M/s. Prima Infratech Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 1377/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5246 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 14-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 07-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Capital asset; Business income; Depreciation
• Section: 68; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES SMC: NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA.NO.1377/DEL./2017 ASSESSMENT YEAR 2012-2013 M/S. PRIMA INFRATECH P. LTD., 45, LGF, WORLD TRADE CENTRE, BARAKHAMBA LANE, NEW DELHI 01. PAN AAECP9183G VS. THE INCOME TAX OFFICER, WARD-20(1), NEW DELHI. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI VED JAIN, C.A. FOR REVENUE : SHRI T. VASANTHAN, SR. D.R. DATE OF HEARING : 08.08.2017 DATE OF PRONOUNCEMENT : 11.08.2017 ORDER THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(A)-36, NEW DELHI, DATED 09 TH DECEMBER, 2016 FOR A.Y. 2012-2013 ON THE FOLLOWING GROUNDS : 1. THAT THE ORDERS PASSED BY LOWER AUTHORITIES ARE BA D IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE . 2. THAT BOTH CIT(A) & A.O. HAVE ERRED IN LAW AND ON FA CTS IN NOT ALLOWING LEASE CHARGES RS.5,27,188 AND INTEREST ON LOAN RS.21,12,466 U/S.57(III) INCURRED TO EARN RENTAL IN COME UNDER SECTION 57 OF THE ACT ARBITRARILY AND WITHOUT ANY J URISDICTION IGNORING THE FACT THAT EXPENSES HAVE DIRECT NEXUS W ITH THE EARNING OF INCOME. 3. THAT BOTH CIT(A) & A.O. HAVE ERRED IN LAW AND ON FA CTS IN NOT ACCEPTING THE CONTENTION OF THE APPELLANT THAT LEAS ING OF LAND/PROPERTIES IS THE MAIN BUSINESS OF THE APPELLA NT CO. AND EXPENSES ARE OTHERWISE ALLOWABLE U/S.37 OF THE ACT. 2 ITA.NO.1377/DEL./2017 M/S. PRIMA INFRATECH P. LTD., NEW DELHI. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE-COMP ANY FILED RETURN OF INCOME DECLARING INCOME AT RS.17,09,100. TH E ASSESSEE- COMPANY IS SAID TO BE MAINLY ENGAGED IN THE BUSINESS OF DEVELOPMENT OF INFRASTRUCTURE FOR COMMERCIAL USE ON BEHALF OF OTHE R COMPANIES. THE ASSESSEE-COMPANY IS DEVELOPING INFRASTRUCTURE OF PLO T NO. A.16, SECTOR-68, NOIDA. DURING THE YEAR, THE ASSESSEE-COMPA NY HAS EARNED INCOME AS LEASE RENT ON LAND GIVEN TO ROHAN MOTORS. A PERUSAL OF THE AUDITED BALANCE SHEET AND P & L A/C REVEAL THAT THE ASSE SSEE DID NOT START ITS BUSINESS ACTIVITIES DURING THE YEAR UNDER CONSI DERATION. IN THE P & L A/C ONLY ENTRY IS RELATED TO OFFERED INCOME I.E ., INCOME RECEIVED FROM LEASE RENTAL OF LAND. IN THE BALANCE SHEET ASSES SEE-COMPANY HAS SHOWN AN AMOUNT