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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: HON’BLE SHRI MAHAVIR SINGH & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2014-15 arises out of the order of learned Commissioner of Income Tax (Appeals)-3, Chennai [CIT(A)] dated 04-03-2020 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 16-12-2019. The only ground urged in the appeal is disallowance of business expenditure. 2. The Ld. AR assailed the conclusion of Ld. AO that only 1% of the expenses would be allowable as business expenditure. The ld.
2 - Sr. DR controverted the same and submitted that the assessee was entitled for statutory deduction only. Having heard rival submissions, our adjudication to the subject matter of appeal would be as under.
The Registry has noted delay of 103 days in the appeal. However, considering the fact that impugned order was passed on 04.03.2020 which was followed by lockdown situation arising out of Covid-19 pandemic, we condone the delay and admit the appeal for adjudication on merits.
The assessee received rental income and allied charges which was offered and accepted under the head Income from House Property. Under this head, the assessee is allowed statutory deduction of 30% for deemed expenditure irrespective of actual expenditure incurred by the assessee towards properties so rented out. The other income was merely 1% of total receipts of the assessee. The point of dispute arose due to the fact that the assessee claimed business expenditure of Rs.36.21 Lacs which include depreciation of Rs.4.31 Lacs. In the opinion of Ld. AO, the same could not be allowed to the assessee. The assessee defended its stand, inter-alia, by submitting that renting out of property was business activity. To maintain the company, overhead expenditure is to incurred. However, Ld. AO held that the assessee would be entitled only for 1% of expenditure thus claimed. The stand of Ld.AO, upon confirmation by Ld. CIT(A), is in further appeal before us. Our findings and Adjudication 5. This is undisputed fact that majority of the income is assessed under the head Income from House Property wherein the assessee
3 - is entitled for statutory deduction of 30% and other specified deductions irrespective of actual expenditure incurred towards the property. At the same time, to main corporate personality, the assessee is required to incur administrative costs, salaries and professional charges etc. Further, depreciation allowance is statutory deduction which is allowable to the assessee. Considering the peculiar facts of the case, wed direct Ld. AO to allow 50% of the expenditure as claimed by the assessee as business expenditure instead of 1% as allowed from interest income. The interest income shall continue to be assessed under the head Income from other sources. The business expenditure, to the tune of 50% shall be disallowed and added back to the assessee’s income. The appeal stands partly allowed in terms of our above order. 6.
Order pronounced on 09th June, 2022.