TMI Blog2020 (9) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... income from Profits or Gains from Business or Profession . Thus, there is no question of allowing any deduction as depreciation under section 32 for the period for which this property was let out and income thereof was offered for tax under the head 'income from house properties'. Thus, we concur with the finding of the assessing officer. Office house property (office premises) earlier used for the purpose of business is not used for the purpose of business during the year under consideration and that the assessee has let out the same for the first time on rent and assessing officer may restrict to a fair proportionate part of asset for the purpose of depreciation - We find convincing force in the contention of assessee and restore back this issue to file of assessing officer to examine the issue afresh on this contention and pass the order in accordance with law. Needless to order that before passing the order the assessing officer shall grant opportunity to the assessee as per the new procedure of assessment. The assessee is also directed to provide all information and evidence to the assessing officer. - Decided in favour of assessee for statistical purpose. Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 143(3) dated 12th December 2017 for the assessment year 2015- 16. The assessee has raised following grounds of appeal: Taxability of rental income in respect of the property at Fort (Mumbai) under the head 'Profits and gains of business or profession' instead of the head 'Income from house property': ₹ 8,91,000: 1. On the facts and in the circumstances of the case and in law, the Commissioner of Income- tax (Appeals) erred in upholding the action of the Assessing Officer in considering the income from letting out of office premises owned by the appellant under the head 'Profits and gains of business or profession' instead of the head 'Income from house property'. 2. On the facts and in the circumstances of the case and in law, the Commissioner of Income- tax (Appeals) erred in upholding the action of the Assessing Officer in taxing the impugned rental income under the head 'Profits and gains of business or profession' merely on the ground that impugned property was a part of the business assets of the appellant on which depreciation had been claimed. 3. On the facts and in the circumstances of the case and in law, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and assessment was completed under section 143(3) on 12th December 2017. The assessing officer while passing the assessment order noted that the assessee has claimed rental income and offered the same under the head income from house property . The assessee claimed rental income from the house property which was included in block of asset for which the assessee has claimed depreciation. During the year under consideration the assessee also claimed depreciation on the asset and claimed rental income of the same asset under the head income from house property . The assessing officer after issuing the show cause notice and considering the reply of assessee, treated the rental income from house property (business asset) as income from business income . The assessing officer further held that that in future on sale of property will be considered as short term capital gain under section 50 of the Act. 3. The assessing officer during the assessment further noted that the assessee has made investment for earning exempt income. On show cause notice for disallowance under section 14A, the assessee claim that investment was made in group concerned as a strategic decision. The assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer in the assessment order itself. It was submitted that 97% of the income of the assessee is from the travel and tourism and only about 3% relates to the isolated activity of letting out of Fort property. The ld AR for the assessee prayed for treating the income from letting of property as income from house property. In support of his submissions the ld AR for the assessee rely on the decisions of Hon ble Apex Court in Raj Dadarkar Associate Vs ACIT [2017] 81 taxmann.com193 (SC), Chennai Property Investment Ltd Vs CIT [2015] 56 taxmann.com 456(SC) and Shambhu Investment Private Limited Vs CIT [2003] 263 ITR 143 (SC) 5. The ld. AR for the assessee further submits that as per sub-section (2) of section 38 of the Act, if any building used for the purpose of business is not exclusively so used for the purpose of business, the deduction under section 32 shall be restricted to a fair proportionate part, which may be determined by the assessing officer. 6. On the other hand the ld. DR for the revenue supported the order of the lower authorities. The ld DR further submits that the assessee was claiming depreciation on the asset and also claimed depreciation in respect of bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer that the assessee cannot altogether claim depreciation on the business asset as well as income from the same business asset as income from the house property. The case laws relied by ld. AR for the assessee not applicable on the unique facts of the present case. In none of the case laws cited above, the same property was shown in the block of asset as shown in the present case. The assessee has declared its income from letting out of house properties under the head Income from House Property' which falls under Chapter IV-C of the 1961 Act containing Section 22 to 27.Thus, the assessee will be entitled only for deductions prescribed under sections 22 to 27 of Chapter IV-C of the Act, while computing income from house property chargeable to tax. This chapter IV-C of the Act does not provide for depreciation on immovable properties as one of deductions from income earned by assessee from letting out of such house property. However, section 32 of the Act provides for depreciation and falls under Chapter IV-D which concerns itself with computation of income from Profits or Gains from Business or Profession . Thus, there is no question of allowing any deduction as depreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t income during the year should be considered for computing the average value of investment which yielded exempt income during the year as held by Special bench of Delhi Tribunal in Vireet Investment P. Ltd. (supra). After considering the submission of ld. AR of the assessee, we find convincing force in his submission that only those investments which yielded exempt income during the year be considered for computing the average value of investment. Therefore, the assessing officer is directed to re-compute the disallowance under Rule 8D(2)(iii) by following the decision of Special Bench of Delhi Tribunal in Vireet Investment P. Ltd. (supra). Needless to order that before re-computing the disallowance under Rule 8D(2)(iii), the assessing officer shall grant opportunity of hearing to the assessee. The assessee is also directed to provide necessary details and information to the assessing officer. 15. In the result, this ground of appeal is partly allowed. 16. Ground No. 8 relates to deduction of education cess. The ld. AR for the assessee submits that the assessee has raised this ground of appeal for the first time before the Tribunal. The Ground of appeal is purely legal in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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