TMI Blog2018 (5) TMI 1894X X X X Extracts X X X X X X X X Extracts X X X X ..... he authorities below. Following rule of consistency, we do not find any infirmity in the observations of CIT(A) in treating the hiring receipt under the head income from business . Disallowance being bank charges, hiring charges for generator, maintenance charges, security charges and depreciation - HELD THAT:- Income received by assessee from hiring of equipments has to be treated as business income . It is an admitted fact that except for generator, rest of the equipments have been purchased by assessee and form part of block of assets - depreciation claimed by assessee on these equipments would be allowable. In respect of the other items like maintenance charges, security charges, assessee is already claiming standard deduction u/s 24 at 30% which subsumes all such misc. expenses in so far as the property building is concerned under the head income from house property . We cannot appreciate the fact that these charges could be allocated to the rental income earned by assessee against hire of furniture fittings as all the maintenance charges are borne by the lessee. In so far as bank charges are concerned, A.O. shall verify if it could be attributed to earning of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f earning rental income and consistently assessee has been reflecting the said loan in the balance sheet in the preceding A.Ys which has not been disputed by revenue. Further, assessee declared in its hands the rental income received from building as income from house property and rent received from hiring of furniture and fittings as income from business . No reason to interfere with the observations of CIT(A). Accordingly this ground raised by revenue stands dismissed. Difference in the cost of construction - DR submitted that there was a difference in the cost of construction shown by the appellant in the books of accounts and as determined by the DVO - CIT-A deleted addition - HELD THAT:- We agree with the submissions advanced by AR that AO has not found any fault in the bills and vouchers produced by assessee in support of the construction cost but has merely relied upon the DVO s report. There has been neither any instance placed on record regarding any infirmity in the books of accounts nor there is any observations regarding the same by her. No reason to differ with the observations of CIT (A) and accordingly the same is upheld. Depreciation disallowance - HELD THA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng receipts of ₹ 17,35,852/- under the head income from business or profession as against income from house property (ii) Deleting the disallowances amounting to ₹ 22,85,644/- made on account of bank charges, hiring charges for generator, maintenance charge, security charges and depreciation. (iii) Deleting the disallowance of ₹ 44,14,909/- on account of interest paid. (iv) Deleting the disallowance made on account of salary and staff welfare. (v) Directing the AO to treat the loan of ₹ 2.60 crores as liability of firm, instead of that of the partners and allow interest paid thereon amounting to ₹ 33,59,700/- u/s 24 of the Act. (vi) Deleting the addition of ₹ 1,92,670/- made on account of difference in cost construction. (vii) Directing the AO to allow depreciation of ₹ 14,97,977/- instead of ₹ 9,51,526/- which is actually allowable. The appellant craves the right to add, alter or amend any other ground(s) of appeal. ITA no. 5545/Del/2012 (A.Y.:2009-10) On the facts and circumstances of the case and in law CIT(A) has erred in- ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that two ladies namely Smt. Poonam Hassija and Smt. Neha Hassija joined together, to constitute a Partnership firm, in the name and style M/s Poonam Hassija Neha Hassija, (being the assessee before us). Assessee purchased piece of land at D7, Info City, Gurgaon on 22/12/06, for a sum of ₹ 1,62,02,000/- and started construction of building, with the intention to let it out on rent. 3.2. Asessee filed its return of income on 11/08/09 declaring total income of ₹ 6,630/-. Ld.AO observed that during the year under consideration assessee earned rental income, interest income and also income from business of trading in road safety equipment. Ld.AO observed that during the year, assessee received rent of ₹ 82,04,148/- but had offered only ₹ 27,26,065/-as income for the year under consideration. 3.3. A survey was carried out on 12/11/10 as an aid to ongoing scrutiny assessment proceedings for the year under consideration. It was observed by survey team that the property, minus furniture and fixtures have been sold during April 2010, and that no business activity of the firm were carried out at the said address. 3.4. During the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 33,59,700/-, depreciation amounting to ₹ 20,44,726/-. 3.9. Aggrieved by the order of Ld. AO, assessee preferred appeal before Ld. CIT (A). Ld. CIT (A) deleted all the additions made by Ld. AO and allowed the appeal of assessee. 4. Aggrieved by the order of Ld. CIT (A) revenue is in appeal before us now. 5. Ground No. (i) Ld.Sr.DR placed reliance upon the order passed by Ld.AO. 5.1. Ld. AR submitted that there were separate agreement for letting off of building and furniture fittings, power equipments for which rents were separately received by assessee. The terms and conditions for both agreements were different and were related to subject of agreement. He submitted that Assessing Officer has merely relied on particular Clause, that too in the Preamble of building rental agreement, which talks of renewal and existence of both agreements. Ld.AR submitted that this Clause was specifically inserted to safeguard interest of assessee. Ld.AR placing reliance on Hon ble Supreme Court in case of Chennai Properties Investments Ltd. vs. CIT reported in 373 ITR 673 (2015) (SC), submitted that under the Income Tax Act, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not, therefore, be subject to tax under the