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TMI Blog2014 (3) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... er allowable under Section 36(1)(ii)or 22. (4)The learned CIT(A) further erred in this connection in holding that the loan Rs. 321894.14 has not been utilised by the Appellant for its construction activities. (5)The learned AO erred in levying interest under Section 234B and 234C. (6)The Appellant craves leave to add to and/or amend and/or delete and/or modify and/or alter the aforesaid grounds of appeal as and when the occasion demands. (7).All the aforesaid grounds of appeal are independent in the alternative & without prejudice to one another." ITA/24/Mum/2011-AY.2003-04 Grounds of appeal read as under for the year under appeal: "(1) The learned Commissioner of Income Tax (Appeals) [CIT(A)] erred in confirming the assessment of the receipts Rs.635220/-from Mandvi Bank as income from house property as against business income offered by the Appellant. (2) The learned CIT(A) further erred in this connection in impliedly disallowing expenses Rs.7, 42, 088.50claimed by the Appellant as deductible for earning the aforesaid receipts. (3).The learned CIT(A) erred in affirming the disallowance of interest on loan 5, 09, 450/- (5, 04, 188+5262)and secured loan Rs.29, 64, 360/- re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m/2011-AY.2002-03: 2. First ground of appeal is about the assessment of the receipts Rs.7, 96, 710/-from Mandvi Bank as income from house property as against business income offered by the assessee.During the assessment proceedings AO found that during the year under appeal assessee had constructed a building consisting of several commercial and industrial units at Shree Ganesh Industrial house, Ghatla Village, Chembur, Mumbai comprising 67 units, out of which 9 units remained unsold as on 31.02.2002. AO found that out of the unsold nine units six units were located in the basement and one each on the ground, first and second floor respectively which were reflected by the assessee in its books of accounts as stock in trade, that the assessee had credited to Profit & Loss Account incomes under the heads 'godown-rent' and 'maintenance-receipts', that against the said income the assessee had debited a number of expenses and has arrived at profit of Rs.5, 38, 940/-, that profit declared by it was set-off against the brought-forward business losses of earlier years and net income of Rs.87, 672/- was declared in the return filed.AO further found that the assessee had dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that interest, amounting to Rs.4, 19, 453/- was debited to the P & L a/c.by the assessee.He held that instead of giving an interest free deposit, the Licencee-MCB, had given an interest bearing loan to the assessee company, that loan taken by the asessee company had not been utilized by it in its construction activities, that interest of Rs. 4, 19, 453/- could not be allowed as a deduction either u/s.36(1)(iii) or 24(b) of the Act. 3.Against the order passed by the AO u/s.144 of the Act, assessee preferred an appeal before the First Appellate Authority(FAA).After perusing the leave & licence agreement, he held that the agreement was in nature of rent of lease and not licence, that even though the words leave and licence were used in the agreement, that the rental income received by the assessee had direct nexus to the house property.He relied upon the cases M/s. Shambu Investment(249ITR47), M/s. Bhaktawar Construction P.Ltd.(162ITR452)East India Housing and land Development Trust (42 ITR49), Chugamdas & Co.(55 ITR 17)., S. G. Mercantile Corpn.(P) Ltd(83ITR700), S.B (House & land)Pvt.Ltd(119ITR785)D. R. Puttana Sons (P)Ltd.(162ITR 468), N. L.Mehta Cinema Enter - prises (P) ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnish any detail.AO finalised the assessment u/s. 144 of the Act.He held that income offered by the assessee under the head business income was to be assessed as income from house property, that interest paid by it was not allowable under section 24 or 36 of the Act, that other incomes earned by it was to be assessed under the head income other sources. In the appellate proceedings, FAA upheld the order of the AO, as he had done in the earlier year. ITA/22/Mum/2011-AY.2004-05: 5.For the year under appeal, facts and circumstances were same as of earlier two AYs, except that the assessment was not framed u/s.144 of the Act.AO had considered the submissions of the assessee, but he arrived at the same conclusion as that of earlier AYs.In the appellate proceedings , FAA upheld the order of the AO. 6.Before us, Authorised Representative (AR) submitted that assessee was engaged in the business of developing industrial estates, that it had sold industrial galas, that out of none unsold galas one was let out to Bank, that it had taken a loan from the Bank and interest was paid accordingly, that income earned by the assessee was rightly disclosed as income from house business in the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X
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