In order to be covered under section 22, it is sine qua non that the assessee must be the owner of the house property as per section 27 read with section 269UA(f). In the instant case, the assessee is not the owner of the property. It cannot also be considered as deemed owner of house property within the meaning of section 27 because it took property on lease for a period of three years. Since the assessee was neither the owner nor the deemed owner of the house property, applying the provisions of section 22, the annual value of such property could not have been charged to tax under the head ‘Income from house property’. As it was a case of simple subletting of property, not facilitating the carrying on of the assessee’s business in any manner, the rental income so realized by the assessee could not be considered as ‘Business income’. In such a situation, the same should be included under the head ‘Income from other sources’. The impugned order on this issue is set aside and the matter is restored to the file of the Assessing Officer for doing the needful accordingly.
Undisputedly the office of the Assessing Officer who passed the assessment orders is located in Delhi, over which the Delhi Benches of the Tribunal has jurisdiction. The order under section 127 of the Act was passed by the ld. Commissioner of Income-tax on 12.8.2011 w.e.f. 23.8.2011, which was passed after passing the assessment order and even after filing of the first appeal.
Interest on FD and from bank on surplus funds – Even as admitted by the assessee during hearing, the same is only on surplus funds for the time being and, therefore, cannot be said to be derived from the assessee’s business. The same stands rightly excluded. Sales tax refund and excise duty draw back -As such, section 10B(1) read with section 10B(4) does not admit of receipt, the immediate source of which is not the economic activity itself, but a fiscal incentive, as being profit derived therefrom. Thus, the assessee’s claim in respect of aforesaid items was to be rejected.
Insofar as ground (a) raised by the Assessing Officer that loss on sale of investment of Rs. 6,15,66,000, is a capital loss and is not allowable as deduction, is untenable in law in view of the judgment of Hon’ble Supreme Court and High Court. The Bombay High Court in Bank of Baroda (supra), after following the judgment of Hon’ble Supreme Court in UCO Bank (supra), held that the depreciation in value of investments held by a Bank is allowable as deduction as business loss.
As per DRP Rules Rule, objections, if any may be filed in person or through his agent within the specified period in Form 35A. There is no prescription that the objection should be filed by assessee in person. An agent is permitted to file the objection, but in the case of company whether the agent should be a Managing Director/ Director, Chartered Accountant or any other person has not been prescribed under the Rules.
In the instant case, the contention of the A.R of the assessee is that the impugned order passed u/s 143(3) by the Assessing Officer is not an order which is passed in pursuance of the directions of the DRP. However, if the above contention of the assessee is taken as correct then it implies that the assessee is not entitled to file directly appeal before the Tribunal in pursuance to such an order of the Assessing Officer passed u/s 143(3) of the Act. We find that the DRP has categorically stated that it has no jurisdiction to pass any direction in pursuance to the belated objections filed by the assessee against the draft order of the Assessing Officer and in fact, the Panel gave no direction in respect of objections of the assessee.
In the instant case, the business should be construed set up as the assessee obtained necessary approvals, recruited requisite personal, procured requisite machinery etc. In fact, the assessee has successfully identified certain mineral rich blocks too. As analyzed by the jurisdictional High Court in the case of Western India Vegetable Products Ltd. (supra), the expression ‘setting up’ means ‘to place on foot’ or to establish or ‘to ready to commence’. Therefore, we find no difficulty in coming to the conclusion that the assessee’s business is set up in this year and in fact commenced too. Thus the expenditure incurred after the set up constitutes allowable expenditure.
The other objection taken by the TPO for rejecting CUP method was that there was difference in the dates of comparable transactions. The ld. DR brought to our notice the transactions entered into by the assessee with its AE on 27.11.2004 which was compared by the assessee with transactions entered with Non-AEs on 10.5.2004 & 12.3.2005. It can be observed that the comparison is made by the assessee with the transactions entered into in the same year with Non-AEs.
At the time of registration proceedings u/s 12A r.w. section 12AA of the Act, the CIT is statutorily required to examine and satisfy himself as to the genuineness of the activities of the Trust or institution, carried on, in consonance with its objects. The objects of the trust or institution must conform to the definition of ‘Charitable purpose’ as defined u/s 2(15) of the Act.
As regards the year of allowability, the claim has to be allowed on the basis of restatement of the liability on the balance-sheet date as held by the hon’ble Supreme Court in the case of Woodward Governor India (P.) Ltd. (supra). Thus the claim of the assessee is allowable. In case there is gain in a year and the assessee has not offered it to tax, the Revenue is free to take action under law. In these years, admittedly there is loss which is allowable as deduction.
