M/S SHOBHANA PROPERTIES & INVESTMENTS PVT LTD,MUMBAI vs. INCOME TAX OFFICER, MUMBAI

This appeal by the assessee is directed against the order of the CIT(Appeals)-6, Mumbai dt. 28/02/2013 for the Asst. Year 2009-10.

2.1 The assessee filed its return of income for Asst. Year 2009-10 on 30/09/2009 declaring income of Rs. 4,52,491/-. The return was processed u/s 143(1) of the income Tax Act, 1961(in short ‘the Act’) and the case was subsequently taken up for scrutiny. The assessment was completed u/s 143(3) of the Act vide order dt. 18/10/2011, wherein the income of the assessee was determined at Rs. 35,24,113/- . The assessee preferred an appeal before the CIT (Appeals)-6, Mumbai who disposed off the assessee’s appeal vide order dt. 28/02/2013, allowing the assessee partial relief.

1) The Learned Income Tax officer has erred and the Learned Commissioner of Income Tax has up held treating Compensation received from the South Indian Bank of Rs.46,84,680/- as rent income & disallowance of Rs.96,258/- as per Rule 8D and disallowances of all expenses debited to Profit & Loss A/c .

2. These explanations and submissions were given to the Learned Income Tax Officer as well as to the Learned Commissioner of Income Tax. The Learned Income Tax Officer & Learned Commissioner of Income Tax has considered your appellant as deemed to be the owner of the premises hence considered the compensation received as Rent Income whereas your appellant has given the premises to the South Indian Bank on lease for a period of 11 months with a further renewal option for the period of 11months, thus the provision of deemed to be the owner u/s 269UA(F) read with section 27(iiib) of the Income Tax Act 1961 doesn't arise. In order to buy peace with the Income Tax Department your Appellant has submitted the revised computation of Total Income bifurcating the Compensation received from the South Indian bank as the Income from House Property & Service Charges, where the Learned Income Tax officer as well as learned

Commissioner of Income Tax has partially accepted the computation by treating the compensation received as Income from House Property & Other sources and not given the allowance of the expenses incurred for the purpose of the business.

3. The Learned Income Tax Officer has erred in proportionately disallowing the expenses of Rs.96,258/- as per new rule 8D which was upheld by the Learned Commissioner of Income Tax. Your appellant has submitted the explanations to the Learned Income Tax Officer & also to the Learned Commissioner of Income Tax that your appellant has invested in the shares out of owned capital held by them to earn tax free income whereas the Loan s from the bank was taken for the business purpose.