OF RS.2,60,39,783.81PS AS CAPITAL WOR K IN PROGRESS AS ON 31 ST MARCH, 2012. CAPITAL WORK IN PROGRESS (CWIP) AS ON 31 ST MARCH, 2011 WAS RS.2,22,83,734. THIS INCLUDES EXPEN SES TOWARDS INTEREST ON UNSECURED LOANS, CONSULTANCY FEES, SECURIT Y CHARGES, DEPRECIATION ETC., DURING THE PERIOD OF CONSTRUCTION OF BUILDING. IT HAS BEEN STATED THAT THE SAME WILL BE CAPITALISED UPON COMPL ETION OF BUILDING. SINCE THE ASSESSEE WAS ADMITTEDLY IN THE PROC ESS OF SETTING- UP THE BUILDING, IT WAS ASKED TO EXPLAIN WHY EXPENSES IN RESPECT OF LEASE RENT AND INTEREST EXPENSES SHOULD NOT BE DISALLOW ED AGAINST THE INCOME FROM OTHER SOURCES. THE ASSESSEE SUBMITTED BEFO RE A.O. THAT ASSESSEE-COMPANY LEASED OUT LAND TO M/S. ROHAN MOTORS LTD., ON WHICH RENTAL INCOME OF RS.43,48,750 WAS RECEIVED AND SHOWN UNDER THE HEAD INCOME FROM OTHER SOURCES. AGAINST THE RENTAL INCOME, ASSESSEE-COMPANY CLAIMED DEDUCTION UNDER SECTION 57(I II) ON ACCOUNT OF LEASE CHARGES PAID TO NOIDA AUTHORITY AND INTEREST PAID TO AUTOTECH ANCILLARIES (P) LTD., ON LOAN TAKEN FOR ACQUISITION O F LAND FROM THE DATE OF LAND GIVEN ON LEASE. THE EXPENDITURE PRIOR TO DATE OF LEASE OF LAND WERE CAPITALISED AND NOT CLAIMED AS DEDUCTION AS THOSE EXPENDITURE WERE NOT INCURRED TO EARN THE INCOME. IT WAS SUBMITTED THA T ASSESSEE 3 ITA.NO.1377/DEL./2017 M/S. PRIMA INFRATECH P. LTD., NEW DELHI. HAS FULFILLED THE CONDITIONS OF SECTION 57(III) OF THE I.T. ACT. EVEN IF IT IS ASSUMED THAT THESE EXPENDITURE ARE NOT ALLOWABLE AS DEDU CTION UNDER SECTION 57(III), THE SAME MAY BE ALLOWED UNDER SECTION 37 BY CONSIDERING INCOME UNDER THE HEAD INCOME FROM BUSIN ESS. HOWEVER, THE CONTENTION OF ASSESSEE WAS FOUND UNTENABLE BY THE A. O. AND UNACCEPTABLE ON THE FOLLOWING GROUNDS INTER ALIA. A) THE ASSESSEE-COMPANY HAD PURCHASED LAND MEASURING 8000 SQ . METER INCLUSIVE OF 1860 SQ . METER OF COVERED ARE A ON 25 . 03 . 2009. THE ASSESSEE-COMPANY IS INVO L VED IN DEVELOPING THE INFRASTRUCTU RE O N T H E LAND AND ALL THE RELATED EXPENSES WHICH I NCLUDES EXPENSES TOWARDS INTEREST ON UNSECURED LOANS, CONSULTANCY F E E , SECUR I TY C HARGE S, D E PR E CIA TI O N E TC . DURING THE PERIOD OF CO N S T R UCTION OF BUILD I NG W E RE BE I NG CA P I TA L I SED . THE L AND W AS G I VEN TO M/S. ROHAN MOTORS V I DE L EASE AGREEMENT OF 07.07. 