2012 (10) TMI 1082 - AT - Income Tax

Summary

Issues involved: Addition of income from house property u/s 22 and 23, Disallowance u/s 14A.

Income from house property: The appellant, a manufacturing company, owned a premises leased to IDBI. The AO added income from the property for the whole year, disputing the claim of vacancy. The CIT(A) upheld the AO's decision. The appellant argued that the property was vacant after the lease ended, citing a court decision. The Tribunal found merit in the appellant's argument, directing the AO to verify the vacancy claim and allow benefit u/s 23(1)(c) if found correct.

Disallowance u/s 14A: The appellant claimed exemption for dividend income without making a disallowance for related expenses u/s 14A. The AO disallowed expenses proportionately, which was modified by the CIT(A) applying Rule 8D retrospectively. The Tribunal, following a High Court decision, set aside the CIT(A)'s order and directed the AO to recompute the disallowance on a reasonable basis.

In conclusion, the appeal was allowed for statistical purposes, with the Tribunal providing detailed reasoning and directions for each issue raised in the appeal.