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TMI Blog2012 (12) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... 42 Dividend recd. 1,638,900.00 Rent Received 6,504,000.00 (Rs.53,04,000/- on account of rent from leasing of properties and Rs.12,00,000/- on account of leasing of machinery. Insurance claim received - Freight & Handling - Interest received 414,218.00 Income Tax Refund - Profit on sale of Assets 2,877,316.00 12,259,911.41 3. The revised grounds of appeal read as under :- "1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs.22,80,241/- made by the Assessing Officer even through the conditions of section 22 of the LT. Act, 1961 were met, therefore, the claim for depreciation was not maintainabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was not maintainable. 5. Learned DR submitted that it is an undisputed fact that assessee had not carried out any business activity during the year. The Assessing Officer asked to explain and justify the claim of depreciation. The Assessing Officer also show caused the assessee, why the income from the rent should not be assessed as income from house property. Assessing Officer also asked to furnish the rent agreement in respect of various premises let out. The assessee submitted the agreements in respect of properties, i.e., 130/24, Faridabad and 143/24, Faridabad only. No evidence or agreements were submitted in respect of remaining properties. Learned DR also pleaded that the CIT (A) had confirmed the assessment of rental income as in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legally defensible in this particular instance. The depreciation should be allowed on the basis of W.D.V. as provided in the books of account in respect of the let out proportion only as per the finding in the case of M/s Lakhani Rubber Udyog Pvt. Ltd. for AY. 1999-00 and 2000-01 where it was decided to be allowed on W.D.V. basis on the rented portion of the building. Therefore, a similar decision is imperative in the case under consideration and therefore, the action of the AO in shifting the income from business income to income from house property is upheld, but he is directed to allow the depreciation on the W.D.V. of the rented portion of the building as per the Income Tax Rules, 1962." Therefore, on the identical fact and circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T (A) has wrongly directed to allow depreciation by holding that even though there was no business activity, assets like plant and machinery had been kept ready for use and depreciation on them ought to have been allowed even for the passive use. Learned DR pleaded to set aside the order of CIT (A). 10. On the other hand, the learned AR submitted that the claim of depreciation of Rs.13,00,683/- was made on the moulds and dies. These assets were leased out. The income from letting out of these moulds and dies is to be assessed as income from other sources. Assessing Officer has assessed the income under the head income from property. It should have been assessed income from other sources, on such income, depreciation is allowed u/s 57(ii) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,135/- which had been added by the assessee himself in computation of total income out of total addition of Rs.23,90,601/-. Assessing Officer computed income from net profit as per P&L account and net from returned income. 13. Learned DR relied on the order of the Assessing Officer. Learned AR relied on the order of the CIT (A). 14. We have heard both the sides. We find that the total disallowance of Rs.23,90,601/- includes five items - (i) out of building repair Rs.1,54,690/-; (ii) out of rate and tax Rs.3,72,933/-; (iii) out of insurance Rs.2,238,963/-; (iv) 10% out of remaining Rs.40,880/- (Rs.4,088/-); and (v) expenses disallowed in computation of income of Rs.15,83,135/-. We also find that the issue regarding expenditure under the h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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