ARMASOL PROPERTIES PVT. LTD. ,KOLKATA vs. ITO,WARD-12(3), KOLKATA. , KOLKATA

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ITA 772/KOL/2023Status: DisposedITAT Kolkata05 January 2024AY 2016-17Bench: SRI RAJESH KUMAR, ACCOUNTANT MEMBER & SONJOY SARMA (Judicial Member)4 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the authorities below failed to appreciate that the assessee, being a company, needs to incur expenses to keep its office running. The expenses claimed under the head 'business' should be allowed to be set off against house property income.

What were the facts?

The assessee, a private limited company engaged in property development and leasing, incurred expenses for maintaining its office. The Assessing Officer disallowed a significant portion of these expenses, arguing they were not related to house property income. The CIT(A) upheld this disallowance.

What were the issues?

Whether expenses incurred for maintaining an office by a company engaged in property business can be set off against house property income, even if not directly attributable to a specific property.

Which sections of the Income-tax Act were involved?

Section 24(a)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA

Before: SRI RAJESH KUMAR & SONJOY SARMA

order

: January 5th, 2024 ORDER

Per Rajesh Kumar, Accountant Member:

1.

This appeal preferred by the assessee is against the order of Learned Commissioner of Income-tax (Appeals)- NFAC, Delhi [hereinafter referred to Ld. ‘CIT(A)’] dated 30.06.2023 for the Assessment Year (in short ‘AY’) 2016-17.

I.T.A. No.: 772/KOL/2023 Assessment Year: 2016-17 Armasol Properties Pvt. Ltd.

2.

Ground no. 1 is general in nature and does not require a specific adjudication.

3.

The issues raised in ground no. 2 is against the confirmation of disallowance of brought forward losses of Rs. 3,70,075/- which was not pressed at the time of hearing and accordingly the same is dismissed as not pressed.

4.

The issue raised in ground no. 3 is against the confirmation of disallowance of Rs. 5,33,759/- by ld. CIT(A) as made by the AO in respect of expenses charged in the profit and loss account under various heads.

5.

The facts in brief are that the assessee is a private limited company and derives income from business as well as from house property. During the year the assessee did not have any business income albeit it needs to maintain its office and minimum staff in order to keep the office in a running condition. The assessee has only income from house property. During the year the assessee returned loss from business of Rs. 5,66,441/- and income from house property of Rs. 4,71,653/- thereby the gross total income worked out to be negative i.e. Rs. (-)94,788/-. The Assessing Officer (in short ld. 'AO') during the course of assessment proceedings observed that the house property is the only source of income of the assessee and assessee has availed standard deduction to the tune of 30% and thus offered net income from house property Rs. 4,71,653/-. The AO observed that the assessee has also claimed certain expenses in the profit and loss account which do not relate to the house property income and accordingly

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