Expense on Let out Property not allowable as Business Expense if income offered under House Property

DCIT Vs Egberts India Pvt. Ltd. (ITAT Chennai)

From the facts, it emerges that the property at Anna Nagar has been let out by the assessee and the rental income has been offered and assessed as Income from House Property. Under this head, the assessee is entitled to claim statutory deduction of 30% and interest expenditure irrespective of actual expenditure incurred by the assessee. However, it emerges that besides 30% deduction, the assessee is claiming actual expenditure incurred on Anna Nagar property as business expenditure which is not permissible. The assessee is entitled for those expenditure which fulfil the tests of Sec.37(1). Therefore, on the facts and circumstances of the case, we set aside the impugned order and restore the matter back to the file of Ld. AO with a direction to the assessee to bifurcate the business expenditure. The expenditure incurred on Anna Nagar property would not be allowable expenditure as Business expense whereas other expenditure incurred for business purposes and to maintain corporate personality would be admissible expenditure.

FULL TEXT OF THE ORDER OF ITAT CHENNAI

1. Aforesaid appeal by Revenue for Assessment Year (AY) 2010-11 arises out of the order of learned Commissioner of Income Tax (Appeals)-6, Chennai [CIT(A)] dated 15-09-2017 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 15-03-2013. The grounds raised by the Revenue are as under:

The Order of the learned Commissioner of Income Tax (Appeals) is contrary to the Law and facts of the case.

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