2 0 11 ON W HI CH T HE R E N T A L I N CO ME IS B E ING CHARGED. B) THE ASSESSEE HAS A C Q U I R ED TH E L A ND A N D T H E SA I D INFRASTRUCTU RE I S BEING DEVELOPED ON IT WHICH IS THE MAIN COURS E O F B U S I NE SS . T H E LEA S E RENT AL BEING PA I D TO NOI D A I S FOR ACQUIRING CAPITAL ASSET. WHAT IS ALLO WAB LE U/S. 57(III) I S EXP E N D I TURE LAID OUT EXPEN DED WHOLLY AND EXCLUSIVELY FOR THE PURP O S E O F MAK I NG OR EARNI N G I NC OME . THE INT E R EST PA I D TO AUTOTECH ANCILLARIES (P) LTD ., H AS N OTH I N G T O DO WITH E A R N I NG OF RENTAL INCOME. SIMILARLY , L E A SE RENTAL PA I D TO NOIDA IS ALSO NOT I NCIDEN TAL F O R EARN I NG THE RENTAL INCOME, AS IT IS FOR THE ACQUIRING OF THE CAPITAL ASSET. 4 ITA.NO.1377/DEL./2017 M/S. PRIMA INFRATECH P. LTD., NEW DELHI. (C) MERE INCLUSION O F A B U S I NESS I N THE MAIN OBJECT CLAUSE IN THE MEMORANDUM OF ASSOCIATION I S NOT ENOUGH TO CONCLU D E THAT THE ASSESSEE IS INVOLVED IN THE BUS I NESS OF LEASING THE LAND FOR EARNING RENTAL INCOME, AND BUSINESS HAS COMMENCED TO LAY CLA I M FOR DEDUCTION OF EXPENSES. THE MAIN BUSINESS OF THE COMPANY IS TO DEVELOP INFRASTRUCTURE I . E . CONSTRUCTION OF BUILDING WHICH IS STILL CONTINUING. (D) THE ASSESSEE ITSELF HAS DECLARED THE INCOME FROM LETTING OUT OF SURPLUS LAND I . E. LAND OTHER THAN ON WHICH IT IS CONSTRUCTING BUILDING AS 'INCOME FROM OTHER SOURCES '. THE ASSESSEE IS THE BEST JUDGE OF ITS . OWN INTENTION. THUS UNLESS THERE IS ANY CONTRARY EVIDENCE TO SHOW THAT THE INTENTION OF THE ASSESSEE WAS NOT AS DECLA RED BY IT IN ITS RETURN OF INCOME, THE VERSION CANNOT B E CHANGED MIDWAY DURING THE COURSE OF THE PROCEEDINGS. (E) FROM THE FACTS OF THE CASE, IT IS VERY MUCH CLE AR THAT THE ASSESSEE HAS HAD BORROWINGS FOR THE PURPOSE OF DEVE LOPING OFFICE BUILDING IN INDUSTRIAL PLOT. MEANWHILE, TILL THE TIME THE BUILDING IS CONSTRUCTED AND PUT TO USE FOR INTENDED PURPOSE, THE ADJOINING LAND HAS BEEN LEASED OUT TO RELATED C ONCERN. THE INTENTION OF THE ASSESSEE FOR THIS LEASE NOT BU SINESS PURPOSE. IT IS ONLY UTILISATION OF SURPLUS LAND AVA ILABLE TILL ITS PROJECT BECOME OPERATIONAL. UNDER THE G IV E N CIRCU M STAN C E S, THE ENTIRE I NTEREST EXPENSES AND LEASE RENTAL PERTAINING TO LAND IS FOR THE PURPOSE OF ITS BUSINESS ONLY. THE TEMPORARY UT I LIZAT I ON OF ADJOINING LAND FOR SERVICING OF CARS IS NOTHING BUT INCOME 5 ITA.NO.1377/DEL./2017 M/S. PRIMA INFRATECH P. LTD., NEW DELHI. F ROM OTHER SOURCE AS RIGHTLY DECLARED BY THE ASSESSE E IN THE RETURN OF INCOME . THUS THE ENTIRE INTER E ST EXPENSES AND LEASE RENTA L CHARGES OUGHT TO HAV E B EE N CAPITALISED. THERE - IS NO LEGAL BAS I S FOR ALLOCATING EXPENSES WITH LEASE RENTAL EARN E D AS THESE EXPENSES ENTIRELY RELATED TO THE PROJECT . UTILIZATION OF SURPLUS LAND PENDING COMPLETION O F PROJECT IS TAXABLE AS