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TMI Blog2012 (12) TMI 750X X X X Extracts X X X X X X X X Extracts X X X X ..... e recovery goes to reduce the staff welfare expenses in the hands of the assessee-company. The rent recovery made from the employees is not an independent income or a different source of income. The assessee is providing residential quarters to the employees against which a nominal rent is recovered from them. The recovery ultimately reduces the cost in the hands of the assessee. Therefore, the recovery is in the nature of business income. This is because it reduces the business expenditure - rent recoveries as business income in the hands of the assessee company – in favour of assessee. Recovery of pay for notice period and other recoveries from employees for certain facilities like telephone calls and similar utilities,these recoveries ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-07. The appeals arise out of the orders passed by the Commissioner of Income-tax (Appeals)-V at Chennai, dated 15-9-2010, 22-9-2010 and 29-9-2010. The appeals arise out of the assessments completed under section 143(3) of the Income-tax Act, 1961. 2. Smt. Pushya Sitaraman, the learned Senior Advocate alongwith Smt. G.Vardini, Advocate, appeared for the assessee and argued the case. Dr. Sibendu Moharana, the learned Commissioner of Income-tax, appeared for the Revenue. 3. First we will consider the appeals filed by the assessee. 4. The first issue raised in the appeals filed by the assessee is the question of treating the interest income, whether as business income or as income from other sources. This issue is raised for all the thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the employee-tenants as income from other sources and not as income from business. 7. The nature of the recovery made from the employees is that the recovery goes to reduce the staff welfare expenses in the hands of the assessee-company. The rent recovery made from the employees is not an independent income or a different source of income. The assessee is providing residential quarters to the employees against which a nominal rent is recovered from them. The recovery ultimately reduces the cost in the hands of the assessee. Therefore, the recovery is in the nature of business income. This is because it reduces the business expenditure. The lower authorities are not justified in treating it as income from other sources. The above propositio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... These amounts represented the various recoveries made from the employees against telephone calls and similar utilities. It also included the amounts recovered from outgoing employees towards notice period pay. While considering the appeals filed by the assessee, we have already held that these recoveries go to reduce the expenses in the hands of the assessee and accordingly partake the character of business income. We find, therefore, that the Commissioner of Income-tax(Appeals) is justified in holding so. The relevant grounds are accordingly dismissed. 12. The second ground raised for the assessment year 2001-02 is that the Commissioner of Income-tax(Appeals) has erred in directing the Assessing Officer to deduct the expenditure incurre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax(Appeals) has erred in directing the Assessing Officer to allow depreciation of Rs. 5,55,73,965/- as per the chart given by the assessee in its written representation. It is the case of the Revenue that the assessee has not produced any evidence by itself, but only provided a working of the depreciation, which has been accepted by the Commissioner of Income-tax(Appeals) without proper verification. It is also the case of the Revenue that the Commissioner of Incometax( Appeals) has violated Rule 46A. 17. After considering the issue in great detail, we find that the matter needs to be re-examined by the Assessing Officer in the light of the details available in the hands of the assessee. The assessee is directed to produce the neces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax(Appeals) on this point is set aside and the finding of the assessing authority is restored. Accordingly, the interest income shall be treated as income from other sources. This issue is decided in favour of the Revenue. 20. The appeal filed by the Revenue for the assessment year 2006-07 is partly allowed. 21. Next we will consider the appeal filed by the Revenue for the assessment year 2005-06 in ITA No.2214(Mds)/2010. 22. The first issue raised by the Revenue is regarding depreciation allowance. Following our decision for the assessment year 2006-07, the issue is remitted back to the Assessing Officer for adjudicating the issue after examining the relevant materials afresh. The issue is remanded back to the Assessing Officer. 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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