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TMI Blog2017 (1) TMI 1197X X X X Extracts X X X X X X X X Extracts X X X X ..... iny and the assessment was completed under section 143(3) of the Income Tax Act, 1961 (in short 'the Act') vide order dated 14.03.2013, wherein the assessee's loss was determined at Rs. 9,10,06,577/-. On appeal, the learned CIT(A)-10, Mumbai disposed off the appeal vide the impugned order dated 23.03.2015, allowing the assessee partial relief. For A.Y. 2011-12, the assessee filed the original return of income on 30.09.2011 declaring loss of Rs. 5,33,98,520/-. A revised return of income was filed on 28.09.2012 declaring loss of Rs. 5,89,10,449/-. Subsequently another revised return of income was filed on 30.03.2013 declaring loss of Rs. 7,71,31,825/-. The case was selected for scrutiny and the assessment was completed under section 143(3) of the Act vide order dated 18.02.2014, wherein the assessee's loss was determined at Rs. 2,30,03,570/- . On appeal, the learned CIT(A) disposed off the appeal vide the impugned order dated 23.03.2015 allowing the assessee partial relief. 3. Aggrieved by the order of the CIT(A)-10, Mumbai dated 23.03.2015 for both assessment years 2010-11 and 2011-12, the assessee has preferred these appeals. These two appeals will be disposed off in seri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law, the learned Commissioner of Income Tax (Appeals) ought to have allowed the entire depreciation of Rs. 7,88,20,827/- claimed on the Mail building u/s. 32 of the Act as the same forms part of commercial asset of the appellant and therefore depreciation on the said Mali building is allowable u/s. 32 of the Act. 4.(a) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in upholding the disallowance made by the Assessing Officer of brokerage expenses amounting to Rs. 18,69,387/- incurred by the appellant for grant of licenses to various users. 4.(b) On the facts and in the circumstances of the case and in law, the authorities below failed to appreciate that the brokerage expenses were incurred for the purpose of grant of license of the Mall premises to various users which activity is in the nature of commercial exploitation of the said Mall premises and therefore the brokerage expenses are allowable as deduction u/s. 37(1) of the Act having been incurred for the purpose of business of the appellant. 5.(a) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer ought to have first added the revenue earned from recovery of Municipal Taxes of Rs. 46,16,454/- from the licensees (as part of Common Area Maintenance Charges) to the Property Lease Income of Rs. 9,36,99,661/- as the same does not form part of the said Property Lease Income of Rs. 9,36,99,661/- but form part of "Recovery of Common Area Maintenance and Utility Expenses" credited to the Profit and Loss Account which has been taxed as Business Income. 2.(c) Correspondingly, the residual Business Income would get reduced by aforesaid amount of Rs. 46,16,454/- (representing recovery of municipal taxes). 3. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) ought to have allowed the entire depreciation of Rs. 7.96,67,391/- claimed on the Mall building u/s. 32 of the Act as the same forms part of commercial asset of the appellant and therefore depreciation on the said Mali building is allowable u/s. 32 of the Act. 4.(a) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in upholding the disallowance made by the Assessing Officer of brokerage e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his issue in favour of the assessee holding as under at paras 8 and 8.1 thereof: - "8. We have given a thoughtful consideration to the orders of the authorities below. We have also gone through the judicial decisions relied upon by the Ld. Counsel. The entire dispute has to be considered in the light of the decision of the Hon'ble Supreme Court in the case of Chennai Properties & Investments Ltd Vs CIT 373 ITR 673 wherein the Hon'ble Apex Court has held that letting out of the properties being the business of the assessee, the income from which has to be treated as income from business. The Hon'ble Supreme Court has further observed that the Memorandum of association of the assessee company clearly mentions that main objects is to acquire and hold the properties and holding the aforesaid properties and earning income by letting out those properties is the main objective of the company. Therefore, any income earned has to be taxed under the head 'Income from 'business'. 8.1. In the present case also we find that in A.Y. 2008-09, the AO himself has accepted the nature of business of the assessee as "Operation of Mall' therefore any income earned by the assessee by the operation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owable as a deduction from business income. It is submitted that this claim of the assessee has been wrongly decided by the authorities below. In view of our holding that the income earned by the assessee from running and operation of Mall and a provision of host of other services and utilities is to be construed as commercial explanation of its properties and is exigible to tax as 'business income' as declared by the assessee, we hold that the assessee is entitled to be allowed deduction of Municipal taxes of Rs. 46,16,454/- from its business income. We hold and direct accordingly. Consequently, assessee's grounds No. 2(a) to 2(c) are allowed. 8. Grounds No. 3, 4(a) & 4(b) for both assessment years 2010-11 & 2011-12 8.1 In these identical grounds, the assessee contends that the learned CIT(A) ought to have allowed; (i) the depreciation claimed on the Mall building in these assessment years under section 32 of the Act as the same forms part of commercial assets of the assessee, and (ii) brokerage expenses incurred for grant of licence to various users. 8.2 We have heard the rival contentions and perused and carefully considered the material on record. We find that the Coordinate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e find that on the issue of disallowance under section 14A r.w. Rule 8D the Coordinate Bench of the Tribunal in the assessee's own case for A.Y. 2009-10 in its order in ITA No. 3879/Mum/ 2014 dated 05.01.2016 deleted the disallowance under section 14A r.w. Rule 8D, following the decisions of the Hon'ble Bombay High Court in the case of Reliance Utilities and Power Ltd. (313 ITR 40) and HDFC Bank Ltd. (366 ITR 505), holding as under at para 11.2 thereof: - "11.2. We find force in the contention of the Ld. Counsel. A perusal of the factual matrix elsewhere shows that the assessee was having sufficient own funds for making the investments and for giving interest free advances. The facts of the case are squarely covered by the decision of the Hon'ble High Court of Bombay in the case of Reliance Utilities and Power Ltd(supra) followed by the Hon'ble High Court of Bombay in the case of CIT Vs HDFC Bank Ltd. 366 ITR 505. Respectfully following the same, we direct the AO to delete the impugned disallowances made on account of interest expenditure. Ground No. 5 & 6 are accordingly allowed." 9.2.2 Following the decision of the Coordinate Bench of the Tribunal in the assessee's own case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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