INCOME FROM OTHER SOURCES AND NO EXPENSES CAN BE SAID DIRECTLY CONNECTED TO . THE EARNING OF INCOME OF FROM OTHER SOURCES. IN THIS CASE, AS A LL SUCH EXPENSE S PERTAIN TO THE PROJECT OF DEVELOPMENT OF LAND, WHICH SOUND HAVE CAPITALIZED BY THE ASSE SSEE. RELIANCE IS PLACED ON THE DECISION OF THE SUPREME COURT IN T HE CASE OF TUTICORN ALKALI AR I D VARIOUS OTHER CASES IN WH I CH NO INTEREST EXPENSES WAS AL L OWED TO BE SET OFF AGAINST INTEREST I NCOME EARNED FROM FIXED DEPOSITS . IN VIEW OF THE ABOVE, THE CLAIM OF THE ASSESS E E F OR D E DUCTION INTEREST AND LEASE RENTAL AGAINST INCOME FROM OTHER SOURCE . IS HELD INADMISSIBLE U N D E R THE . LAW AND THEREFORE D I SALLOWED . THE CLAIM OF LEASE EXPENSES ALONG WITH IN TEREST E XPENSE WAS NOT ALLOWED TO BE DEDUCTED FROM INCOME FROM OTHER SOURCES . AS THE SAM E WAS FO UND TO BE RELATABLE TO PROJECT AND THEREFORE TO BE CAPITALISED . IN VIEW OF THE ABOVE , TH E R E NT AL INCOME OF RS.43,48,750 IS HELD AS TAXABLE INCOME ASSESSAB L E UNDE R TH E H E AD 'IN CO ME FROM OTHER SOURCES. 3. THE ASSESSEE REITERATED THE SAME SUBMISSIONS BEF ORE LD. CIT(A). IT WAS ALSO SUBMITTED THAT ENTIRE INTEREST EXPENSES AND LEASE RENTAL PERTAINING TO LAND IS FOR THE PURPOSE OF BUSINE SS ONLY. THEREFORE, THE DEDUCTION MAY BE ALLOWED. THE LD. CIT(A), HOWEVER , DISMISSED THE 6 ITA.NO.1377/DEL./2017 M/S. PRIMA INFRATECH P. LTD., NEW DELHI. APPEAL OF THE ASSESSEE. HIS FINDING IN PARAS 6 TO 8 O F THE APPELLATE ORDER ARE REPRODUCED AS UNDER : 6. I HAVE GONE THROUGH ASSESSMENT ORDER, GROUNDS O F APPEAL AND THE SUBMISSIONS MADE BY THE ASSESSEE. IN THIS C ASE, THE SUBMISSIONS MADE BY THE ASSESSEE HAVE REMAINED SAME DURING THE ASSESSMENT PROCEEDINGS AND THE APPELLATE PROCEEDINGS. THE FACTS THAT HAVE EMERGED FROM THE C ASE ARE THAT THE ASSESSEE IS BASICALLY DEVELOPING INFRASTRU CTURE FOR COMMERCIAL USE ON BEHALF OF THE OTHER COMPANIES. FO R THIS PURPOSE, A PLOT HAS BEEN TAKEN IN SECTOR 68 IN NOID A ON WHICH THE BUSINESS ACTIVITIES HAD NOT YET STARTED D URING CONCERNED F.Y. AS A RESULT, IT HAS BEEN CAPITALISIN G THE EXPENDITURE TILL THE BUSINESS ACTUALLY BEGIN. MEANW HILE, IT APPEARS THAT TO UTILISE THE VACANT LAND, THE ASSESS EE LEASED OUT A PART OF THE LAND TO M/S. ROHAN MOTORS LTD., O N WHICH RENTAL INCOME OF RS.43,48,750/- WAS RECEIVED. THE A SSESSEE HAS ITSELF SHOWN THIS INCOME AS INCOME FROM OTHER SOURCES. HOWEVER, IT HAS CLAIMED THE EXPENDITURE ON LEASE RE NTAL PAID TO NODIA AUTHORITIES AND INTEREST PAID ON LOAN TAKE N FOR ACQUISITION OF LAND AGAINST THIS RENTAL INCOME, WHI CH THE A.O. HAS DISALLOWED FROM INCOME FROM OTHER SOURCES AS IT WAS RELATED TO THE PROJECT WHICH IS THE MAIN BUSINESS O F THE ASSESSEE AND SHOULD HAVE BEEN THEREFORE CAPITALISED . 