9911796707
TMI Blog2014 (3) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... allowing deduction u/s. 24(a). 3. On this issue AO noted that the assessee had disclosed income from house property of Rs. 104,887,980/- and claimed deduction u/s. 24(1) of 30% thereof amounting to Rs. 3,14,66,394/-. AO noted that assessee's firm was formed on 25.3.2002 and consisted of two corporate members and one trust of DLF Group. That as per Clause 8-A of the Tax Audit Report business of the assessee was trading of shares whereas as per the profit and loss account the assessee's main source of income was on account of rent receipt. On query in this regard, assessee submitted as under:- "The firm has received rental income on the plot admeasuring about 0.79 hectares (i.e. about 1.95 acres) situated on Gulmohar Marg, N-Block, Phase- I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) noted that observation of the AO regarding Column 8(a) in Tax Audit Report is done without proper appreciation of facts. Ld. CIT(A) further noted that it is not clear from the assessment order as to how the AO had come to the conclusion that rent received by the assessee is disproportionate of the value of the house property. He observed that it is not the AO's case that assessee has received rent from sister concern nor he was of the view that the rent receipt is disproportionate to market rent. Ld. CIT(A) observed that rental income needs to be taxed as income from house property whether such rental income is high or low. Ld. CIT(A) concluded as under:- "Considering the fact that the appellant has been consistently showing this rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax proceedings. She further claimed that assessee has itself accepted that the property is a commercial property. hence, she claimed that the income in this regard cannot be treated as income from house property. 6.1 Ld. Counsel of the assessee on the other hand relied upon the order of the Ld. CIT(A). He submitted that as per the Income Tax Act the income from house property has to be taxed as income from house property irrespective of the fact that the property is commercial property or otherwise. He submitted that there is no distinction between commercial property or other property in the Income Tax Act. In this regard, he referred to the provisions of section 22 & 23 of the I.T. Act. He further submitted that the AO's pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of rental income is to be disallowed. We agree with the Ld. Counsel of the assessee that the Income Tax Act does not make any distinction between commercial property and other property for the classification of income from house property. In these circumstances, nothing has been brought on record by the AO to show that the income returned as house property is actually income from business. 7.2 In this regard, Ld. Counsel of the assessee has also submitted that if the rental income is treated as income from house property and profession, then assessee would be entitled to depreciation on building of Rs. 20.24 crores. This would result in proportionate reduction in the income earned in this regard. 7.3 Hence, we agree that there is no lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usively for the purpose of earning such income. 10. On this issue AO noted that assessee has also declared income from other sources, against which expenses of Rs. 5,24,765/- has been claimed out of which the assessee has disallowed a sum of Rs. 3,10,289/-. AO opined that assessee has no ground to claim deduction of Rs. 2,14,476/- out of income from other sources, consequently the same was disallowed. 11. Upon assessee's appeal Ld. CIT(A) restricted the disallowance to 50% by holding as under:- "The appellant has shown Rs. 29,76,582/- as income under the head income from other sources and this consists of interest received of Rs. 29,56,629/- and miscellaneous income of Rs. 20,223/-. Against this income, the appellant has claimed an expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on legal and professional charges, service charge on office maintenance, conveyance expenses, salary paid other expenses totaling to Rs. 524,765/-. Out of this assessee has himself disallowed Rs. 310,289/- u/s. 14A and only the balance of Rs. 214,476/- was claimed. On this claim Ld. CIT(A) has further disallowed 50% against which the Ld. Counsel of the assessee submitted that the assessee is not in appeal. Hence, Ld. Counsel of the assessee submitted that the Ld. CIT(A)'s order is reasonable and fair and should be sustained. 14. We have heard both the counsel and perused the records. We find that in the background of the facts and circumstances narrated above, assessee has incurred expenditure of Rs. 524,765/- in earning income from other ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
