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Sushena Properties Ltd. Versus Asstt. Commissioner of Income Tax -1 (3) , Mumbai. and Dy. Commissioner of Income Tax -1 (3) , 564, Mumbai Versus Sushena Properties Ltd.

2016 (9) TMI 641 - ITAT MUMBAI

Assessment of loss - under the head “profit and gains from business or profession” OR under the head “income from house property” - Held that:- In view of the decision of the Tribunal in group cases of the assessee, we are of the considered view that the facts of the assessee’s case is fully covered by the decision of the Tribunal and therefore, respectfully following the decision of the same allow the appeal of the assessee by setting aside the order of ld.CIT(A) and direct the AO to treat the .....

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e being decided by this common order for the sake of convenience and brevity. 2. Now first we shall take up the appeal bearing ITA No.5130/M/13. The issue raised in the grounds of appeal is against the confirmation and upholding the view of the AO that the assessee s loss was assessable under the head profit and gains from business or profession as against the assessee s contention that the said income (Loss) was to be computed and assessed under the head income from house property . 3. Brief fa .....

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m house property: Rent : Nil Less Exempt u/s 24(a) @ 30% : Nil NIL Less : Interest paid Rs.85,15,655/- Income from house property Rs.(85,15,655) The AO issued show cause notice to the assessee which was replied vide its submissions dated 27.10.2009 and 7.12.2009 which are incorporated in assessment order at para 6.3. The assessee company was incorporated on 31.3.2006 as a wholly owned subsidiary of M/s Bennett Coleman and Co Ltd which purchased properties and building under the name Times Tower .....

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here were no revenues /receipts in the profit and loss account. The assessee thereafter showed NIL income under the head Gains/Profit by adding the expenditure in the profit and loss account and calculated the income from property at (-8515,655) by stating that the sum for which the property can reasonably be expected to let was Rs.NIL and after claiming the interest as deduction u/s 24 of the Act loss of ₹ 85,15,655/- was arrived at. Thereafter the AO rejected the submissions of the asses .....

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matter is that the appellant company is incorporated with the sole objective of acquiring the immovable property for the purpose of letting it out. It is also a matter of fact that the appellant is a subsidiary of Bennett, Coleman & Co. Ltd. and the entire property was purchased by taking unsecured loan from M/s.Bennett, Coleman & Co. Ltd. The appellant has shown interest loan of ₹ 85,15,695/- in its profit and loss account and other expenses including depreciation amounting to &# .....

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perty may be considered as nil. Therefore, these need to be allowed against 'Income from house property'. The appellant, is therefore, contesting that despite the objections, the income is to be treated as 'Income from house property'. However, the appellant had itself stated that it is income from business and not income from house property. Without prejudice to the foregoing, even if the contention of the appellant is accepted which is not acceptable, the property cannot be sai .....

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to be done in a residential accommodation is a matter of common knowledge which cannot be done in two months. Therefore, the property was not lettable for the year under consideration and the entire expenses at best can be called as pre-operative expenses and cannot be allowed in the year under consideration. The ALV of the property cannot be taken as nil as the property cannot be reasonably expected to let out in the year under consideration. Therefore, the submissions of the appellant are rej .....

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24.6.2016. 5. On the other hand, the ld. DR strongly objected to the arguments of the ld. AR and submitted that in the assessee s case, the rent received was treated as income from house property but in fact, the rent received by the assessee as income from business or profession and hence, the order passed by the ld.CIT(A) be uphold and the appeal of the assessee be dismissed. In support of his contention, the ld. DR placed reliance on the following case law: a) Civil Appeal No.4494 of 2004 in .....

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ated 31.7.2015 which was passed in the group cases of the assessee. On perusal of the order of the Tribunal, we find that the identical issue was decided by the co-ordinate Bench of the Tribunal in favour of the assessee. The relevant portion of the order, for the sake of clarity is reproduced below : 8. Apropos the issue as to whether the assessee s income is to be computed as income from house property as claimed by the assessee, or under the head profits and gains of business or profession , .....

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pment Trust Ltd. vs. CIT , 42 ITR 49 (SC) and in S.G. Mercantile Corporation Pvt. Ltd. vs. CIT , 83 ITR 700 (SC). Both these decisions were cited by the assessee before the ld. CIT(A). However, the ld. CIT(A) has neither dealt with these decisions, nor quoted any decision to the contrary. In view of these decisions, the observation of the ld. CIT(A) that the assessee had itself stated that the income was from business and not from house property is of no consequence at all. It is for the taxing .....

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resolved that attempt be made to let out the property as a bare-shell, without making any renovation or furnishing. This fact has been taken note of by the ld. CIT(A) at page 4, para (d) of the impugned order. 9. For the above discussion, the grievance of the assessee is found to be justified and is accepted as such. The order of the ld. CIT(A) in this regard is cancelled and it is held that the income of the assessee is to be computed as income from house property . The assessee s claim in thi .....

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come from House Property . Accordingly, assessee s claim in this regard is allowed. 8. The decision relied by the ld.DR is distinguishable and therefore not applicable to the present case. In view of the decision of the Tribunal in group cases of the assessee, we are of the considered view that the facts of the assessee s case is fully covered by the decision of the Tribunal and therefore, respectfully following the decision of the same allow the appeal of the assessee by setting aside the order .....

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