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TMI Blog2016 (11) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 82,571,088/- paid to IL & FS crystallized during the year. The reasons given by him for doing so are wrong, contrary to the facts of the case and against the provisions of law. 2. The Ld. AO ought to have held interest expenses crystallized during the year, incurred for the purposes of the business, as allowable expenses u/s 36(1 )(iii) /37 or 43B of the Act. 3. In the appeal filed by the Revenue, Revenue is aggrieved by action of CIT(A) for treating operational income from mall as income from business. 4. At the outset Ld. AR placed on record order of Tribunal in assessee's own case dt. 30/07/2014, wherein issue raised by revenue in its appeal No.1437/M/2012 has been decided in favour of the assessee for the AY 2007-08, 2008-09, & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the A.O was not justified in taking a different view by treating the operating income received by the assessee companies from Malls in the form of rent and other service charges as income from house property and the Id. CIT(A) was correct in treating the same as business income of the assessee companies by following the rule of consistency after having found that there was no change in the relevant facts and circumstances of the case. 13. It is also observed that while accepting the claim of the assessee companies that operational income in the form of rent and service charges constituted their business income on merit, the Id. CIT(A) has considered all the judicial pronouncements cited by the assessee as well as relied upon by the A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case as borne out from the record clearly shows that the cases of the assessee's fall under the latter category as the intention of the assessee's clearly was to exploit the commercial property by way of complex commercial activities and it was not a case of letting out the property owned by the assessee companies simpliciter. The rental income was not received by the assessee companies merely because of the ownership of the property but the same was received because of the complex commercial activity carried on by them of operating and running Malls which brought that rental income. The rental income and service charges thus were received by the assessee company as business income during the course of its business carried on by them of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s own case, wherein Tribunal have held that operational income received by the assessee company from running of Malls in the form of rent and service charges are assessable as business income in place of income from house property. Respectfully following the order of the Tribunal we do not find any infirmity in this part of order of the Ld. CIT(A) accepting assessee's claim of income from business. 6. In the result, appeal of Revenue is dismissed. 7. With regard to the ground taken by the assessee for disallowing interest expenditure we found that during the course of assessment proceedings the Ld. AO observed that the assessee has claimed interest of Rs. 8,25,71,088/paid to IL&FS during the year on account of share application money rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the proposition that the share application money cannot be equated with the share capital as obligation to return money is always implicit in event of non allotment of shares hence payment of interest on share application money pending allotment of shares would be allowable as revenue expenditure. Reliance was placed on the decision of Pune bench in case of ACIT Vs. Rohit Exhaust Systems P. Ltd. in ITA No. 686/PN/2011 order dt. 05/10/2012, wherein it was held that share application money pending allotment during the year under consideration, and the assessee paid interest for the said amount, was eligible for deduction of interest as expenditure. 9. Further in support of proposition of deductibility of interest in the year of crystalli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntarily on the ground of commercial expediency to facilitate carrying on the business would be deductible under section 37. So far as deductibility of interest even pertaining to earlier years is concerned we found that interest was crystallized only during the year under consideration, therefore same is allowable during the year when it is paid and claimed as expenditure. 11. In the instant case though the interest payable relates to share application money taken in earlier year the liability to pay interest was crystallized during the year as the assessee as well as IL&FS has decided not to proceed with the allotment of shares in pursuance of agreement dt. 01/12/2007. It was not a suo motto decision of the assessee. No prudent businessma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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