head house property. What goes in favour of the appellant are the facts that in succeeding years also, such hire charges are treated as business income. Moreover, once the property is sold in the F.Y. 2010-11, the appellant continues to recover hire charges and treats the same as business income. I am also of the view that the judgement of the Hon'ble Delhi High Court in the case of K L Puri (HUF) (supra) is squarely applicable to the facts of the case of the appellant. In view of the above and respectfully following the judgement of the Hon'ble Delhi High Court mentioned above, it is hereby held that the hire charges received by the appellant by hiring of equipments, furniture, fixtures, air conditioning and interior items is to be subjected to tax under the head business income and correspondingly, all the expenses claimed by the appellant as a consequence, shall be allowed as legitimate expenses, since, all such expenses are fully vouched and the AO has not pointed out any defect in the books of account of the appellant. Accordingly, the appellant gets a relief of ₹ 17,32,852/- (to be taxed as business income) and ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve perused the submissions advanced by both the sides in the light of the records placed before us. 6.4. While deciding ground number (i) hereinabove, we have already held that the income received by assessee from hiring of equipments has to be treated as business income . It is an admitted fact that except for generator, rest of the equipments have been purchased by assessee and form part of block of assets. Under these circumstances, the depreciation claimed by assessee on these equipments would be allowable. In respect of the other items like maintenance charges, security charges, assessee is already claiming standard deduction u/s 24 at 30% which subsumes all such misc. expenses in so far as the property building is concerned under the head income from house property . We cannot appreciate the fact that these charges could be allocated to the rental income earned by assessee against hire of furniture fittings as all the maintenance charges are borne by the lessee. In so far as bank charges are concerned, ld.A.O. shall verify if it could be attributed to earning of rental income from hiring of furniture fittings. In the event the bank charges could be attributed to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction of building as well as towards purchase of furniture, fixtures, equipments and fittings. Ld.A.O. shall then consider the claim of assessee as per law. 7.5. Accordingly this ground raised by revenue stands partly allowed for statistical purposes. 8. Ground number (iv) This ground has been raised by revenue against deleting the disallowance made on account of salary and staff welfare. 8.1. Ld. DR placed reliance upon the order of Ld. AO. 8.2. On the contrary Ld.AR placed reliance upon the observations of Ld. CIT (A). 8.3. We have perused the submissions advanced by both the sides in the light of the records placed before us. 8.4. On perusal of the observations by Ld.CIT(A) in conjectures with the records placed before us, we are of the considered opinion that the rental income earned by assessee from hire of furniture, fittings has been allowed to be treated as business expenditure , which do not require to engage any employee since all the maintenance of such furniture, fixtures and fittings are being taken care by lessee as per agreements placed in the paper book. Further it is observed that assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missed. 10. Ground number (vi) This ground has been raised by revenue against disallowance being deleted on account of difference in the cost of construction. Ld.DR submitted that there was a difference in the cost of construction amounting to ₹ 1,92,670/- shown by the appellant in the books of accounts and as determined by the DVO. 10.1. On the contrary Ld.AR submitted that reference for valuation of the construction was made to the DVO, Jaipur has estimated the construction cost at ₹ 4,44,21,764/- whereas as per the regular books of accounts maintained by assessee value of construction was ₹ 4,42,29,094/-. It was submitted that assessee had maintained regular books of accounts of construction of building and has also maintained all the vouchers and bills which were produced before Ld. AO and no fault has been observed by her. 10.2. We have perused the submissions advanced by both the sides in the light of the records placed before us. We agree with the submissions advanced by Ld.AR that Ld. AO has not found any fault in the bills and vouchers produced by assessee in support of the construction cost but has merely relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be raised before the Tribunal. If for reasons recorded by the departmental authorities in respect of a contention raised by the assessee, grant of relief to him on another ground is justified, it would be open to the departmental authorities and the Tribunal, and indeed they would be under a duty, to grant that relief. The right of the assessee to relief is not restricted to the plea raised by him. It is thus, apparent, that the AO is under an obligation to bring the correct amount of income to tax. If, the appellant has made a wrong claim, it is the duty of the Assessing Officer to allow the correct claim as per law as a deduction. The decision of the Hon ble Supreme Court in the case of Goetze (supra) is not applicable in the case of the appellant since it is not making a new claim but is revising correctly the claim it has already made in the return of income. Therefore, the AO is directed to allow the correct amount of depreciation on furniture and fixtures at ₹ 14,97,977/-) 11.3. On perusal of the above, we do not find any reason to interfere with the same and accordingly the same is upheld. 11.4. Accordingly this ground raised by revenue stands ..... X X X X Extracts X X X X X X X X Extracts X X X X
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