Case Law Details
Kanti Thermo Equip Pvt Ltd Vs ACIT (ITAT Mumbai)
The recent ruling by the Income Tax Appellate Tribunal (ITAT) Mumbai in the case of Kanti Thermo Equip Pvt Ltd vs Assistant Commissioner of Income Tax (ACIT) addressed significant issues regarding the assessment of rental income, share of profit, and interest income for the assessment year 2014-15. This article delves into the details of the case and the tribunal’s decision.
Assessment of Deemed Rental Income: The dispute arose from the assessment of the annual rental value of a property, Marathon Innova A-902, which remained vacant throughout the year. The Assessing Officer (AO) considered the property’s annual letting value (ALV) as “deemed rental income” and computed it at 8.5% of the property’s value. However, the ITAT ruled that as per Section 23(1)(c) of the Income Tax Act, if a let-out property remains vacant for the entire year, its ALV should be considered as nil. Therefore, the tribunal directed the Assessing Officer to delete the addition related to deemed rental income.
Disallowance of Expenses: The second issue revolved around the disallowance of expenses claimed by the assessee amounting to Rs. 7,56,265. The assessee had generated three types of income: rental income, interest income from M/s. Alf Engineering Pvt. Ltd., and share of profit from a partnership firm. The ITAT analyzed whether these expenses were deductible against any of the income sources.
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