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TMI Blog2010 (1) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... e and in law, the learned Commissioner of Income-tax (Appeals) erred while confirming disallowance of expenses on account of salary, staff welfare, bank charges, miscellaneous, travelling and conveyance, repair and maintenance, printing and stationery and depreciation on furniture and fixtures. On perusal of the assessment order, it is found that the assessee earned income only under the head "House property". Therefore, the assessee was required to show-cause as to why the expenses mentioned under the above heads should not be disallowed as no income was earned under the business head. It was submitted that the company had to incur some expenses for its running. The Assessing Officer did not accept the aforesaid submission and mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these persons. Expenditure on travelling and conveyance was for the purpose of the staff members for taking care of the properties. Printing and stationery was a normal expenditure. A reference was also made to the accounts for the assessment year 2007-08, in which income was also shown in respect of sale of agricultural land. This income along with the rental income was shown as business income in the accounts. Therefore, it was contended that the assessee had been carrying on business and the expenses incurred by it were deductible in computing the total income. In reply, the learned Departmental representative submitted that the only purpose of formation of the company was to earn the rental income and no other income was earned in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of business nature. Therefore, on the facts it has to be concluded that the only source of income of the assessee-company is the rental income, which is chargeable to tax as "property income". In so far as cases relied upon by the learned Departmental representative are concerned, we are of the view that those do not advance the case of the Revenue. The reason is that the decisions deal with the controversy of form versus substance, which does not exist here as the admitted fact is that only rental income has been earned, which is taxable under the head "House property". The assessee had also relied upon certain cases before the learned Commissioner of Income-tax (Appeals). The main finding in the case of ITO v. Mokul Finance P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no residuary head allowing the expenditure incurred for earning the income. The decision in the case of Nakodar Bus Service P. Ltd. v. CIT [1989] 179 ITR 506 (P H) is similar to the decision in the case of CIT v. Ganga Properties Ltd. [1993] 199 ITR 94 (Cal). The decision in the case of CIT v. Rampur Timber and Turnery Co. Ltd. [1981] 129 ITR 58 (All) was also similar to the decision in the case of Ganga Properties Ltd. [1993] 199 ITR 94 (Cal), in which it was held that for an expenditure to come within the ambit of section 57(iii), it must be incidental to make or earning the income and there must be nexus between the character of the expenditure and making or earning of the income. Therefore, the finding of the Tribunal that the expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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