TMI Blog2019 (7) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had claimed to have received gross rent of ₹ 2,17,21,200/- on letting out of the aforesaid property. However, we find that the receipts from the letting out of the aforesaid property and provision of amenities as per the respective Agreements works out to an aggregate of ₹ 1,79,26,200/- viz. (i) rental receips: ₹ 67,62,000/- (i.e @ ₹ 5,63,500/- per month); and (ii) compensation/amenity charges: ₹ 1,11,64,200/- (i.e @ ₹ 9,30,350/- per month). We thus in terms of our aforesaid observations restore the matter to the file of the A.O, with a direction to assess the amenity charges received by the assessee in terms of the Amenities agreement , dated 07.08.2012 under the the head house property . Also, the A.O in the course of the set aside proceedings shall verify the reason for the discrepancy in the amount of the gross rental shown - Ground of Appeal No. 1 is allowed for statistical purposes Disallowance u/s 14A r.w.r. 8D - suo motto disallowance shown by the assessee - HELD THAT:- In case the self owned funds of the assessee viz. profit, reserves, surplus and current account deposits are found higher than the investments made i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.01 On the facts and circumstances of your appellant's case and in law, the Hon'ble CIT(A) has erred in confirming action of ld. AO in erroneously applying section 14A read with rule 8D and partially confirming the disallowance to the tune of ₹ 4,42,425/- as against ₹ 56,000/- as claimed and disallowed by your appellant in the return of income for the year. By doing so, the Id. CIT(A) has erred in not appreciating that there is no direct nexus among exempt income earned and expenditure incurred by appellant. 2.02 Your appellant prays Your Honour to hold so now and direct the ld. AO to restrict disallowance at ₹ 56,000/- as made by appellant while filing return of income and delete the balance disallowance. 3.00 Your appellant craves leave to add, amend and/or delete all or any ground(s) take hereinabove. 2. Briefly stated, the assessee company had e-filed its return of income for A.Y.2013-14 on 29.09.2013, declaring its total income at ₹ 1,49,28,500/-. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the Act. 3. During ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he alternative contention of the assessee that the disallowance @ 30% that was claimed by the assessee under Sec. 24 was liable to be restricted only to the extent of the amenity charges of ₹ 1,29,58,200/-, and not as regards the amount of ₹ 1,49,59,200/- that was adopted by the A.O. Insofar the disallowance under Sec.14A r.w. Rule 8D was concerned, the CIT(A) directed the A.O to restrict the disallowance to the extent of the exempt dividend income. 5. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorised Representative (for short A.R ) for the assessee took us through the facts of the case. It was submitted by the ld. A.R, that the assessee had entered into two agreements with the tenants viz. (i) Leave license agreement: dated 07.08.2012; and (ii) Amenities agreement: dated 07.08.2012. It was submitted by the ld. A.R that the lower authorities were in error in subjecting the amount received by the assessee in lieu of the amenities agreement to tax under the head Other sources . It was submitted by the ld. A.R that in the immediately preceding year i.e A.Y. 2012-13, the A.O had vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of ₹ 5,63,500/- per month were relatable to letting out of the property by the assessee to the aforesaid licensee, had thus observed that receipts only to the said extent were to be assessed as the income of the assessee under the head house property . Accordingly, the A.O had subjected the balance amount of receipts of ₹ 1,49,59,200/- [₹ 21,17,21,200/-(-) ₹ 67,62,000/-] to tax as the income of the assessee from Other sources . 8. We have perused the orders of the lower authorities and have given a thoughtful consideration to the issue before us. As is discernible from the Amenities Agreement , dated 07.08.2012 (Page 134 to 148) of the Assesses Paper Book (for short APB ), the assessee had agreed to provide the aforesaid amenities/services in order to facilitate a better and more effective usage of the property by the licensee. A perusal of the nature of amenities which were to be provided by the assessee to the licensee reveals that the same comprised of viz. (i) exclusive usage of the toilets on the Ground floor and 1st Floor of the building for servants/driver/security staff; (ii) provision of a separate independent and exclusiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion in making the lease - and it matters not whether there is one lease or two, that is, separate leases in respect of the furniture and the building - that the two should be enjoyed together ? ; (b) was it the intention to make the letting of the two practically one letting; and (c) would one have been let alone and a lease of it accepted without the other ? It was observed by the Hon ble Apex Court that if the answers to the first two questions were in the affirmative and the last in the negative, then it has to be held that the lettings would be inseparable. Now, in the case before us, the provision of amenities/services viz. usage of toilets in the building by the servants/drivers/securities staff, provision of electricity connection and water connections for the toilets, provision of exclusive telephone cable etc. and other such services to the licensee, were aimed at facilitating better and more effective usage of the aforesaid property. In our considered view there was a clear nexus on the part of the assessee in letting out of the property and provision of the aforesaid services to the licensee, which as observed by us hereinabove were inextricably interl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 07.08.2012 under the the head house property . Also, the A.O in the course of the set aside proceedings shall verify the reason for the discrepancy in the amount of the gross rental shown by the assessee at ₹ 2,17,21,200/- under the head house Property , as against the amount of ₹ 1,79,26,200/- [₹ 67,62,500/- (+) ₹ 1,11,64,200/-] as is discernible from the respective agreements viz. Leave license agreement, dated 07.08.2012 and Amenities agreement, dated 07.08.2012. In case the assessee is unable to explain the aforesaid discrepancy, then the aforesaid amount of receipt of ₹ 37,95,000/- [₹ 2,17,21,200/- (-) ₹ 1,79,26,200/-] shall be assessed by him under the head Other sources . Needless to say, the A.O shall in the course of the set aside proceedings afford a reasonable opportunity of being heard to the assessee. The Ground of Appeal No. 1 is allowed for statistical purposes in terms of our aforesaid observations. 10. We shall now advert to the claim of the ld. A.R that the A.O had erred in reworking the disallowance under Sec.14A r.w.r. 8D at an amount of ₹ 10,13,864/-, as against the suo motto disall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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