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TMI Blog2012 (11) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... f one’s own property, in the course of business, and for the purpose of business, i.e. an active use of the property, (instead of mere passive possession) qualifies as “own” occupation for business purpose. Thus, this question is answered in favour of the revenue. Deduction u/s 32 AB on interest income - Held that:- As decided in Apollo Tyres Ltd v CIT [2002 (5) TMI 5 - SUPREME COURT] if a business qualifies for the benefit granted under Section 32AB, if an assessee carries on business covered by that provision, and has utilized any amount during the previous year for the purchase of new plant or machinery then it is entitled to a set off of a sum equal to 20 per cent of the profit of such eligible business accordance with sub-section (5) of Section 32AB. As the eligibility or entitlement of the assessee to claim the benefit, was never questioned in the proceedings before the lower authorities the question is answered in favour of the assessee. Admissibility of 100% depreciation for plant - Held that:- In view of the settled position decided in JCIT Vs. Anatronics General Co. (P) Ltd. [2000 (8) TMI 38 - DELHI HIGH COURT] that each bottle constituted plant and was eligible fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter, since identical facts are involved in these appeals, in respect of the same assesse, the said first three questions are answered in favour of the assessee, and against the revenue. Question No. 4 Whether the respondent could have been assessed on the basis of ALV of the unsold flats? 3. The facts relevant to the issue raised relate to the addition on account of annual letting value (ALV) of flats, added on notional basis are that the assessee- company engages itself in the business of development of mini-townships, construction of house property, commercial and shop complexes etc. In the assessment completed for the year under consideration, the AO assessed the ALV of flats which the assessee had constructed, but were lying unsold under the head "Income from house property". The assessee however, contended that the said flats were its stock-in-trade and therefore the ALV of the flats could not be brought to tax under the head "Income from house property". The AO however did not accept the stand of the assessee, and therefore, added the notional value of unsold flats to the total income of the assessee. On appeal by the assessee, the CIT(A) however set aside the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Housing and Land Development Trust (supra), the assessee, incorporated with the object of buying and developing landed properties and promoting and developing markets, purchased land in Calcutta and set up a market. The question was whether the income realized from the tenants of those shops taxable as "business income" under section 10 of the Income-tax Act or income from property under Section 9. The Supreme Court held that the income derived by the company from shops and stalls was income received from property and fell under the specific head described in Section 9. The character of that income was not altered either because it was received by a company with the specific object of setting up markets, or because the company was required to obtain a licence from the Municipality to maintain sanitary and other services, and resultantly had to maintain staff and to incur expenditure. The income did not become "profits or gains" from business within the meaning of Section 10. The character of the income altered merely because some stalls were occupied by the same occupants and the remaining stalls were occupied by a shifting class of occupants. The primary source of income from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out Where a Company acquires properties which it sells or leases out with a view to acquiring other properties to be dealt with in the same manner, the company is not treating them as properties to be enjoyed in the shape of rents which they yield but as a kind of circulating capital leading to profits of business, which profits may be either enjoyed- or put back into the business to acquire more properties for further profitable exploitation. 7. In Sultan's case [1964] 51 ITR 353 the Supreme Court held that: "It seems to us that the inseparability referred to in Sub-section (4) is an inseparability arising from the intention of the parties. That intention may be ascertained by framing the following questions: Was it the intention in making the lease--and it matters not whether there is one lease or two, that is, separate leases in respect of the furniture and the building--that the two should be enjoyed together ? Was it the intention to make the letting of the two practically one letting ? Would one have been let alone and a lease of it accepted without the other ? If the answers to the first two questions are in the affirmative, and the last in the negative then, in our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneral or specific for the purpose of any particular source of income. They are all specific and deal with the various heads in which an item of income, profits and gains of an assessee falls. These sections are mutually exclusive and where an item of income falls specifically under one head it has to be charged under that head and no other." No doubt in that case the learned judges had to decide whether the interest on securities, which fall under section 8 of the Income-tax Act, also came within the scope of section 10 of that Act. But what applies to section 8 obviously also applies to section 9 in relation to section 10. What has to be computed for purposes of assessment under section 9 cannot be brought within the scope of section 10 of the Income-tax Act. With reference to the interest on securities what the Supreme Court laid down was: "Income from interest on securities falls under section 8 of the Act and not under section 10; it cannot be brought under a different head of income, viz., profit and gains of business under section 10, even though the securities are held by a banker as part of his trading assets in the course of his business." Therefore, the fact that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be the income of the business. Therefore, the court observed that: "The heads described in Section 6 and further elaborated for the purpose of computation of income in Sections 7 to 10, and 12, 12A, 12AA and 12B are intended merely to indicate the classes of income: the heads do not exhaustively delimit sources from which income arises. It was also held that: even if an item of income is earned in the course of carrying on a business, it will not necessarily fall within the head "profits and gains of business" within the meaning of section 10 read with section 6(iv). If securities constitute stock-in-trade of the business of an assessee, interest received from those securities will for the purpose of determining the taxable income be shown under the head "interest on securities" under section 8 read with section 6(ii) of the Act. Similarly, dividends from shares will be shown under section 12(1A) and not under section 10. If an assessee carries on business of purchasing and selling buildings, the profits and gains earned by transactions in buildings will be shown under section 10, but income received from the buildings so long as they are owned by the assessee will be sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... physical possession, in law, when Parliament intended a property occupied by one who is carrying on business, to be exempted from the levy of income tax was that such property should be used for the purpose of business. The intention of the lawmakers, in other words, was that occupation of one s own property, in the course of business, and for the purpose of business, i.e. an active use of the property, (instead of mere passive possession) qualifies as own occupation for business purpose. This contention is, therefore, rejected. Thus, this question is answered in favour of the revenue, and against the assessee. 15. The next question which arises, is deduction under Section 32 AB on interest income. This arises for consideration in ITA Nos. 18/1999, 56/2001 and 114/2001. In all the concerned years the assessee had claimed benefit under Section 32 AB (1)(b) contending that it had utilized amounts during the previous year for purchase of new machinery or plant. The Appellate Commissioner had allowed its claim, and in some instances, the Tribunal did so. The revenue urges that the assessee was not entitled to claim the benefit, since it did not carry on eligible business at the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e emphasised that the Andhra Pradesh High Court specifically rejected a similar claim by builder for eligibility for 100% depreciation under first proviso to subsection 232 (1)(ii). 20. Counsel for the assessee on the other hand argued that the question as to whether the shuttering is independent or inter-dependent or constitute an inter-connected element of a plant is no longer res integra since in a previous decision of this Court, concerning the assessee (i.e. CIT Vs. Ansal Properties and Indus. Oversees Projects, ITR 241/1992 decided on 16.08.2010) it was held that such claim for 100% depreciation, in respect of parts of scaffolding and shuttering is admissible and in that position the Court had relied upon two judgments of the Rajasthan and Madras High Courts i.e. CIT Vs. Mohta Construction Co. (2005) 273 ITR 276 and CIT Vs. Alagendran Finance Limited (2003) 264 ITR (269). 21. This Court considered the submissions. Although the Revenue s argument appears to be attractive and plausible, this Court is of the opinion that the previous ruling in Ansal Properties and Indus. Overseas Projects, did consider the matter in detail. The Court also took into consideration, the other j ..... X X X X Extracts X X X X X X X X Extracts X X X X
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