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TMI Blog2018 (6) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... interest income based on netting method - thus not sustainable. Administrative expenditure disallowance u/s.14A - Held that:- Taken as average value of opening and closing value of investments leads to administrative expenditure disallowance of ₹ 1,76,352/- only as against that of ₹ 2,17,750/- taken in the course of assessment. We therefore modify the instant disallowance figure to ₹ 1,76,352/- only. Rent received as treated as income from house property than from "other" sources - Held that:- Relevant rent agreement has been correctly appreciated in the course of lower appellate proceedings - receipts as rent stand accepted as rent income in preceding assessment years - thus CIT(A) has rightly held the assessee’s rent sums of ₹ 147,27,864/- as income from house property - Decided in favor of assessee. - ITA No. 961/Kol/2017, C.O. No. 54/Kol/2017 - - - Dated:- 31-5-2018 - Shri S. S. Godara, Judicial Member And Dr. A. L. Saini, Accountant Member By Assessee : Shri Dev Kumar Kothari, FCA By Revenue : Shri S. Dasgsupta, Addl. CIT-DR ORDER Per S. S. Godara, Judicial Member:- This Revenue s appeal and assessee s Cross Objection for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments qua this former substantive ground in principle. 5. We notice at this stage that assessee s Cross Objection CO 54/Kol/2017 raises its latter substantive ground in seeking to restrict impugned disallowance @ 1% of the impugned dividend income. We are unable to accept the same since the disallowance in question has to be computed as per prescribed formula under Rule 8D of Income Tax Rules w.e.f AY 2008-09. The assessee s instant plea is therefore rejected. 6. Next question that arises for our apt adjudication relates to computation of the impugned disallowance. There is no material on record which could dispute that assessee has paid security transaction tax of ₹ 16,257/- in the nature of direct expenditure to be disallowed under Rule 8D(2)(i) of Income Tax Rule. The same is accordingly confirmed. Now comes proportionate interest expenditure disallowance of ₹ 11,70,790/-. We notice from the case records that assessee had derived interest income of ₹ 1.12 crores as against interest expenditure of ₹ 64.10 lakhs. We quote hon'ble Gujarat high court s decision in DCIT vs. Nirma Credit and Capital Pvt Ltd. (2018) 300 CTR 286 (Guj) holding that such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of expenditure and depreciation on cost of building (construction portion) may kindly be allowed. The company is the owner of two immovable properties, both of which were given of rent as under duly disclosed in the return of income. a) Salt Lake property at an annual rent of ₹ 146.07 lakhs b) Commercial property at an annual rent of ₹ 1.20 lakhs. Facts and submissions are summarize below: Salt Lake property: assessee company had purchased one office space in Block EP and GP, Sector V of Bidhan Nagra vide agreement dated 04.102007 with South City parivar Pvt Lt., Full consideration was paid in earlier years and possession was granted by South City Projects (Kolkata) Ltd on 09.07.2009. Since then assessee is owner of property and has all rights and privileges and obligations in respect of the same as an owner. Therefore, we became the beneficial and bona fide owner of the said property as per meaning u/s. 2(47) of IT Act. There has been complete performance on our part. We have control over property as an owner would have. Registration would be completed as and when possible. In such circumstances we are owner for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompute rental income under head income form house property and allow all eligible deductions. In case any income is not held not assessable under head house property, then kindly direct the AO to allow expenses and depreciation on construction cost. A statement showing bifurcation of cost of construction and depreciation allowable is enclosed accordingly we request you to kindly allow depreciation on cost of construction @ 10%. Findings and decision about second issue: From related documents it is seen that assessee made full payment and took over possession of property on 09.07.2009 (page 9 of paper book possession letter). The conveyance was not register in favour of assessee due to some legal formalities. Therefore to meet the requirement of the tenant, the Registered owner of property, the legal owner that is the vendor namely M/s South City Projects (Kolkata) was appointed and authorized to act as agent of Assessee to facilitate the entering into tenancy agreement with tenant (Unity Tech Wireless (Kolkata) Ltd. The said agent acted as agent and let out property to the tenant and passed over entire rent to assessee/. Tax has also been deducted u/s.194I, cr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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