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TMI Blog2018 (5) TMI 1894X X X X Extracts X X X X X X X X Extracts X X X X ..... tinue renting furniture and fixtures to lessee, which has been admitted to be income from business in the preceding assessment year by the authorities below. Following rule of consistency, we do not find any infirmity in the observations of CIT(A) in treating the hiring receipt under the head income from business . Disallowance being bank charges, hiring charges for generator, maintenance charges, security charges and depreciation - HELD THAT:- Income received by assessee from hiring of equipments has to be treated as business income . It is an admitted fact that except for generator, rest of the equipments have been purchased by assessee and form part of block of assets - depreciation claimed by assessee on these equipments would be allowable. In respect of the other items like maintenance charges, security charges, assessee is already claiming standard deduction u/s 24 at 30% which subsumes all such misc. expenses in so far as the property building is concerned under the head income from house property . We cannot appreciate the fact that these charges could be allocated to the rental income earned by assessee against hire of furniture fittings as all the maintenance charges are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purposes of construction of building as well as acquiring furniture aid fittings for the purpose of earning rental income and consistently assessee has been reflecting the said loan in the balance sheet in the preceding A.Ys which has not been disputed by revenue. Further, assessee declared in its hands the rental income received from building as income from house property and rent received from hiring of furniture and fittings as income from business . No reason to interfere with the observations of CIT(A). Accordingly this ground raised by revenue stands dismissed. Difference in the cost of construction - DR submitted that there was a difference in the cost of construction shown by the appellant in the books of accounts and as determined by the DVO - CIT-A deleted addition - HELD THAT:- We agree with the submissions advanced by AR that AO has not found any fault in the bills and vouchers produced by assessee in support of the construction cost but has merely relied upon the DVO s report. There has been neither any instance placed on record regarding any infirmity in the books of accounts nor there is any observations regarding the same by her. No reason to differ with the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as against 'income from house property' (ii) Deleting the disallowances amounting to ₹ 22,85,644/- made on account of bank charges, hiring charges for generator, maintenance charge, security charges and depreciation. (iii) Deleting the disallowance of ₹ 44,14,909/- on account of interest paid. (iv) Deleting the disallowance made on account of salary and staff welfare. (v) Directing the AO to treat the loan of ₹ 2.60 crores as liability of firm, instead of that of the partners and allow interest paid thereon amounting to ₹ 33,59,700/- u/s 24 of the Act. (vi) Deleting the addition of ₹ 1,92,670/- made on account of difference in cost construction. (vii) Directing the AO to allow depreciation of ₹ 14,97,977/- instead of ₹ 9,51,526/- which is actually allowable. The appellant craves the right to add, alter or amend any other ground(s) of appeal. ITA no. 5545/Del/2012 (A.Y.:2009-10) On the facts and circumstances of the case and in law CIT(A) has erred in- (i) Directing the AO to treat the hiring receipts of ₹ 88,94,880/- under the head 'income from business or profession' as against 'income from house propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- and started construction of building, with the intention to let it out on rent. 3.2. Asessee filed its return of income on 11/08/09 declaring total income of ₹ 6,630/-. Ld.AO observed that during the year under consideration assessee earned rental income, interest income and also income from business of trading in road safety equipment. Ld.AO observed that during the year, assessee received rent of ₹ 82,04,148/- but had offered only ₹ 27,26,065/-as income for the year under consideration. 3.3. A survey was carried out on 12/11/10 as an aid to ongoing scrutiny assessment proceedings for the year under consideration. It was observed by survey team that the property, minus furniture and fixtures have been sold during April 2010, and that no business activity of the firm were carried out at the said address. 3.4. During the assessment proceedings assessee submitted that loan of ₹ 2.60 crores was obtained from ICICI bank to finance the project. It was submitted that this loan was provided by the bank subject to the security by including themselves, their respective husbands and the residential property owned by them along with their husband and also a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d reliance upon the order passed by Ld.AO. 5.1. Ld. AR submitted that there were separate agreement for letting off of building and furniture fittings, power equipments for which rents were separately received by assessee. The terms and conditions for both agreements were different and were related to subject of agreement. He submitted that Assessing Officer has merely relied on particular Clause, that too in the Preamble of building rental agreement, which talks of renewal and existence of both agreements. Ld.AR submitted that this Clause was specifically inserted to safeguard interest of assessee. Ld.AR placing reliance on Hon'ble Supreme Court in case of Chennai Properties & Investments Ltd. vs. CIT reported in 373 ITR 673 (2015) (SC), submitted that under the Income Tax Act, income from letting out of property is to be taxed under section 22 and income from hire charges of furniture, equipments etc. is to be taxed either under section 28 or under section 56, depending upon the facts but certainly it cannot be section 22. However in a case where there are composite agreement entered into for the purposes of letting of building and furniture equipments then effort would have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra) is squarely applicable to the facts of the case of the appellant. In view of the above and respectfully following the judgement of the Hon'ble Delhi High Court mentioned above, it is hereby held that the hire charges received by the appellant by hiring of equipments, furniture, fixtures, air conditioning and interior items is to be subjected to tax under the head "business income" and correspondingly, all the expenses claimed by the appellant as a consequence, shall be allowed as legitimate expenses, since, all such expenses are fully vouched and the AO has not pointed out any defect in the books of account of the appellant. Accordingly, the appellant gets a relief of ₹ 17,32,852/- (to be taxed as business income) and ₹ 22,85,644.12 (as related expenses mentioned in para 2.2 of the assessment order). 