TMI Blog2017 (11) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... no. 1 raised by the Revenue is dismissed. Addition made towards rental income in respect of five shops - determination of income - ownership of shops - assessee pleaded that she is not the owner of the property and hence there could not be any charge of rental income of notional basis under the head income from house property on her - Held that:- In the instant case, the assessee had used these five shops for the purpose of her business in the capacity of sub-licensee. These facts are not in dispute. Hence there is no scope for assessment of rental income on notional basis on fair market value determined by the Inspector of Income Tax. The legislature in its wisdom had contemplated to bring to tax the rental income from properties held as stock in trade on notional basis after one year from the date on which they were acquired, and this amendment is effective only from 01.04.2018. We find similar provision was conspicuously absent previously under the Income Tax Act more particularly, under the head ‘profits and gains of business or profession’ for chargeability of notional income for five shops. Hence, we hold that the Ld. CIT(A) had rightly deleted the addition made toward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, this has a bearing on the disallowance made u/s 14A of the Act in the original assessment, the Ld. AO reopened the assessment u/s 147 of the Act. In the reassessment, the Ld. AO disallowed the sum of ₹ 70,60,839/- (75,60,839 5,00,000) u/s 14A of the Act read with Rule 8D(2) of the Rules. 4. The Ld. CIT(A) observed that the appeal against the original assessment order u/s 143(3) of the Act dated 15.03.2013 was disposed off by the Ld. CIT(A)-XX vide order dated 09.09.2014, wherein, the assessee has only positive interest income (net of ₹ 4,50,84,575/-) and hence, there is no scope for disallowance of interest in terms of Rule 8D(2)(ii) of the Rules. In respect of disallowance to be made under Rule 8D(2)(iii), the Ld. CIT(A)-XX had observed that the total remaining expenses debited in the profit and loss account to the tune of ₹ 40,73,576/- pertained to the expenses related to business income of the assessee and hence, they cannot be attributed as expenditure incurred from earning exempt income. Accordingly, the disallowance made under Rule 8D(2)(iii) was also deleted by the erstwhile Ld. CIT(A) in the original assessment proceedings framed u/s 143(3) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext ground to be decided in this appeal is as to whether the Ld. CIT(A) was justified in deleting the addition made towards rental income in the sum of ₹ 8,40,000/- in respect of five shops, in the facts and circumstances of the case. 7. The brief facts of this issue is that the assessee had acquired five shops at Satyanarayan Park, A.C. Market, Kolkata from her late husband Shri Sankar Lal Saraf, who expired on 15.05.2005. These five shops were vested on the assessee in terms of last will of her husband. Late Shri Sankar Lal Saraf had acquired these shops under deed of sub-license made on 25.08.1995 between Happy Homes Hotels Pvt. Ltd. (Licensee and Sankar Lal Saraf as sub-licensee). Late Shri Sankar Lal Saraf had paid a sum of ₹ 3,77,576/- as premium to M/s Happy Homes Hotels Pvt. Ltd. for the above five shops. M/s Calcutta Municipal Corporation, being licensor of Satyanarayan Park, AC Market, is the owner of the shops being constructed and developed by licensee M/s Happy Homes Hotel Pvt. Ltd.. Ignoring the aforesaid facts, the ld. AO in the reassessment proceedings observed, that the assessee is the owner of five shops at Satyanarayan Park, AC market and sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, I am unable to sustain the addition of ₹ 8,40,000/- made by AO towards the Income From House Property for deemed Rent. The said addition is directed to be deleted. 9. Aggrieved, the Revenue is in appeal before us on the following ground: 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in considering that the assessee is not the owner of the shops and deleting the addition on rental income which is supported by Ld. CIT(A) s order dated 12.06.2015 for the A.Y. 2011-12 on the same issue and on the findings made by the AO on the basis of Departmental Inspector. Ld. CIT(A) has also erred by not considering the order dated 12.06.2015 on the same issue passed by his predecessor. 10. We have heard the rival submissions. We find that the Ld. CIT(A) had given a categorical finding that the assessee is not the owner of these five shops hence, the provision of Section 22 of the Act cannot be invoked in the instant case. We find that the provision being deemed to be let out would apply only when the assessee prima facie is the owner of the property. The same cannot be made applicable for business assets. In the instant case, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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