2011 (10) TMI 679 - AT - Income Tax

Summary

Issues involved: Appeal against CIT(A)'s order for assessment year 2005-06 regarding treatment of rental income and bad debts.

Rental Income Issue:
The Revenue challenged CIT(A)'s decision to treat income from letting out amenities as income from house property despite a separate agreement. The Departmental Representative supported the assessing officer's view. However, the assessee's counsel argued that the CIT(A) correctly followed the Supreme Court's decision in Shambhu Investments case. The Tribunal found in favor of the assessee, citing a previous decision in the assessee's favor for the assessment year 2004-05. The Tribunal upheld CIT(A)'s decision, stating that the composite rent from premises and amenities should be treated as income from house property.

Bad Debts Issue:
The Revenue contested the allowance of bad debts by CIT(A) even though the debts were not proven to be bad. The assessee's counsel argued that the debts were genuine and had been offered for tax previously. The Tribunal agreed with the assessee, stating that the debts were genuine transactions and the write-off after legal proceedings was justified. The Tribunal referred to the decision in the assessee's favor for the assessment year 2004-05 and upheld CIT(A)'s decision to allow the bad debts. The Revenue's appeal was dismissed, and the Tribunal pronounced the order on 4.10.2011.