of the Ld. CIT(A) in this respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tire cost of the common amenities is to be allotted to the total area of the project. The average cost per sq.ft in phase-II in respect of common amenities comes to ₹ 1,088/-. Thus the cost attr ibutable to the area constructed of 8,298 sq. f t X ₹ 1,088/- = ₹ 90,28,224/- only. As against this assessee has charged the entire cost to the work in progress and to cost of sale. Thus the assessee has over stated the cost of sale. The cost of sale is therefore, worked out as under: Direct cost as per details given ₹ 15,13,14,320 Average cost per sq.ft. on area of 12,130 sq. ft. ₹ 12,474 Average cost of common amenities per sq.ft. 1088 ₹ 1,088 Total cost of sale per sq. ft. ₹ 13,562 Cost of Sale of 1282 Sq. ft (104 +1178) x ₹ 13,562 = ₹ 1,73,86,484 5.2 In view of the reasons stated above the book results declared by the assessee in respect of the cost of sales can not be accepted. Hence, the profit loss of the assessee is modifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cost of amenities even to the area which was not constructed/in existence during the year. We, therefore, direct the AO to allocate the cost of amenities of ₹ 1,31,98,017/- directly to the constructed area of 8,298 sq. feet and not to the total area of 12100 sq. feet. Ground No. 3 : 14. Vide ground No.3, the assessee has agitated the enhancement of disallowance made by the Ld. CIT(A) under section 14A read with rule 8D. The Ld. CIT(A) noticed that the assessee during the year had received dividend income of ₹ 1,45,800/-. He, therefore, computed the disallowance as per rule 8D of the Income Tax Rules read with section 14A of the Income Tax Act. Being aggrieved, the assessee has come in appeal before us. 15. We have heard the Ld. Representatives of both the parties and have also gone through the records on this issue. It may be observed that in the case of Godrej Boyce Manufacturing Co. Ltd. (supra) the Hon'ble Bombay High Court has held that Rule 8D r.w.s. 14A(2) is not arbitrary or unreasonable but can be applied only if the assessee's method is not satisfactory. It has been further held that Rule 8D is not retrospective and applies from A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in holding that the rent of ₹ 6,90,19,415/- received from Shoppers' Stop Ltd. and Marine Times was assessee's income from business and not 'Income from House Property' as assessed by the Assessing Officer without appreciating that the assessee was neither engaged in any business activity nor handed over any running business to its tenant but simply received rent from its tenants for the portion of building let out of which assessee was the owner. 4. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in directing the Assessing Officer to allow the entire property tax under the head Business Income' without appreciating that there was no business activity in the year under consideration and the income for the year under consideration was assessed under the head 'Income from House Property'. 5. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in directing to treat collection for maintenance of ₹ 27,74,676/-, miscellaneous income of ₹ 62,234/-, parking charges of ₹ 20,69,780/-, tea sale vendor ₹ 20,974/- and promotional income of ₹ 5,21,435/- a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in A.Y. 2003-04 itself. The copies of MOU and agreement of sale were also filed before the Ld. CIT(A). It was also explained that since the assessee was holding its property in stock in trade account, hence, it was under bonafide belief that the transaction of sale and income there from was taxable only in the year in which the conveyance was registered i.e. A.Y. 2005-06. The assessee therefore did not offer the income from sale of the said property in A.Y. 2003-04. However, a revised return was filed for A.Y. 2003-04 on 08.04.08 in respect of the said income in response to the notice issued under section 148 by the AO, the aforesaid sale transaction of immovable property was offered to tax in the said revised return of income. Thereafter, no action was taken by the Department and as such the revised return filed by the assessee has been accepted by the Department. 22. The Ld. CIT(A), after considering the submissions and the documents relied upon by the assessee, held that the assessee ceased to be the owner of the said property from February, 2003 therefore there was no question of assessing deemed rental income in the hands of the assessee in this respect. 23. The Ld. D.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ponse to notice under section 148 of the Act, the proceeds of the said sale transactions were offered to tax. It was also submitted that though the assessee had committed an error for offering the income in respect of aforesaid immovable property in A.Y. 2005-06, however, the AO was duty bound to assess the income in the previous assessment year in which such income had arisen. The Ld. CIT(A), after considering the submissions in this respect, held that the transfer of the property was done in A.Y. 2003-04 itself. He also observed that the revised return filed by the assessee in response to notice under section 148 was lying in the records. He however, further observed that the proceedings initiated under section 147 of the Act for A.Y. 2003-04 were dropped by the AO on account of non availability of reasons recorded for issuance of notice under section 148 of the Act and that the AO had mentioned that the notice under section 148 was wrongly issued for A.Y. 2003-04. Therefore, the reassessment proceedings were not processed/continued in respect of revised return filed by the assessee for A.Y. 2003-04 in response to notice under section 148 of the Act. He therefore observed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions of the parties. We find that the Ld. CIT(A) has already decided in relation to the issue of deemed rent from the M/s. Movie Times that the assessee had ceased to be the owner of the property in the A.Y. 2003-04 itself. It is also a fact on the file that the assessee in response to the notice under section 148 of the Act had filed a revised return offering the income from the said transaction. Merely because the AO had not verified the claim of the assessee or that the proceedings initiated under section 147 of the Act were dropped, that cannot be a ground to assess the income of the assessee from the said transaction in the year under consideration i.e. A Y 2005-06. Once the Ld. CIT(A) has held that the transfer had taken place in A.Y. 2003-04, there was no justification on his part to assess the income from the said transaction/transfer in A.Y. 2005-06. It was open to the Revenue Authorities to take note of the revised return filed by the assessee for A.Y. 2003-04 in response to notice under section 148 of the Act and take appropriate action to verify the correctness of the claim by way of invoking relevant provisions of the Act. However, the said income cannot be asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case, the learned CIT (A) grossly erred in confirming Assessing officer's order with respect to disallowance of Interest on borrowed capital amounting to ₹ 3,40,31,832/-. 