7. IT IS CLEAR F R OM TH E A B OV E FA C T S T HAT, H AD TH E L A N D NOT BEEN G IVE N ON LEASE TO M/S . R OHAN M O TORS LTD ., STILL THE LEAS E RE N T A L B E I NG P AID T O NO I D A A U THORITI E S AND THE I NTERES T PA ID O N LOAN TAK EN FO R A CQU I SITION OF LAND WOUL D HA VE TO BE PAI D. AS THESE AMOUN T S ARE TO BE PA I D IRR E SPECTIV E OF HO W TH E L A ND I S B E ING T EMP O R A RILY UTILISED, I T CA N N O T BE 7 ITA.NO.1377/DEL./2017 M/S. PRIMA INFRATECH P. LTD., NEW DELHI. SAID THA T T HESE E X PENDITU RE DIR E C T LY R E L A TE D TO THE E A RNIN G O F R E NTAL INCOME, TH E CONT E N TION O F THE ASSESSEE THA T IN SU CH A C AS E TH E SA M E M A Y BE A L LOW E D U/S . 37 BY CONSID ER ING T HE INCOME U NDER BUSI N ESS I NCOM E C A N ALS O NO T HE A CCEPTABLE A S TH E MA I N BUSINESS OF TH E A S S ESSEE IS TO D E V E LOP I NFR A S T RU C TURE FO R COMM E R CIA L USE ON BEHALF OF TH E O T HER COMPANIE S A ND N OT P ARTIA L HIRI N G OF LAND FOR TEMPO R ARY PURPOSE. THE L E AS E P A ID TO T HE NOD I A AUTHORITY FO R AC Q U IRING T HE P LO T A ND T H E INTERES T PAID ON LOAN FOR ACQUIR I NG TH I S P L OT OBVIOUSLY IS NOT RELATED TO T HE E A R N I N G OF R E NT A L INCOME. UNDERSTANDING THESE FACTS . THE ASSESSEE HAS ITSELF DECLARED TH E I N COM E A S 'I NCOME FROM OTHER SOURCES ' . THE RELIANCE BY THE ASSESSEE ON THE DECISION IN THE CASE O F M / S. RAYA L A CORP (P) LTD. BY THE HON'BLE SUPREME COURT I S ALSO MISPLACED , AS THE DEBAT E T H E R E WAS WHETHER THE ASSESSEE'S INCOME SHOULD BE TREATED AS BUSINESS INCOME OR I NCOM E FROM HOUSE PROPERTY WHERE THE ASSESSEES MAIN BUSINESS IS OF RENTING. THE FACTS OF THE CASE ARE TOTALLY DIFFEREN T AND DO NOT APPLY. THE ASSESSEE CANNOT AT THIS STAGE OF PROCEEDING CLAIM THAT LEASING/RENTAL OF LAND/PROPER TY IS THE MAIN BUSINESS OF THE APPELLANT AS ON THE OTHER HAND THE ASSESSEE IS ITSELF ACCEPTING THAT THE MAIN BUSI NESS OF THE COMPANY IS TO DEVELOP INFRASTRUCTURE I.E., CONS TRUCTING BUILDING WHICH IS STILL CONTINUING. I AM THEREFORE INCLINED TO DECIDE IN FAVOUR OF THE ASSESSMENT ORDER HOLDING THAT THE AMOUNT OF RS.43,48,750 IS RIGHTLY ASSESSED AS INCOME FROM OTHER SOURCES AND THE EXPENDITURE ON L EASE RENTAL AND INTEREST WHICH IS NOT SPENT FOR PURPOSE OF 8 ITA.NO.1377/DEL./2017 M/S. PRIMA INFRATECH P. LTD., NEW DELHI. EARNING THIS INCOME MAY BE DISALLOWED AND TO BE CAPITALISED IN THE PROJECT AS IN EARLIER YEARS. