Case Number: ITA 5912/DEL/2019
Appellant: DCIT Circle 27(1), New Delhi
Respondent: U & I Business Services Pvt. Ltd., Delhi
Assessment Year: 2014-15
Order Type: Final Tribunal Order
Date of Order: 2023-10-25
Pronounced On: 2023-10-25
Case Filed On: 2019-07-08
This appeal was filed by the Revenue against the order dated 10.04.2019 of the learned Commissioner of Income-Tax (Appeals)-19, New Delhi for the assessment year 2014-15. The appeal challenged the deletion of disallowances made by the Assessing Officer (AO).
The effective grounds raised by the Revenue were:
The assessee, a corporate entity engaged in the business of leasing property, filed its return of income on 30.10.2014 declaring an income of Rs.3,95,29,220. During assessment proceedings, the AO observed that the rental income of Rs.4,58,97,039 received from letting out a property to Reliance Retail Ltd. was offered under the head “income from house property”.
The AO, however, assessed this income as “business income” based on the assessee’s Memorandum of Association, which indicated that rental income should be treated as business income.
The assessee contested this assessment before the learned First Appellate Authority. The Commissioner of Income-Tax (Appeals) accepted the assessee’s claim and assessed the rental income as “income from house property”, allowing the deduction under Section 24(a) of the Income-Tax Act.
The Tribunal considered the rival submissions and the material on record. The Tribunal observed that the assessee had two properties: one at Sector-32, Gurgaon, let out as a business centre with additional services, and the other at Sector-29, Gurgaon, let out to Reliance Retail Ltd. without any additional services. The rental income from the latter was consistently assessed as income from house property in previous years.
Therefore, the Tribunal upheld the decision of the CIT(A) in treating the rental income as income from house property and allowing the deduction under Section 24(a).
During the assessment proceedings, the AO noticed that the assessee had paid rent of Rs.60,00,000 to Shri Harbans Kohli and Smt. Chanchal Rani Kohli. The AO disallowed this expense, believing that the premises were not used for business purposes.
The CIT(A) verified that one of the properties taken on rent, located at F-41, NDSE Part-I, was used as the registered office and business premises of the assessee. The rent paid for this property, amounting to Rs.48,00,000, was allowed as a business expense.
The Tribunal found that the CIT(A) had recorded a factual finding that one of the properties was used for business purposes, which the Revenue could not controvert. Hence, the Tribunal upheld the CIT(A)’s decision to allow the deduction of Rs.48,00,000 as business expenses.
Order: The appeal filed by the Revenue is dismissed.
Pronounced on: 25th October 2023
Vice-President: Saktijit Dey
Accountant Member: Dr. B.R.R. Kumar
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar, ITAT, New Delhi
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