ITO 8(1)3, MUMBAI vs. ENDOVASCULAR THERAPEUTICS INDIA P. LTD, MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद�य सद�य राजे�� राजे�� केकेकेके अनुसार अनुसार PER RAJENDRA, AM- लेखा लेखा लेखा सद�य सद�य राजे�� राजे�� अनुसार अनुसार Challenging the order dated 18.10.2010 the Assessing Officer (AO) has filed present appeal. Assessee-company, engaged in the business of renting out office premises, filed its return of income on 29.11.2006, declaring total loss of Rs.26.60 lacs.The AO completed the assessment u/s.143(3) of the Act on 28.11.2008 determining the income of the assessee at Rs.9.15 lacs. The effective ground of appeal is about the direction given to the AO to allow the business loss Rs.36.50 lacs. 2.During the assessment proceedings the AO found that the assessee had shown receipt of Rs.9, 750/- as sale proceeds,other income of Rs.13.61 lacs; consisting of rent receipts-Rs.11.16 lacs, interest –Rs.2,159/-, sales tax refund-Rs.18,080/- and recovery of bad debts of Rs.2.25 lacs. The assessee had claimed expenses of Rs.44.51 lacs.Vide his order sheet noting dated 10.10.2008, AO asked the assessee to explain why rent receipt should not be treated as ‘income from house property’ and the expenditure claimed in P&L account should not be disallowed since it was not carrying out any business. In its reply, the assessee filed a revised computation showing rental income as income from house property and claimed business loss of Rs.36.54 lacs. As per the AO assessee did not file any explanation for filing revised computation. The AO held that business loss claimed by it could not be accepted, that it was not conducting any business activity during the year under consideration, that it had not sold any item or had made any purchase during the year, that it had claimed various expenses.He aasessed the income under the head ‘income from other sources’. 3.Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA).After considering the submission of the assessee and the assessment order, he held that the income received by the assessee from letting out of property was to be treated as ‘income from house property’, that same could not be treated as ‘business income’.Relying upon the decisions of Shambhu Investment (266 ITR 143) and Chennai Property (266 ITR 685), the FAA upheld the order of the AO. He further held that there was a distinction between a lull in

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