TaxTMI 
TaxTMI 
2023 (4) TMI 35
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....of Association, the main object of the assessee is to carry on the business of real estate, builders, developers, promoters, architects, supervisors, contractors, consultants, dealers, and agents for real estate including development of townships and the sale of plots. It is further stated therein that the business of the assessee is to purchase, sell, develop, take in exchange, or on lease, hire or otherwise acquire, whether for investment for sale, or working in same, any real or personal estate including lands, buildings, houses, easement or interest in or with respect to any property or whatsoever for the purpose of the company in consideration gross sum or rent or partly in one way and partly in the other way or for any other consideration and to carry on the business of real estate's dealers, estate owners, undertaken construction activities and development of housing plots, suits and projects, design, build, operate, own and manage software technology parks, malls, entertainment parks, theme parks, integrated townships including construction of apartments, houses, housing colonies and commercial complexes and industrial estates, export processing zones, special economic Jone....
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....t the loans were utilised for repayment of the debt incurred in relation to the acquisition of property from which rental income was accrued to the assessee. Insofar as the interest added by the learned Assessing Officer is concerned, learned CIT(A) was of the opinion that under section 24(b) of the Income Tax Act, 1961 (for short "the Act"), interest incurred in relation to the loan meant for acquisition of property can be deducted and since Rs. 8.40 crores was not meant for clearing the loans borrowed for acquiring the property yielding house property income and, therefore, the rest of the interest cannot be allowed. 7. Hence the assessee is in appeal before us. Learned AR argued that the ground relating to the disallowance of carry forward of losses, proportionate process fee and interest are dependent upon the basic questions as to whether the assessee commenced its business or not, and whether the income of the assessee from lease rentals is taxable under the head PGBP or IFHP. He submitted that though the assessee initially offered the rental income to tax under the head IFHP, subsequently realising the mistake and pursuant to the decision of the Hon'ble Apex Court in the ca....
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....d interest is not allowable because nothing materialised during all the four years involved in these appeals. According to him the assessee parked the loan amount at some place according to their convenience, only with an intention to claim deduction on the ground of commencement of business. According to the learned DR, a business is said to have been acquired only when it is made fit for business usage, until such time the interest has to be capitalised. He submitted that the decision of the Hon'ble Apex Court in the case of Chennai Properties and Investments Ltd., (supra) has no application to the facts of the case because the Memorandum of Association of the assessee does not spell out the activity of leasing and earning rental income as one of the objects of the assessee. 11. We have gone through the record in the light of the submissions made on either side. Though we have detailed the objects of the business of the assessee as per the Memorandum of Association, we deem it necessary, for the sake of completeness, to extract the same hereunder. "1. To carry on the business of Real Estate builders, developers, Prompters, Architects, Supervisors, Contractors/Consultants, deal....
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.... (supra) has no application to the facts of the case. We accordingly hold that the learned CIT(A) is right in rejecting the contention of the assessee and maintaining the chargeability of rental income under the head IFHP. Grounds relating to this issue are dismissed. 14. Coming to the issue relating to the commencement of business, there is no dispute that the assessee is a private limited company and was incorporated on 8/6/2006. Unlike a limited company, a private limited company is not required to obtain the certificate for commencement of business. A private limited company can start the business immediately after incorporation. Immediately after incorporation, the assessee had carried out several operations like raising loans and acquiring business assets and in that process the asset at Bangalore was acquired and an advance amount for acquiring the asset at Hyderabad was made. According to us, these transactions are part of the business of the assessee and there is no requirement of obtaining any commencement certificate in this case. Apart from this, the assessee incurred expenditure relating to printing and stationery, audit fee, filing fee, miscellaneous expenses etc., w....