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. 4. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUB MITTED THAT THE EXPENDITURE WERE INCURRED FOR EARNING THE RENTAL INCOM E, THEREFORE, THE SAME WERE ALLOWABLE BOTH UNDER SECTIONS 57(III) AND 3 7 OF THE I.T. ACT. HE HAS ALSO SUBMITTED THAT ASSESSEE BORROWED ENTIRE FUND S FOR THE PURPOSE OF BUSINESS. 5. ON THE OTHER HAND, THE LD. D.R. RELIED UPON THE OR DERS OF THE AUTHORITIES BELOW. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE FAC TS NOTED ABOVE ARE NOT IN DISPUTE THAT THE ASSESSEE-COMPANY IS MA INLY ENGAGED IN THE BUSINESS OF DEVELOPMENT OF INFRASTRUCTURE FOR C OMMERCIAL USE ON BEHALF OF OTHER COMPANIES. THE ASSESSEE-COMPANY I S DEVELOPING INFRASTRUCTURE ON PLOT NO.A-16, SECTOR-68, NOIDA. IT IS ALSO AN ADMITTED FACT THAT IN THE ASSESSMENT YEAR UNDER APPEAL THE ASSESSE E DID NOT START ITS BUSINESS ACTIVITIES. THE ASSESSEE ALSO ADMITTED BEFORE THE AUTHORITIES BELOW THAT THE CWIP INCLUDES TOWARDS INTEREST ON UNSECURED LOANS, CONSULTANCY FEES, SECURITY CHARGES, DEPRECIATION ETC., DURING THE PERIOD OF CONSTRUCTION OF BUILDING AND IT IS, THEREFORE, STATED THAT SAME WILL BE CAPITALISED UPON COMPLETION OF THE BUI LDING. IT IS ALSO AN ADMITTED FACT THAT ASSESSEE HAS SHOWN LEASE RENTAL AS INCOME FROM OTHER SOURCES. SINCE NO BUSINESS ACTIVITIES WE RE CARRIED OUT DURING THE YEAR UNDER CONSIDERATION, EXPENSES WERE CA PITALISED AND ASSESSEE HAS SHOWN LEASE RENTAL INCOME AS INCOME FR OM OTHER SOURCES, THEREFORE, ASSESSEE HAS NOT INCURRED ANY EX PENDITURE FOR THE PURPOSE OF BUSINESS SO AS TO CLAIM DEDUCTION UNDER SE CTION 37 OF THE 9 ITA.NO.1377/DEL./2017 M/S. PRIMA INFRATECH P. LTD., NEW DELHI. I.T. ACT. SECTION 57(III) OF THE I.T. ACT PROVIDES FOR DEDUCTIONS I.E., ANY OTHER EXPENDITURE (NOT BEING IN THE NATURE OF CAPITAL EXP ENDITURE) LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOS E OF MAKING OR EARNING SUCH INCOME I.E., INCOME FROM OTHER SOURCES. THE A.O. HAS CORRECTLY GIVEN FINDING OF FACT THAT ASSESSEE HAS ACQU IRED THE LAND AND THE SAID INFRASTRUCTURE IS BEING DEVELOPED ON IT WHICH IS THE MAIN COURSE OF BUSINESS. THE LEASE RENTAL PAID TO NOIDA A UTHORITY IS FOR ACQUIRING CAPITAL ASSET. WHAT IS ALLOWABLE UNDER SECTIO N 57(III) IS EXPENDITURE LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVE LY FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME I.E., INCO ME FROM OTHER SOURCES. THE INTEREST PAID TO AUTOTECH ANCILLARIES (P) LTD., HAS NOTHING TO DO WITH THE EARNING OF RENTAL