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TMI Blog2015 (1) TMI 1396X X X X Extracts X X X X X X X X Extracts X X X X ..... akaurichi Cogen Project and Sivaganga Cogen Project on the ground that the assets were used for trial run - Held that:- The assessee cannot be denied the benefit of depreciation on the ground that the machinery was used for the very short duration for the trial run. It has not been disputed by the Revenue that trial run production was immediately followed by the commercial production. The Hon’ble Punjab & Haryana High Court in the case of CIT v. Piccadily Agro Industries Ltd. [2007 (8) TMI 327 - PUNJAB AND HARYANA HIGH COURT] has held that machinery used in trial run production would be entitled to depreciation. Rental receipts being treated as ‘business income’ - Held that:- A perusal of the records show that the assessee has been receiving rental income from letting out of commercial/business assets. Substantial part of rental income ₹ 33,11,438/- is received from letting out of staff quarters and the remaining rental income is from commercial buildings like industrial shed, corporate office etc. It is a trite law, that any income from exploiting commercial/business asset is a business income. This view is fortified by the judgments rendered in the case of CIT vs. VST Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng loss of ₹ 118,56,41,840/- under normal provisions and book profit of ₹ 35,74,15,022/- under sec.115JB of the Income-tax Act, 1961 (hereinafter referred to as the Act ). The case of assessee was selected for scrutiny and notice under sec. 143(2) of the Act was issued to the assessee on 3.9.2009. During the course of scrutiny assessment, the Assessing Officer made additions/disallowance in the income returned, which, inter alia, include disallowance of depreciation on Sivaganga Beverage Unit; Disallowance of depreciation on three projects viz., (i) Modakurichi Sugar Project, (ii) Modakaurichi Cogen Project, (iii) Sivaganga Cogen Project; Disallowance of interest on discounted bills, rent receipts, and Disallowance under sec.14A of the Act. Aggrieved by the assessment order dated 31/12/2010, the assessee preferred an appeal before the Commissioner of Income-tax(Appeals). The Commissioner of Income-tax (Appeals) vide impugned order upheld the findings of the Assessing Officer with respect to disallowance of depreciation on Sivaganga Beverage Unit. In respect of depreciation on projects, i.e., Modakurichi Sugar Project, Modakaurichi Cogen Project and Sivaganaga Cogen Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) DCIT vs. Yellamma Dasappa Hospital, 290 ITR 353 (Kar.) (ii) CIT vs. Chennai Properties Investments Ltd., 266 ITR 685 (Mad.) (iii) Southern Petro Chemical Ind. Vs. DCIT, 3 SOT 157(Chennai) (iv) ACIT vs. Mohit K. Mehta, 3 ITR(Trib) 580 (Bang.) Controverting the submissions of the Revenue with respect to the findings of the Commissioner of Incometax ( Appeals), the ld. Counsel strongly defended the findings of the First Appellate Authority and prayed for dismissing the appeal of the Revenue. The ld. Counsel in support of his contentions relied on : (i) ACIT vsm Finance Ltd., ITA No.1816/Mds/2012 decided on 21.3.2014 8. We have heard the submissions made by the representatives of both the sides and have perused the orders of the authorities below. We have also examined the decisions on which the representatives of both the sides have placed reliance. The assessee in its appeal has assailed the findings of the Commissioner of Income-tax(Appeals) in respect of depreciation on Sivaganga Beverage Unit. It is an undisputed fact that the assessee has already completed trial run production of beverage unit. It is equally undisputed that in the earlier assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not necessary that the machinery in question should have been actually used in the relevant previous year for the purpose of business and it is sufficient if the same is kept ready for use during the relevant previous year, though not actually used due to circumstances beyond the assessee s control. 4.8 In case of M/s. Swati Synthetics Ltd Vs. ITO supra, the Mumbai Benches of this Tribunal has held that depreciation is allowable on entire block of assets even if some of the assets of the block have not been used. Existence of individual asset in the block of assets itself amounts to use for the purpose of the business. Therefore, after the amended provisions of the Act, the scheme of depreciation on block assets fully supports the claim of depreciation on the entire block irrespective of the fact that an individual asset is used or not for business purpose during the previous year. 4.9 In the case in hand, there is no ambiguity and doubt about the trial run of the Beverages Division and, therefore, the same was ready for commercial production. The assessee has not started or commenced new business but has only established a new Division in his old on-going business. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee during the relevant period received rental income of ₹ 55,20,726/- and offered the same as business income. Rental income includes, income from letting out of staff quarters to its employees and directors, income from letting out of corporation office building, industrial shed etc. The assessee for the past several years has been consistently showing rental income under the head income from business . For the first time in the impugned assessment year, the Assessing Officer objected to treating of rental income as business income. A perusal of the records show that the assessee has been receiving rental income from letting out of commercial/business assets. Substantial part of rental income ₹ 33,11,438/- is received from letting out of staff quarters and the remaining rental income is from commercial buildings like industrial shed, corporate office etc. It is a trite law, that any income from exploiting commercial/business asset is a business income. This view is fortified by the judgments rendered in the case of CIT vs. VST Motors P. Ltd. (supra), Scientific Instruments Co. Ltd. vs. CIT (Supra), CIT vs. Elnet Technologies Ltd. (supra) and the decision of the co- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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