5.6. Admittedly in preceding Assessment Year as is observed from assessment order passed for Assessment Year 2007-08 placed at page 77-79 in the paper book-II, Ld.A.O. in reassessment proceedings has not disputed the nature of income earned by assessee. Further at page 80 of paper book -II computation for year ending 31/03/11 has been placed, wherein rent receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowable. In respect of the other items like maintenance charges, security charges, assessee is already claiming standard deduction u/s 24 at 30% which subsumes all such misc. expenses in so far as the property building is concerned under the head 'income from house property'. We cannot appreciate the fact that these charges could be allocated to the rental income earned by assessee against hire of furniture fittings as all the maintenance charges are borne by the lessee. In so far as bank charges are concerned, ld.A.O. shall verify if it could be attributed to earning of rental income from hiring of furniture fittings. In the event the bank charges could be attributed to earning of rental income from furniture fittings, the same may be allowed as 'business expenditure'. Assessee is directed to provide all details in respect of the same to the satisfaction of Ld.AO for proper verification as per law. 6.5. We, therefore, modify the findings of Ld.CIT(A) regarding claim of expenditure as discussed above. Accordingly this ground raised by revenue stands partly allowed for statistical purposes. 7. Ground number (iii) This ground has been raised by revenue against deleting the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y both the sides in the light of the records placed before us. 8.4. On perusal of the observations by Ld.CIT(A) in conjectures with the records placed before us, we are of the considered opinion that the rental income earned by assessee from hire of furniture, fittings has been allowed to be treated as 'business expenditure', which do not require to engage any employee since all the maintenance of such furniture, fixtures and fittings are being taken care by lessee as per agreements placed in the paper book. Further it is observed that assessee during the year has earned income from house property and rental income from hire of furniture, fixtures being income from business. Assessee is already claiming standard deduction u/s 24 at 30% which subsumes all such misc. expenses in so far as the property building is concerned under the head 'income from house property'. We cannot appreciate the fact that these charges could be allocated to the rental income earned by assessee against hire of furniture fittings as all the maintenance charges are borne by the lessee. 8.5. Accordingly this ground raised by revenue stands allowed. 9. Ground number (v) This ground has been raised b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of building and has also maintained all the vouchers and bills which were produced before Ld. AO and no fault has been observed by her. 10.2. We have perused the submissions advanced by both the sides in the light of the records placed before us. We agree with the submissions advanced by Ld.AR that Ld. AO has not found any fault in the bills and vouchers produced by assessee in support of the construction cost but has merely relied upon the DVO's report. There has been neither any instance placed on record regarding any infirmity in the books of accounts nor there is any observations regarding the same by her. 10.3. Under such circumstances, we do not find any reason to differ with the observations of Ld. CIT (A) and accordingly the same is upheld. 10.4. Accordingly this ground raised by revenue stands dismissed. 11. Ground number (vii) This ground has been raised by revenue against depreciation being allowed at ₹ 14,97,977/-instead of ₹ 9,51,526/-. Ld.DR placed reliance upon the order of Ld. AO. 11.1. On the contrary Ld.AR placed reliance upon the orders of Ld. CIT (A). 11.2. We have perused the submissions advanced by both the sides in the light of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectly the claim it has already made in the return of income. Therefore, the AO is directed to allow the correct amount of depreciation on furniture and fixtures at ₹ 14,97,977/-)" 11.3. On perusal of the above, we do not find any reason to interfere with the same and accordingly the same is upheld. 11.4. Accordingly this ground raised by revenue stands dismissed. 12. In the result appeal filed by revenue for assessment year 2008-09 stands partly allowed. 13. Assessment year 2009-10 Both the parties submit that issues are identical and stands squarely covered by the decision taken for assessment year 2008- 09. It has been submitted that issues raised herein are similar to ground nos. (i) (ii) (iii) (iv) and (vii) as raised in Assessment Year 2008-09. Both the parties reiterated identical arguments in respect of the grounds herein. We have perused the submissions advanced by both the sides in the light of records placed before us. We observe that since the issues are similar to those raised by Revenue in Assessment Year 2008-09 and that they have been dealt with herein above while deciding grounds for Assessment Year 2008-09, for the sake of brevity the same are n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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