INCOME. SIMILARLY, LEASE RENT PAID TO NOIDA IS NOT RELATED TO EARNING OF RENTAL INCOME. MERE INCLUSION OF A BUSINESS IN THE MAIN OBJECT CLAUSE IN THE MEMORANDUM O F ASSOCIATION IS NOT ENOUGH TO CONCLUDE THAT ASSESSEE IS INVOLVED IN THE BUSINESS OF LEASING THE LAND FOR EARNING RENTAL INCOME, AND BUSIN ESS HAS COMMENCED TO LAY CLAIM FOR DEDUCTION OF EXPENDITURE. T HE MAIN BUSINESS OF THE ASSESSEE-COMPANY IS TO DEVELOP INFRAS TRUCTURE I.E., CONSTRUCTION OF BUILDING WHICH IS STILL CONTINUING. FUR THER, THE ASSESSEE-COMPANY HAS DECLARED INCOME FROM LETTING OUT SURPLUS LAND AS INCOME FROM OTHER SOURCES. THUS THE ENTIRE INTERES T EXPENSES AND LEASE RENTAL EXPENSES SHALL HAVE TO BE CAPITALISED BY THE ASSESSEE. IT MAY ALSO BE NOTED HERE THAT, HAD THE LAND IN QUESTION N OT BEEN GIVEN ON LEASE TO ROHAN MOTORS LTD., STILL LEASE RENT BEING PAID TO NOIDA AUTHORITY AND INTEREST PAID ON LOAN TAKEN FOR ACQUISITI ON OF LAND, WOULD HAVE TO BE PAID IN NORMAL COURSE. THE ASSESSEE IS UNDER OBLIGATION TO PAY LEASE RENT AND INTEREST EVEN IF PART OF LAND NOT LET OUT TO M/S. ROHAN MOTORS LTD., EARNING OF RENTAL INCOME HA S NO NEXUS WITH PAYMENT OF LEASE AND INTEREST. ONCE ASSESSEE DECL ARED INCOME FROM OTHER SOURCES, IT CANNOT CLAIM IT AS BUSINESS INCO ME. THEREFORE, IF 10 ITA.NO.1377/DEL./2017 M/S. PRIMA INFRATECH P. LTD., NEW DELHI. THESE EXPENSES ARE INCURRED COULD NOT BE SAID TO HAVE BEEN DIRECTLY RELATED TO THE EARNING OF INCOME FROM OTHER SOURCES FOR CLAIMING DEDUCTION UNDER SECTION 57(III) OF THE I.T. ACT. ASSESS EE SHALL HAVE TO PROVE THAT SUCH EXPENSES WERE INCURRED WHOLLY AND EXC LUSIVELY FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME I.E., INCO ME FROM OTHER SOURCES WHICH ASSESSEE HAS FAILED TO SATISFY IN THI S CASE. THE LEASE PAID TO NOIDA AUTHORITY FOR ACQUIRING OF THE PLOT AN D INTEREST PAID ON LOAN FOR ACQUIRING OF THE PLOT IS, THEREFORE, NOT RELAT ED TO EARNING OF THE RENTAL INCOME. THE FACTS OF THE CASE CLEARLY PROVES THA T ASSESSEE IS NOT ENTITLED FOR DEDUCTION OF ANY OF THE EXPENDITURE. I, THE REFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DISMISSING THE CLAIM OF ASSESSEE FOR DEDUCTION OF THE EXPENDITURE EITHER U NDER SECTION 57(III) OF THE I.T. ACT AND SECTION 37 OF THE I.T. ACT. THE APP EAL OF ASSESSEE HAS NO MERIT AND THE SAME IS ACCORDINGLY DISMISSED. 6. IN THE RESULT, APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DELHI, DATED 11 TH AUGUST, 2017 VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH 6. GUARD FILE // BY ORDER // ASST. REGISTRAR ITAT : DELHI BENCHES DELHI.