TMI Blog2017 (7) TMI 1000X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed for statistical purposes. - ITA No.3034 And 3035/Del/2014 - - - Dated:- 28-3-2017 - For The Assessee : Dr. Rakesh Gupta, Adv Sh. Somil Aggarwal, CA For The Revenue : Sh. Umesh Chand Dubey, Sr. DR ORDER PER N.K.SAINI, A. M. 1. These appeals filed by the assessee are directed against the consolidated order dated 23.01.2014 of the ld CIT(A)-XXIII, New Delhi. Common issues are involved in these appeals therefore the appeals were heard together and are being disposed off by this consolidated order for the sake of convenience and brevity. 2. First we will deal with the appeal in ITA No. 3034/Del/2014, following grounds have been raised in this appeal: 1. That having regard to the facts and circumstances of the case, Ld. C1T(A) has erred in not deleting the addition made despite there being no incriminating material found during search u/s 132 of the Income Tax Act, 1961. 2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. A.O. in making disallowance of a sum of ₹ 25,59,084/- on account of depreciation and computing the income under the head house pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any business or profession carried on by the assessee, the profit of which are chargeable to Income Tax, shall be chargeable to tax under the head income from house property. Therefore, the rental income received by the assessee company is chargeable to tax under the head income from house property and is taxed accordingly. 4. From the computation of income filed by the assessee, it is seen that the assessee company has also claimed depreciation in respect of the building, office equipment and furniture and fixtures conjointly giving rise to the rental income. Under the provision of section 24 of the Income Tax Act, the only deduction allowable in computing the income chargeable to tax under the head income from house property is 30% of the annual value provided under clause (a) of the said section. Since, no other deduction is allowable, claim of depreciation made by the assessee is not allowable and is accordingly disallowed. With the above remarks, the income of the assessee company is computed as under:- Income as per return Less: (-) Rs.1961190/- Rental income (to be considered separately) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b.) Where in search assessment under section 153A all assessments pertaining to six immediately preceding assessment years were complete, Assessing Officer cannot make any addition there under unless there is any incriminating material recovered during search. Jai Steel India Vs ACIT 259 CTR 281 (HC) (Rajasthan) 29. The argument of the learned counsel that the AO is also free to disturb income, expenditure or deduction de hors the incriminating material, while making assessment under s. 153A of the Act is also not borne out from the scheme of the said provision which as noticed above is essentially in context of search and/or requisition. Kusum Gupta Vs DCIT, ITA Nos. 4873/Del/2009, (2005-06) 2510 (A.Y. 2003-04), 3312 (A.Y. 2004-05) 2833/Del/2011 (A.Y. 2006-07) 15. Since there is no change on this material fact that during all these assessment years no incriminating material was recovered or statement was recorded during the course of search suggesting non-genuineness of the claimed gifts or expenses etc. and no such addition/'disallowance was made in the original assessment which remained unabated, we following the decision on the issue hereinabov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the latest being by hon'ble Rajasthan High Court in the case of Jai Steels India vs. CIT in 259 CTR (Raj.) 281, where the Hon'ble Court has held that in case of assessment u/s 153A, the completed assessment can be tinkered only on the basis of incriminating material found during search. Therefore, in the present case without any incriminating material Assessing Officer was not justified in making disallowance. Therefore, ground no. 2 is also allowed. ACIT vs. Pratibha Industries Ltd. [2012] 28 taxmann.com 246 (Mumbai-Trib.) Second submission of the appellant is that the entire depreciation of ₹ 22,58,435/- is not in respect of property which has been let out as it would be evident from details of depreciation. Therefore, even if rental income is assessed as income from house property, though contested, such disallowance cannot exceed the amount of deprecation referable to the let out building. Without prejudice to above, it is submitted that appellant is in the business of real estate and the impugned rent is from letting out building, furniture and fixture, plant and machinery and equipment. Therefore, in view of the following judicial decisions, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 24(a) of I.T. Act and disallowed depreciation u/s 32 on these assets. Ld. AR has argued that entire depreciation disallowed is not claimed on the property rented. Therefore, he argued that the disallowance of depreciation has to be restricted to the depreciation claimed on the assets whose income is assessable under the head 'Income From House Property . Without prejudice to the above ground, Ld. AR has argued that the appellant is in the business of real estate and rent is received from letting out buildings, furniture and fixture. P M etc. Therefore, he argued that such income should be assessed under business head only. He relied upon the decision of Hon ble Supreme Court in case of I.C.D.S. Ltd. Vs. CIT 350 ITR 527 (SC), that for granting depreciation there is no requirement of usage of asset by assessee himself. I have considered the arguments of Ld. AR. I agree in principle with the arguments of Ld. AR that disallowance of depreciation should be restricted to the depreciation as the property from which the rent is received. In the assessment order, details of property rented has not been discussed. Therefore. I direct the Ld. Assessing Officer to verify th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd Vs. CIT, Central Circle-3, Tamil Nadu reported at (2015) 6 Taxman.com 456 held that lease rental raising from exploitation of commercial property which has several amenities attached with the property was to be considered as business income. He accordingly directed the AO to treat the lease rental as income from business and not under the head income from house property . The relevant finding has been given by the ld. CIT(A) in the order dated 29.01.2016 for the Assessment Year 2012-13 in para 5.4 which reads as under:- 5.4 I have carefully considered the assessment order, written submissions, case laws relied upon and oral arguments of Ld. AR. The objections/arguments of the appellant, are discussed as under:- ( i) In the return of income, the assessee has shown lease rent of ₹ 8,71,719/-, which has been received/earned on giving the furnished office premises on rent. For this purpose, the assessee has entered into a lease deed on 20.02.2010 with M/s, Dharampal Satyapal Ltd. for monthly rent of ₹ 72,000/-. ( ii) It has been submitted by the appellant that in lieu of monthly rent, they have provided not only the office space, but also the furnit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the finding of the A.O. is erroneous, by treating the lease rental as income from house properly and the A.O. is directed to treat the lease rental, as income from business and also to allow all the expenses, including depreciation, as claimed by the Appellant. Accordingly, ground no. 3, is hereby allowed. 10. Since the facts in the years under consideration are identical to the facts involved in the assessment year i.e. 2012-13 which has been decided by the ld CIT(A) in assessee s favour by following the judgment of the Hon'ble Supreme Court in case of M/s. Chennai Property and Investment Ltd. Vs CIT reported at 373 ITR 673 (supra). In the present case the ld counsel for the assessee stated that department had not preferred any appeal against the order dated 29.01.2016 passed by the ld CIT(A) for the subsequent assessment year i.e. Assessment Year 2012-13, the said averment needs verification. We therefore deem it appropriate to set aside this issue back to the file of AO for verification of the facts and if the department accepted the rental income as business income in subsequent year 2012-13 then for the assessment years under consideration also, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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