TMI Blog2016 (4) TMI 1398X X X X Extracts X X X X X X X X Extracts X X X X ..... detailed finding recorded by the CIT(A) has not been controverted by the department by bringing any positive material on record. Issue in favour of the assessee for holding that such commercial exploitation renders income from business rather than income from house property. - Decided against revenue. Disallowance of interest u/s. 36(1)(iii) - assessee has failed to substantiate the commercial expediency of giving interest free advances to the sister concerns out of its interest bearing borrowings - HELD THAT:- Assessee before us clearly stated that the assessee and its sister concerns are engaged in the business of real estate and this fact was argued before CIT(A) by assessee. He explained that the assessee has embarked upon setti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. 2. The first issue in this appeal of revenue is against the order of the CIT(A) in holding that the rental receipts of the assessee are business receipt and not income from house property. 3. Briefly stated facts are that the assessee in its P L Account has credited an amount of ₹ 1,05,78,000/- under the head business centre service charges. As against this, the assessee has debited various expenses including interest and finance charges amounting to ₹ 2,08,64,803/- and also claimed depreciation amounting to ₹ 8,45,860/-. The AO assessed the business centre service charges credited by the assessee in its P L Account as income from house property and treated the same as rental income. He stated that the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as confirmed the order of CIT(A) and considered the business centre service charges as business receipts by observing in para 5 as under: 5. We have considered rival contentions and found from the record that the business asset was used by the assessee in, its business of letting out as per its primary object to exploit the property by complex commercial activity. After considering the Business' Conducting that the assessee has granted permissive use of the services and facilities provided in the premises by the assessee. The Conductor has no right of occupancy, but only limited access for the purposes of business activities during hours of day fixed in the agreement. We also found that the premises are in the control of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the commercial expediency of giving interest free advances to the sister concerns out of its interest bearing borrowings. 7. Briefly stated facts are that the AO treated the business service centre charges as rental income and assessed the same under the head income from house property. Once it is assessed as income from house property, the AO noted that the interest paid to Central Bank of India amounting to ₹ 1,43,64,614/- on term loan of ₹ 15 cr. for a period of 12 months interest @ 12.50% was a corporate loan for the corporate needs. According to him, the utilization of this ₹ 15 cr. was for advancement of interest free loan to sister concerns viz., ESES Commercial Pvt. Ltd. and Erudite Trading Pvt. Ltd. Accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount is held to be advanced for the purpose of business and the interest on the same is allowable. Hence, the ground of appeal of the appellant is allowed. Aggrieved, revenue is in second appeal before Tribunal. 8. We have heard rival submissions and gone through facts and circumstances of the case. Admittedly and finally, the business centre service charges are assessed as business receipts and we have also confirmed this aspect in the above issue. We find that the AO himself noted the fact that the loan of ₹ 15 cr. obtained from Central Bank of India was utilized for advancing further loan to assessee s sister concerns viz. ESES Commercial Pvt. Ltd. and Erudite Trading Pvt. Ltd. and factually this is a corporate loan. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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