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Issues Involved:
1. Charging of interest under sections 139(8) and 215/217 of the Income Tax Act. 2. Charging of interest under sections 234A and 234B of the Income Tax Act. 3. Charging of notional interest on security deposits received against renting of property. 4. Addition of short-term capital gains. 5. Allowance of depreciation on the building. Issue-wise Detailed Analysis: 1. Charging of Interest under Sections 139(8) and 215/217 of the Income Tax Act: The assessee challenged the charging of interest under sections 139(8) and 215/217 for the assessment years 1988-89 and 1989-90, arguing that these were reassessment proceedings and not regular assessments as defined under section 2(40) of the Act. The assessee contended that since the reassessment was initiated by a fresh notice under section 148, the interest could not be charged. The Departmental Representative argued that an assessment made for the first time under section 147 is considered a regular assessment as per Explanation 2 to section 139(8) and section 215(6). The Tribunal held that for the assessment year 1988-89, the reassessment pursuant to notice under section 148 should be regarded as a regular assessment for the purpose of levying interest under sections 139(8) and 215/217, thus rejecting the assessee's ground. However, for the assessment year 1989-90, it was not considered a regular assessment as it was not the first assessment, and no specific order for levying interest was made. Hence, the assessee's ground for 1989-90 was allowed. 2. Charging of Interest under Sections 234A and 234B of the Income Tax Act: For the assessment year 1990-91, the assessee challenged the charging of interest under sections 234A and 234B. The Assessing Officer (AO) had merely stated to charge interest as per law without making a specific order. The Tribunal referred to the Supreme Court decision in CIT vs. Ranchi Club and the Delhi High Court decision in CIT vs. Insilco Ltd., which held that a specific order is necessary to charge interest. Consequently, the Tribunal directed the AO to delete the interest charged under sections 234A and 234B. 3. Charging of Notional Interest on Security Deposits Received Against Renting of Property: The assessee objected to the addition of notional interest on security deposits received from tenants to the annual value of the property. The Tribunal referred to the Calcutta High Court decision in CIT vs. Satya Company Ltd. and other relevant case laws, concluding that notional interest cannot be considered as rental income under section 23 of the Act. The Tribunal directed the deletion of the addition made by the AO and sustained by the CIT(A). 4. Addition of Short-term Capital Gains: The AO treated the deposits received from parties for shops as sale consideration and taxed them as short-term capital gains. The assessee argued that no conveyance deeds were made or registered, and the deposits were refundable, thus not constituting a sale. The Tribunal examined the agreements and found that the deposits were interest-free and refundable, and the agreements were in the nature of rent agreements. The Tribunal concluded that the deposits could not be considered as sale consideration and directed the deletion of the addition made as short-term capital gains. 5. Allowance of Depreciation on the Building: For the assessment year 1990-91, the assessee claimed depreciation on the building, which the AO denied, stating that a major portion of the building was let out. The CIT(A) allowed proportionate depreciation for the portion used for business. The Tribunal restored the issue to the AO for verification of the maintenance charges received and directed that if the charges were assessed as business income, the space should be treated as used for business, and depreciation should be allowed accordingly. Conclusion: The Tribunal dismissed the appeal for the assessment year 1988-89 and partly allowed the appeals for the assessment years 1989-90 and 1990-91, providing specific directions for each issue.
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