TMI Blog2018 (9) TMI 1009X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of business - Held that:- oan has been taken from SBI Balanagar Branch for the purpose of business and therefore, it has to be allowed as business expenditure. Irrespective of the nature of the lease rental income, the assessee has utilized the said loan for the business purposes of the assessee which is not disputed by the Revenue. Of course, the said amount cannot be set off from the ‘income from house property’ as claimed by the assessee but the AO/CIT (A) can set off the same from the business income if any, of the assessee. AO is directed to allow the same as business expenditure. We find that the security for the loan, is the lease rental income, but it does not mean that it can be set off against the rental income. Depreciation disallowed on the building which is leased to M/s BHEL Gas Turbines Services Ltd. - Held that:- As already held that the income from lease rental is to be treated as income from house property, the building cannot be treated as a business asset and therefore the depreciation thereon cannot be allowed. Ground rejected. Notional interest at the rate of 12% added on the advances made to sister concerns - Held that:- case of CIT vs. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. 2. The learned Commissioner of Income Tax erred in confirming the order of the Assessing Officer wherein, the lease rental income of ₹ 28,15,047 admitted as business income, was considered as income from property, inspite of a favorable recommendation from the Assessing Officer. 3. The learned Commissioner further erred in confirming the disallowance of interest of ₹ 16,08,014/- which is claimed as business expenditure as the loan taken from SBI, Balanagar branch was utilized for the purpose of business, inspite of a favorable recommendation from the Assessing Officer. 4. The learned Commissioner of Income Tax erred in confirming the order of the Assessing Officer wherein, the claim of depreciation amounting to ₹ 18,50,219/-was disallowed on the building which is leased to M/s BHEL Gas Turbines Services Ltd. 5. The learned Commissioner erred in confirming the order of the Assessing Officer wherein, a notional interest at the rate of 12% was added, on the advances made to sister concerns amounting to ₹ 1,73, 71,422/-. 6. The learned Commissioner erred in confirming the order of the Assessing Officer, wherein, a notional interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of ₹ 44,23,061 and that the assessee has offered the lease rent received as income from other sources . According to the AO, as per the provisions of section 22 of the I.T. Act, the income received on the building and land appurtenant thereto, is to be treated as income from house property . Therefore, the AO treated it as income from house property and observing that only the expenditure mentioned u/s 24 is to be allowed, the AO observed that the interest portion of ₹ 16,08,014 is not allowable. Further, he also disallowed the claim of depreciation of ₹ 18,50,219/-. 5. Further, the AO also noticed that the assessee has advanced interest free loans amounting to ₹ 1,73,71,422 to its sister concerns and observing that there is a direct nexus between interest bearing loans and the advances made, he disallowed interest @ 12% on such advances and brought a sum of ₹ 20,84,566 to tax. He also observed that there were advances outstanding to the tune of ₹ 36,90,231. Observing that the advances are in the nature of personal advances to one of the Directors of the Company, Shri G.Venkat Reddy, he treated it as advance made to Directors in the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used the lease deed filed by the assessee. From the recitals in the lease deed, we find that the assessee had given the land and also the building and structures constructed thereon or to be constructed thereon, as per the requirements of the lessee, for a period of 5 years. It is seen that the assessee is required to make the modification/repairs or construction as per the requirements of the lessee and thereafter, the lessee is required to take care of the said property. The assessee is not rendering any services to the lessee except leasing out of the land and the constructed property thereon. In the decisions relied upon by the assessee the income from letting out of the I.T. Parks has been treated as income from business because the assessees therein, have not only let out the property, but also have rendered services for the maintenance of the same for effective carrying on of the business of such lessees. In the case before us, the lessees has taken over the possession of the property and thereafter had to conduct its business without any assistance from the assessee. Therefore, the income of the assessee is only from letting out of the property and thus, we agree with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf), , the revenue cannot justifiably claim to put itself in the armchair of the businessman or in the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. We find that neither the AO nor the CIT (A) have verified this claim of the assessee, except for holding that the assessee has not filed the necessary evidence. Therefore, we deem it fit and proper to remand the issue to the file of the AO for denovo consideration. Accordingly, assessee s ground of appeal No.5 is treated as allowed for statistical purposes. 12. As regards grounds 6 and 7 also, the assessee has failed to produce any evidence before us to demonstrate that the advances were made to various parties for the purpose of business. Therefore, the order of the CIT (A) on this issue is confirmed. 13. As regards Ground No.8, we find that the assessee has filed confirmation letters before the CIT (A) for which remand report was called for. We find that the AO has observed that the assessee could not produce the parties for establishing the genuineness and creditworthiness of the transaction. The learned Counsel for the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
