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TMI Blog2012 (7) TMI 397X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee is allowed - I.T.A No. 702/JP/2011 - - - Dated:- 25-5-2012 - S/SHRI R.K. GUPTA, SANJAY ARORA, JJ. Assessee by Shri J.K. Ranka, Advocate and Shri Siddharth Ranka, CA ARs Revenue by Shri D.K. Meena, Jr. DR O R D E R Per Sanjay Arora, AM: This is an Appeal by the Assessee directed against the Order by the Commissioner of Income-tax (Appeals)-1, Jaipur ( CIT (A) for short) dated 16-05-2011, dismissing the assessee's appeal agitating the order dated 23/3/2009 imposing penalty u/s. 271(1)(c) of the Income Tax Act, 1961 ( the Act hereinafter) for the assessment year (A.Y.) 2004-05. 2.1 It would be relevant to recount the background facts of the case leading to the confirmation of the penalty by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest expenditure (Rs. 9.34 lacs) had been incurred only in relation to the capital borrowed for the purpose of construction/repair/renovation of the house property, a business asset, so that it was allowable in full. Similarly, the disallowance of various expenses was not justified; being only in minor sums, to maintain the corporate/organizational status of the company, and stood vacated for that reason. However, in the view of the ld. CIT(A), the assessee had wrongly returned the rental income as from house property, claiming standard deduction at Rs. 8.18 lacs thereagainst. The business had not been closed down, and it was a case of only a temporary lull therein, having been finally started in the year relevant to the assessment year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeding to effect the said disallowance thereat, i.e., in the quantum proceedings. We consider both the assessee pleas as of little merit. Neither addresses the issue on its merits, i.e., the assessee's explanation in making the impugned claim for standard deduction for repairs u/s. 24(a) of the Act. If the assessing authority had erred, could that form the basis of relief or a justification for having preferred a wrong claim? If such a view is accepted, no penalty could, as a matter of rule, be levied where a disallowance/addition is sustained on an assessment framed in pursuance to a revision order u/s. 263 of the Act. The assessee had itself claimed interest as business expenditure, being admittedly only against construction/repair/re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome from house property? If that be so, as it indeed is, how would it matter that the interest had been claimed as a business expense, rather than against house property? It needs to be appreciated that the default, i.e., if we may say so, is not in preferring the impugned claim per se, which is incidental, but in the classification of the head of income under which the rental income is liable to be taxed. We could understand of the Revenue having a case where the assessee had claimed repairs as a business expense, while also claiming standard deduction in its respect. And which is not so; the ld. AR taking us through the P L a/c for the relevant year (PB pg. 23), which bears only nominal expenses, i.e., apart from the interest expense at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the house property let out is a commercial or a non-commercial property. The apex court in Sultan Bros. (P.) Ltd. v. CIT (1964) 51 ITR 353 (SC) has clarified that nothing much turns on the house property under reference being a business or a commercial asset, as business could be carried out with practically any asset. Further, that whether a particular letting is business is to be decided in the circumstances of each case, which have to be looked at from the businessman point of view. Assessability of rental income, i.e., whether as business income or from house property, is, thus, and indeed in the instant case was, a mixed question of fact and law, and the non-acceptance of the assessee's claim in quantum proceedings would not ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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