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2018 (10) TMI 1354 - HC - Income TaxIncome from sub-lease of land - to be assessed under the head incomes from other sources OR business income - Held that - The assessee s business for development of Bio-Tech Park was already up and commenced, and therefore, it was held that the sub-lease income was assessable as business income. In fact, these orders of the CIT(A) were subjected to further appeal before the ITAT, which confirmed the orders of the CIT(A). Addition in respect of interest on borrowed capital utilized for construction of the property - CIT-A deleted the addition - Held that - CIT(A) by following his own order in the case of the very same assessee for the A.Y. 2008-09, had deleted the addition made by the A.O. This decision of the CIT(A) was once again confirmed by the ITAT. For that A.Y. the ITAT held that if the interest is paid by the assessee on the capital used for acquiring or construction of the assets that are used for earning taxable income, then his claim for interest expenditure has to be allowed. The relevant finding of the Tribunal for the A.Y. 2008-09. ITAT held that there was no justifiable reason to interfere with the decision of the CIT(A).
Issues:
1. Challenge to the order of the Income Tax Appellate Tribunal (ITAT) by the revenue. 2. Assessment of income from sub-lease of land and interest on borrowed capital. 3. Appeal before the Commissioner of Income-Tax (Appeals) (CIT(A)). 4. Grounds of appeal before the First Appellate Authority. 5. Appeal before the ITAT by the revenue. 6. Substantial questions of law raised by the appellant. 7. Analysis of the substantial questions of law raised. Issue 1: Challenge to the ITAT Order The appellant, the revenue, challenged the Judgment and Order of the ITAT dated 27th May, 2015, concerning the Assessment Year 2010-11. The ITAT dismissed the revenue's appeal against the order passed by the CIT(A), setting aside the Assessing Officer's order under Section 143(3) of the Income Tax Act, 1961. Issue 2: Assessment of Income and Interest The Assessing Officer assessed the total income of the assessee, a company engaged in Bio-Tech Park development, at Rs. 12.76 Crores, disallowing business loss and interest on borrowed capital. The A.O. contended that sub-lease income should be under "incomes from other sources" and disallowed the interest as the capital's utilization was not adequately proven. Issue 3: Appeal Before CIT(A) The assessee appealed before the CIT(A) challenging the A.O.'s order. The CIT(A) set aside the A.O.'s decision regarding sub-lease income classification and interest disallowance based on previous rulings favoring the assessee. Issue 4: Grounds of Appeal Before First Appellate Authority The assessee raised grounds before the First Appellate Authority, arguing against the A.O.'s treatment of income from different sources and disallowance of interest. The First Appellate Authority set aside the A.O.'s order based on previous rulings in favor of the assessee. Issue 5: Appeal Before ITAT The revenue filed an appeal before the ITAT challenging the CIT(A)'s decision. The ITAT dismissed the appeal, citing previous rulings in favor of the assessee for different assessment years. Issue 6: Substantial Questions of Law Raised The appellant raised substantial questions of law regarding the deduction of interest from rental income, compliance with Section 24 of the Act, and consideration of facts by the ITAT, arguing that the impugned order gave rise to legal errors. Issue 7: Analysis of Substantial Questions The High Court found the questions raised by the appellant unmeritorious, stating that they did not give rise to substantial questions of law. The Court noted that the ITAT had considered previous rulings favoring the assessee and upheld the CIT(A)'s decision based on factual aspects, leading to the dismissal of the appeal. In conclusion, the High Court dismissed the appeal, finding no merit in the arguments presented and stating that the impugned order did not suffer from perversity or legal errors, thus not warranting further consideration under Section 260A of the Income Tax Act, 1961.
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