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TMI Blog2019 (1) TMI 988X X X X Extracts X X X X X X X X Extracts X X X X ..... ake of convenience and brevity. First we take up Assessee's Appeal ITA No. 8905/Mum/2010 for Assessment Year [AY] 2006-07 which contest the order of Ld. Commissioner of Income Tax (Appeals)-7, Mumbai, [CIT(A)], Appeal No.CIT(A)-7/DCIT.3(3)/IT- 444/09-10 dated 05/10/2010 by raising the following Grounds of Appeal:- 1) The learned Commissioner of Income Tax (Appeals) erred in confirming the disallowance of the carry forward of the Business loss as claimed of Rs. 31,26,440/- 2) The learned Commissioner of Income Tax (Appeals) erred in confirming the erroneous conclusion arrived at by the Assessing Office that the expenses claimed by Your Petitioner were not allowable as business expenses since no business activity was carried out and the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which no income / receipts were reflected. Besides depreciation, the assessee claimed various administrative expenditure aggregating to Rs. 16.28 Lacs, the details of which have already been extracted at para 3 of the quantum assessment order. The assessee reflected income of Rs. 0.54 Lacs in the shape of dividend / interest / liabilities not payable out of which dividend of Rs. 0.47 Lacs was claimed as exempt. In this manner, Business Loss was computed by the assessee as Rs. 31.26 Lacs which was stated to be carried forward for set-off in subsequent years. However, the aforesaid facts led the Ld. AO to reach a conclusion that no business activity was being carried out by the assessee during impugned AY and therefore, the various expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther words, the office premises have been shown as business assets. The aforesaid office premises, prima facie, have been used by three sister concerns of the assessee and it is undisputed fact that the assessee has not reflected any rental income / receipts against the same. The perusal of financial statements / material on record reveal that the assessee has received interest free security deposit of Rs. 637.52 Lacs for the usage of the premises. The Ld. AO came to the conclusion that no business activities have been carried out by the assessee during impugned AY and therefore, the expenditure including depreciation as claimed by the assessee could not be allowed. It has also been concluded that rental income / receipts were assessable un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liabilities not payable, prima-facie, seems to be of the nature covered by Section 41(1) and therefore assessable as Business Income. The interest on tax refund shall be assessable as Income from Other Sources. Whatever stand is adopted by lower authorities with respect to office premises, the expenditure found necessary to maintain the corporate personality / identity shall be allowable under the head Business Income. The deductibility of other expenditure including depreciation shall be ascertained at the threshold of stand of lower authorities with respect to fact that whether the income from office premises was assessable as Business Income or Income from House Property. With these directions, the appeal stands allowed for statistical p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me and consequently, the impugned disallowance of depreciation, society maintenance expenses was deleted. The disallowance u/s 36(1)(iii) was deleted on the premise that the loan was obtained to purchase the premises and hence business expenditure allowable to the assessee. Aggrieved by the aforesaid conclusions, the revenue is in further appeal before us. 7. Since, we have restored the matter for AY 2006-07 to the file of Ld. AO for re-adjudication with certain directions, with a view to maintain consistency, the matter for this year also stands remitted back to the file of Ld. AO for fresh adjudication on similar lines. Needless to add that a consistent view shall be adopted by the revenue to frame the assessment for this year also. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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