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TMI Blog2011 (2) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... t is to be assessed under the head “income from business or profession” as very nature of the receipt will not be changed, even if the actual payment is deferred. In respect of expenditure since hire charges and management consultancy fees are treated as business income such expenditure would be allowed. However, for the purpose of verification and quantification whether the assessee has provided the interest on the partner’s capital account as per terms of Deed of Partnership, the file restored back to the A.O.- Decided partly in favor of Revenue for statistical purposes. - ITA No. 1542/Mum/2007 - - - Dated:- 25-2-2011 - ORDER PER R.S. PADVEKAR, JM This appeal is filed by the revenue challenging the impugned order of the Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the fact that no business or professional activity was carried on during the year under consideration. 2. The facts pertaining to the case are as under. The assessee firm is in the business of management consultancy. The assessee filed the return of income for the A.Y. 2003-04 declaring the total income of 29,83,620/-. The return filed by the assessee was selected for scrutiny and assessment was completed u/s. 143(3) of the Act. The assessee has declared the receipt from the professional consultancy at Rs 1 lakh which was in respect of the consultancy services given to MPSRTC in the year 1997. The assessee is following the cash system of accounting and hence the said receipt was declared in the A.Y. 2003-04. The assessee has leased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arges received by the assessee at Rs 86 lakhs u/s.22 of the Act as income from house property and also allowed deduction u/s.24 of the Act at 30% of the annual value and disallowed all other expenditure claimed by the assessee. So far as the professional receipt of Rs 1 lakh is concerned, the same has treated as a miscellaneous income of the assets under the head income from other sources on the reason that the assessee has not carried out any business activity during the previous year relevant to the assessment year 2003-04. The A.O. also disallowed the interest paid on the partner s capital of 25 lakhs on the reason that the funds cannot be said to have been used for the business purposes. The A.O. finally determined the total income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame way, the Ld. CIT (A) also directed the A.O. to allow the interest expenditure on the partner s capital, which was utilized for the purpose of the assessee s business as an allowable expenditure. The Ld. CIT (A) also directed the A.O. to allow the remuneration to the partners and other related expenditure. Now, the revenue is in appeal before us. 4. We have heard the rival submissions of the parties and also perused the records. Ground no.1 is raising a grievance against the finding of the Ld. CIT (A) that hire charges received on account of hiring of the motor-cars, office equipment, computer, furniture and fixture is to be treated as a business income. The Ld. D.R. vehemently argued that the assessee has not carried out any activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urces but has to be assessed under the head income from business or profession as very nature of the receipt will not be changed, even if the actual payment is deferred. We, accordingly, confirm the order of the Ld. CIT (A) on this issue and dismiss ground no.2. 6. So far as ground no.3 4 are concerned, these grounds depend on whether the hire charges and management consultancy fees are to be treated as business income or not. The assessee has claimed the expenditure in respect of the interest paid on the partners capital account u/s.40(b)(iv) of the I.T. Act as well as other business expenditure of 3,16,233/- and remuneration to the partners of 1,59,328/-. As we have held that the income from the hire charges of the assets and the m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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