2011 (3) TMI 1823 - AT - Income Tax

Summary

Issues involved: Determination of prorata expenses related to rental income, treatment of loss on derivatives as speculation loss, deduction of occupancy charges.

Prorata Expenses related to Rental Income:
The appeal was against the order of the Commissioner of Income Tax (Appeals) concerning the allocation of common business expenses, specifically related to rental income. The Assessing Officer disallowed a sum against the rental income based on the analysis of income elements. The Commissioner restricted the disallowance after considering the nature of expenses and their nexus with the property. The Tribunal set aside the Commissioner's order, noting that the income from house property had been separately computed, and remitted the matter back to the Assessing Officer for re-examination.

Treatment of Loss on Derivatives as Speculation Loss:
The Assessing Officer disallowed the loss on derivative transactions as speculation loss, a decision upheld by the Commissioner. The Tribunal, considering the decision in the case of Shree Capital Services Ltd., confirmed the treatment of the loss as speculative, based on the prospective nature of the relevant section. The appeal was dismissed in this regard.

Deduction of Occupancy Charges:
The Assessing Officer disallowed a claim of occupancy charges deduction, citing the provisions of section 24 of the Act. The Commissioner's decision was supported by the Tribunal, emphasizing that deductions can only be allowed if provided under the relevant head of income. Rulings from various cases were cited to support the denial of the deduction for occupancy charges. The Tribunal upheld the Commissioner's order, stating that since no deductions for occupancy charges were provided under section 24, the claim was not allowable.

In conclusion, the appeal was partly allowed for statistical purposes, with the Tribunal confirming the Commissioner's decision on the issues discussed.