2. On the facts and circumstances of the case, the Ld. CIT (A) erred in taking the stamp duty value amounting to ₹ 3,89,84,500/- as sale consideration for the sale of proper ty to M/s. Movie Time as against actual sale consideration of ₹ 2,00,00,000/- received by your appellant and accordingly direct the AO to recalculate depreciation after deducting aforesaid sale consideration from the block of assets. 3. The appellant craves leave to add to, alter, to delete from or substantiate the above ground of appeal. Ground No.1 33. The Ld. CIT(A) has discussed this issue in para 5.2. of the impugned order. The AO during the assessment proceedings noted that the assessee had debited an amount of ₹ 3,40,31,832/- as interest on loans. He noted that the said amount had been disallowed in the computation of income but deduction had been claimed by way of notes. He held that no such deduction can be allowed in view of the decision of the Hon ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of the assessee. Being aggrieved, the assessee has come in appeal before us. 35. We have considered the rival submissions. From the above discussion, it is clear that the Ld. CIT(A) after considering the submissions of the assessee and verification of the facts, has held that the interest expenditure was allowable expenditure in this case. He has rejected the claim of the assessee only on the ground that the same was not claimed in the return of income. However, it is also an admitted fact that the assessee had put a note in the return of income and had claimed the said deduction, however, had not deducted the same in computation income and had reserved right to claim the same during the assessment proceedings. 36. The Hon ble Bombay High Court in the case of Pruthvi Brokers Shareholders Pvt. Ltd. (2012) 349 ITR 336 (Bom.), while relying upon the various decisions of the Hon ble Supreme Court and other Hon ble High Courts, has held that even if a claim is not made before the AO it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim is not barred. The Hon ble Bombay High Court while relying upon the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue as revenue expenditure. Ground No.2 38. The second cross objection taken by the assessee is with regard to the applicability of section 50C to the sale proceeds of M/s. Movie Times. In view of our discussion made and finding given above while deciding ground No.6 of Revenue s appeal, this issue is decided accordingly. 39. Now coming to the Revenue s appeal for A.Y. 2006-07 bearing ITA No.5522/M/2010. ITA No.5522/M/2010 for A.Y. 2006-07 40. The Revenue in this appeal has taken six effective grounds of appeal. Ground Nos.1 to 3 41. Ground Nos.1 to 3 are regarding the treatment of income derived from commercial complex as to whether the same has to be assessed as income from house property or business income and further about the claim of allowability of depreciation and expenditure relating to said commercial complex. In view of our findings given above and the issue being covered by the decision of the co-ordinate bench of the Tribunal in the own case of the assessee for A.Y. 2003-04, these grounds are accordingly decided in favour of the assessee and the finding of the Ld. CIT(A) in this respect is upheld. Ground No.4 42. Ground No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or A.Y. 2007-08 47. The grounds raised by the Revenue in this appeal are identical to the grounds raised in the appeal for A.Y. 2006-07 and in view of our finding given above and applying the same ratio, appeal of the Revenue is hereby dismissed. 48. Now coming to the appeal of the Revenue for A.Y. 2008-09 bearing ITA No.5479/M/2011. ITA No.5479/M/2011 for A.Y. 2008-09 49. The Revenue has taken four effective grounds in this appeal Ground Nos.1 to 3 50. Ground Nos.1 to 3 are in relation to the treatment of income received from the business complex. As held above, the same is to be treated as business income and depreciation on the business asset is allowable and the corresponding expenditure is also held to be allowable. Ground No.4 51. So far as Ground No.4 is concerned, the same is in relation to the carried forward of losses pertaining to the depreciation of earlier years. In view of our finding given above, while deciding the assessee s appeal for A.Y. 2006-07 and 2007-08 and applying the same ratio, this ground of the appeal is also dismissed. 52. Now coming to the assessee s appeal for A.Y. 2008-09 bearing ITA No.5492/M/2011. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow coming to the Revenue s appeal for A.Y. 2009-10 bearing ITA No.4708/M/2012. ITA No.4708/M/2012 for A.Y. 2009-10 57. The grounds taken by the Revenue in this appeal are identical to the grounds taken in earlier assessment years i.e. in relation to the treatment of income from business complex and carried forward of depreciation etc. In view of our findings given above, all the issues are decided against the Revenue accordingly. The appeal of the Revenue is therefore dismissed. 58. Now coming to the assessee s appeal for A.Y. 2009-10 bearing ITA No.4171/M/2012. ITA No.4171/M/2012 for A.Y. 2009-10 59. The assessee has taken three effective grounds of appeal. Ground Nos.1 2: At the outset, the Ld. A.R. of the assessee has stated at bar that he does not press ground Nos.1 2 of the appeal due to smallness of the amount. Ground No.3 60. Ground No.3 is regarding the disallowance of interest amount on the ground that the borrowed funds were used for giving interest free loans and making investment.In view of our findings given above while deciding the assessee s appeal for A.Y. 2008-09, this issue is restored to the file of the AO in the same terms ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
