M/s. Kenton Leisure Services, P. Ltd. Vs. DCIT (ITAT Cochin) – It was held that lease rental income arising from agreements for letting on lease hostel premises along with provision and maintenance of various facilities and amenities would be taxable under the head ‘Income from Business’ as against ‘Income from House Property’.The characterisation of lease rental income as ‘Income from Business’ comes as a relief to taxpayers who lease out property along with provision of facilities / amenities. However, this issue is fact specific and it would be important for taxpayers to bear the above principles in mind while determining the taxability of such revenue streams.
It is the purpose or the proximity to the purpose, which would determine the character of the asset and, thus, that of the income arising there-from and, consequently, its assessability under the Act, going on to hold that where the amount was deposited in the bank to obtain a letter of credit for purchase of a capital asset (machinery), the interest thereon would only be a capital receipt, which shall go to reduce the cost of the relevant capital asset. The said decisions, in our view, full govern the present case, and the Revenue has misapplied the decisions by the hon’ble jurisdictional high court.
Dy. DIT, Ernakulam Vs Adi Sankara Trust ( ITAT Cochin)- Income Tax – Sections 11, 12A, 32(1) – When assessee, a charitable body, has already claimed deduction for acquisition of capital assets as application of money, the further claim of depreciation on the same assets would amount to double benefits and can not be allowed.
The agreement of the assessee to acquire a rented property for running its office cannot be considered as an intangible asset similar to know how, patents, copy rights, trade marks, etc under section 32(1)(ii).
The assessee is, admittedly, neither a `primary agricultural credit society’ nor a `primary cooperative agricultural and rural development bank’. As such, it is not covered by the exceptions to s. 80P(4), as provided by the said sub-section itself, denying deduction u/s. 80P to all cooperative banks. The Legislature in its wisdom restricted the exemption, which extends to the whole of the specified incomes, i.e., of cooperatives societies undertaking specified activities, w.e.f. 1/4/2007 to the said two primary units, where the assessee is a cooperative bank. The assessee in the instant case being an apex cooperative society lending money to such primary units functioning within the State of Kerala, he denied the assessee its claim for deduction u/s. 80P (2)(a)(i).
When the scheme of financing adopted by the assessee company is explained in a convincing manner, it is not fair on the part of the lower authorities to treat a part of the deposits as unexplained only for the reason that inch-by-inch documentary particulars were not furnished before them in respect of that remainder deposits.
If there was a surplus of agricultural income in the hands of the assessee for these impugned assessment years, there would have been no question of claiming expenses by way of deduction or question of allowing the same as deduction in computing the business income of the assessee company. The expenses relating to agricultural operations cannot be allowed as expenditure in computing the business income for the simple reason that agricultural income does not form part of the total income under the IT Act.
We have heard rival submissions and perused the orders of the authorities below. Copies of Registration Certificate under Kerala Value Added Tax and Form ST-2 under Service Tax Act placed at pages 20 and 21 clearly mentions that assessee has been registered as a works contractor doing construction of residential complex
We have heard the rival submissions and perused the material available on record. In terms of provisions of section 47 (xiv) of the Act I any transfer of a capital asset will not be regarded as transfer liable to capital gains tax, if the conditions under Clauses (a),'(b) & (c) of the said Section are complied with. Sub-clause(a) specifies that all assets and liabilities have to be transferred by the sole proprietory concern to the company.
For the purpose of Expenditure Tax Act, 1987 the convention center managed by a hotel is an extension of the hotel itself and therefore, rent collection from the convention center shall be eligible for the levy of expenditure tax.
