Directi Internet Solutions Pvt. Ltd. Vs ITO (ITAT Mumbai)
The case of Directi Internet Solutions Pvt. Ltd. vs. Income Tax Officer (ITAT Mumbai) revolves around the taxation treatment of rental income and depreciation claimed by the assessee company for the assessment years 2013-14 and 2014-15. Here’s a detailed summary of the case:
Background: Directi Internet Solutions Pvt. Ltd., engaged in IT-enabled services and business support, purchased floors in a building named “Directi Plex Acme Tech Park” through agreements in 2005 and 2010. A portion of the building was leased to Media.net Software Services (India) Pvt. Ltd. under a leave and license agreement for 15 months. The agreement stipulated that the lessee would make alterations to the building at their own expense and leave non-removable fixtures upon vacating the premises.
Assessment Year 2013-14: The company claimed depreciation on the building for the period it was leased out, arguing that it was used for business purposes. However, the Assessing Officer disallowed the depreciation, treating the income as “income from house property.” The Commissioner of Income Tax (Appeals) upheld this decision.
Assessment Year 2014-15: Similarly, for this assessment year, the company treated the rental income as business income and claimed depreciation on the building. However, the Assessing Officer again treated the rental income as “income from house property” and disallowed the depreciation claimed.
