TMI Blog2014 (5) TMI 1176X X X X Extracts X X X X X X X X Extracts X X X X ..... ss Income’ - Held that:- We find that AO was of the opinion that assessee had not commenced its business activity and therefore, income received under the heads miscellaneous income etc. could not be assessed as business income. But, in the earlier years it has been held by the Tribunal that income from sub-leasing of premises of the I.T.Parks was the business of the assessee and same was set up/commenced in earlier years and we have followed the order of earlier years. In these circumstances, in our opinion, FAA had rightly held that incomes from foreign exchange gain, car parking, penalty etc. were incidental to the business, carried out by the assessee. Addition on account of income from sub-lease of land and income under the head maintenance - Held that:- Following our order for the earlier year, we hold that income from the sub lease of land and income under the head maintenance has to be assessed under the head Business income and not under the head Income from Other Sources. As a result, we decide first ground of appeal against the AO. Addition on account of interest paid on borrowings utilised for construction of house property under section 24 - Held that:- It is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to allow interest expenditure under the head Income from House Property without appreciating that as per the provisions of section 24(b), the deduction is allowable only in respect of the amount of interest payable on borrowed capital if the property has been acquired, constructed, repaired, renewed or reconstructed with such capital. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to allow interest expenditure without appreciating that the onus to prove the correctness of its claim was on the assessee itself, which the assessee had failed to discharge. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to tax the miscellaneous income of ₹ 18,71,708/-, Foreign Exchange Gains of ₹ 19,491/- and other income of ₹ 7,720/- under the head Business Income without appreciating that the said income is not derived from the business activity of the assessee company and there was no business activity at all in the year under consideration. (i) The appellant craves leave to add, amend, vary, omit or substitute any of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85/- 15.11.2010 6,48,52,410/- 15.07.2011 ITA No. 401/Mum/2011 During the year assessee had shown income of sub-lease of land at ₹ 3.54 Crores, rental income at ₹ 63.45lacs,maintenance income at ₹ 33.10 lacs.AO found that assessee-company had claimed business loss of ₹ 3.40 Crores and had computed income from house property at ₹ 1, 01,76,053/- and had set off the business loss against such income, that it had credited incomes in the return under the head rental income and other income only, that no business income was shown by it. In order to ascertain the correctness of the claims and as to whether any business activity had been carried out, AO issued a notice u/s.142(1)of the Act and called for various details. After considering the submissions of the assessee, AO held that assessee s claim as business loss was not allowable in absence of any business activity, that the development of various projects were shown in the work-in-progress that were claimed to be business activity and against the same loss had been computed, that the project was still in the stage of WIP, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33322/Mum/2011-AY 2005-06 and ITA No. 224/Mum/2010-AY 2006-07 dated 23.11.2012) had decided the issue in favour of the assessee, that it was held by the Tribunal in both the years that assessee had started its business in AY-2004-05. 5.We have heard the rival submissions and perused the material before us. We find that in the order dated 23.11.2012 for the AY 2006-07 Tribunal has held as under: We have considered the rival contentions and examined paper book on record and also various case law relied upon by the parties. As seen from the order of CIT u/s. 263, the main thrust of the argument was on the basis of findings given by Assessing Officer in assessment year 2006-07 that assessee has not commenced business even in that year. As rightly submitted by the assessee, this finding of AO in AY 2006-07 was not upheld. On the basis of Memorandum and Articles of Association of the assessee company, it was accepted that one of the activities of the assessee company was sub-leasing of movable or immovable property according to the object clause of the company. Sub-leasing income was shown as business income of the assessee company. It was further held by CIT(A) that it took land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the original instance is not erroneous and prejudicial to the interests of the revenue. Therefore, CIT has no jurisdiction to set aside the same. Assessee s grounds are allowed. We further find that while deciding the appeal for, AY 2005-06 on 11.09.2013,Tribunal had held that assessee commenced its business activity in March 2004 i.e. in AY 2004-05. It was finally held that assessee had set up his business activities in earlier years. As the facts and circumstances for the year under appeal are identical to the earlier AY.s,so,respectfully following the same we decide ground no.1 2 against the AO. He is directed to allow the deductions to the assessee as per the provisions of law. 6.Next ground of appeal is about direction given by the FAA to allow the AO to interest expenditure under the head Income from House Property .We have,following orders for the earlier years,held that income of the assessee for the year under consideration has to be assessed under the head Business Income ,therefore, in our opinion ground taken by the AO has to be dismissed. 7.Next ground of appeal is about allowing the interest expenditure.While deciding first two grounds of appeal,we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 6829/Mum/2011 AY.2008-09 10.The first ground of appeal is about deleting the addition on account of income from sub-lease of land and income under the head maintenance. In the assessment order AO held that income credited in P L Account were in the nature of rental income or maintenance income or income on sub-lease of land or other income, that the only business activity undertaken by the assessee during the year was sell of land to TCGLS. He was not satisfied with the claim of the assessee of business loss as he was of the opinion that it had not carried out any business activity during the AY under appeal. He held that income of ₹ 1.89 Crores received by the assessee on account of sub-lease of land had to be assessed under the head Income from Other Sources . Similarly, maintenance income of ₹ 1.15 Crores was treated by the AO as income from other sources. While finalising the assessment, AO disallowed various expenses claimed by the assessee and capitalised the same. 11.In the appellate proceedings, FAA held that in the appeal orders for the AY.s. 2006-07 and 2007-08 he had held that the assessee s business of developing of Bio-Tech Park was already se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee for the purpose 14.Deciding the appeal, FAA had held that in computation the income under the head House Property the assessee had claimed interest expenses of ₹ 2.93 Crores, that assessee had obtained loan form bank, that loan was utilised for the purpose of project, that it had established the nexus between the loan taken and construction of building, that the project consisted of various buildings, that of the buildings were let out by the assessee, that the rent thereof was offered by the assessee under the head income from house property, that there was no dispute about the fact that part of the loan was utilised for construction of let out properties, that the Auditors, in schedule 19 of the balance-sheet had given a finding that out of total claim of interest expenditure interest amounting to ₹ 2.48 Crores had been capitalised, that interest pertained to work in progress, that assessee s claim on interest expenditure was justified. He further held that balance interest was to be allowed under either of the heads-business income or income from house property. Finally, he held that entire interest expense had to be allowed. 15.Before us, DR supported the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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