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TMI Blog2016 (2) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be taxed under the head Profits & Gains of Business or Profession. The main object of the company as per the Memorandum of Association also refers to such activities as the main object for which the company is incorporated. As the main object itself shows that the assessee-company has been incorporated for running shopping malls /departmental stores, super markets, shopping arcades, shopping outlets, entertainment, recreation and amusement centre therefore any income earned from such activities has to be taxed under the head profits and gains of business.The assessee is entitled for the claim of depreciation and also brokerage expenses. The AO is directed to allow the same - Decided in favour of assessee Addition on account of notional lease rental income - Held that:- As relying on Reliance Industrial Infrastructure [2009 (1) TMI 4 - BOMBAY HIGH COURT ] we direct the AO to exclude the notional lease rental income from the total income of the assessee - Decided in favour of assessee. Disallowance of interest (a) for giving interest free advances (b) for earning exempt income - Held that:- A perusal of the factual matrix elsewhere shows that the assessee was having s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and brokerage expenses. The detailed explanation filed by the assessee did not find any favour with the AO who proceeded by treating the property lease income as income under the head House Property , denied the claim of depreciation and brokerage expenses and allowed the statutory deduction of 30%. The AO further disallowed the claim of interest expenses holding that the assessee has given interest free advances while it has paid interest on its borrowings. The AO further made disallowance u/s. 14A of the Act. Once again treating a part of the interest expenditure being incurred for earning exempt income and completed the assessment. 4. Aggrieved by this, the assessee carried the matter before the Ld. CIT(A) and reiterated its claim of income to be taxed under the head Profits Gains of Business simultaneously justifying the claim of depreciation and brokerage expenses. However, the Ld. CIT(A) confirmed the findings of the AO so far as this issue is concerned. 4.1. In so far as the claim of interest expenditure is concerned, the Ld. CIT(A) directed to allow the claim proportionately i.e. that portion which is used for earning the business income. In so far as the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the main objective of the company. Therefore, any income earned has to be taxed under the head Income from business . 8.1. In the present case also we find that in A.Y. 2008-09, the AO himself has accepted the nature of business of the assessee as Operation of Mall therefore any income earned by the assessee by the operation of mall has to be taxed under the head Profits Gains of Business or Profession. The main object of the company as per the Memorandum of Association also refers to such activities as the main object for which the company is incorporated. As the main object itself shows that the assessee-company has been incorporated for running shopping malls /departmental stores, super markets, shopping arcades, shopping outlets, entertainment, recreation and amusement centre therefore any income earned from such activities has to be taxed under the head profits and gains of business. This will be in line with the ratio laid down by the Hon ble Supreme Court in the case of Chennai Properties Investment Ltd (supra). We, accordingly set aside the findings of the Ld. CIT(A) and direct the AO to treat the income under the head Profits Gains of Business. 8.2. Hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has been offered to tax. This lease equalization fund is a mere book entry made to comply with the Guidance Note issued by the Institute of Chartered Accountants of India so as to meet the Accounting Standards. Further, even if one accepts the submission on behalf of the Revenue that these guidelines have not been notified by the Central Government for u/s. 145(2) of the Act and, thus, cannot be accepted yet what follows is that the amount credited as a lease equalization fund to the profit and loss account has to be ignored as it is not real income. It is an amount which is completely notional and brought into the books only for complying with the Accounting Standards and has no relevance to determine the amount of net income chargeable to tax. In that view of the matter, the respondent-assessee was completely justified in reducing the amount of ₹ 2.06 crores credited to the profit and loss account as lease equalization fund for the purposes of determining the income chargeable to tax. In these circumstances, we find that question (B) does not give rise to any substantial question of law for our consideration. Hence, not admitted. Respectfully following the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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