SENDRA MARBLE CO. P LTD., Jaipur V. ITO, Jaipur

ITA 333/JPR/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5300 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 01-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Business expenditure

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 333/JP/2013 & 549/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 & 2008-09 M/S. SENDRA MARBLE CO. (P) LTD. 301, MADRAMPURA, ARCADE INTERNATIONAL AJMER ROAD, JAIPUR CUKE VS. THE ITO WARD- 2 (2) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAFCS 2571 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SHRAWAN KUMAR GUPTA, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY:SHRI RAGHUVIR SINGH DAGUR,ADDL. CIT- DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 25/05/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 02/06/2016 VKNS'K@ ORDER PER BHAGCHAND, AM BOTH THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST TWO DIFFERENT ORDERS OF THE LD. CIT(A)-1, JAIPUR DATED 08-02-2012 AND 25-04- 2014 FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09 RESPECTIVELY. 2.1 IN NUT SHELL, THE LD. AR OF THE ASSESSEE THROUG H HIS WRITTEN SUBMISSIONS FILED THE GROUNDS OF APPEAL IN BOTH THE ASSESSMENT YEARS AS UNDER:- ITA NO. 333/JP/2013 M/S. SENDRA MARBLE CO. (P) LTD. VS. . ITO, WARD 2 (2), JAIPUR . 2 TREATING THE LEASE / RENTAL INCOME AS INCOME FROM HOUSE PROPERTY AS AGAINST BUSINESS INCOME DECLARED BY THE ASSESSEE AND NOT ALLOWING THE BUSINESS EXPENDITURE. 2.2 IT IS ALSO OBSERVED THAT THE LD. AR OF THE ASSE SSEE IN BOTH THE ASSESSMENT YEARS HAVE FILED THE CONDONATION APPLICA TIONS FOR LATE OF FILING OF THE APPEALS I.E. 350 DAYS IN ITA NO. 333/JP/2013 AND 16 DAYS IN ITA NO. 549/JP/2014 MAINLY PRAYING THEREIN AS UNDER:- 2. THE REASON OF LATE FILING WAS THAT THE ORDER O F THE LD. CIT(A) HAS BEEN COLLECTED BY SHRI NANDAN SI NGH BHIST ON 15-02-2012 FROM THE COUNSEL OF THE ASSESSEE AND AFT ER COLLECTING THE ORDER SHRI NANDAN SINGH KEPT THIS ORDER IN THE FILE BECAUSE AT THAT TIME CONCERNED PERSONS (DIRECTOR) OF THE COMPA NY WAS NOT AVAILABLE AND HE FORGOT TO TELL ABOUT THIS ORDER TO THE DIRECTORS. HENCE, THIS FACT OF APPEAL ORDER COULD NOT COME IN THE KNOWLEDGE. HOWEVER, WHEN BEFORE SOME DAY DURING SOME DISCUSSIO N WITH THE LOCAL COUNSEL ABOUT THE STATUS OF APPEAL, THEN IT C AME TO KNOW ALL THE HISTORY. DUE ALL THIS REASON, THE APPEAL COULD NOT BE FILED WITHIN TIME. IN SUPPORT THESE CONTENTION, AN AFFIDAVIT OF THE DIRECTOR AND STAFF MEMBERS ARE ENCLOSED. 2.3 THE LD. AR OF THE ASSESSEE ALSO RELIED ON THE J UDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF COLLECTOR, LAND & ACQ UISITION VS. MST. KATIJI & OTHERS (1987) 167 ITR 471. 2.4 THE LD. DR OPPOSED THE CONDONATION APPLICATIONS OF THE ASSESSEE. 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT EMERGES FROM THE RECORD AND ARGUMENTS THAT THE DELAY IN FILING THE APPEALS IS NOT ON ACCOUNT OF THE ASSESSEE BUT IT WAS ON ITA NO. 333/JP/2013 M/S. SENDRA MARBLE CO. (P) LTD. VS. . ITO, WARD 2 (2), JAIPUR . 3 THE PART OF THE OFFICE STAFF SHRI NANDAN SINGH BISH T WHO COULD NOT INTIMATE THE ASSESSEE ABOUT THE LD. CIT(A)S ORDER IN TIME AND THE ASSESSEE HAD TO SUFFER ON THE LAPSE OF OFFICE STAFF. THUS, IT APPEARS THAT SUCH DELAY OF LATE FILING THE APPEALS MAY BE CONDONED IN VIE W OF THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF COLLECTOR, LAND A CQUISITION VS. MST. KATIJI AND OTHERS, 167 ITR 471 WHEREIN THE HON'BLE COURT HAS OBSERVED AS UNDER:- THE LEGISLATURE HAS CONFERRED POWER TO CONDONE DELA Y BY ENACTING SECTION 5 OF THE LIMITATION ACT, 1963, IN ORDER TO ENABLE THE COURTS TO DO SUBSTANTIAL JUSTICE TO PARTIES BY DISPOSING OF MATTERS ON MERITS. THE EXPRESSION ' SUFFICIENT CAUS E ' IN SECTION 5 IS ADEQUATELY ELASTIC TO ENABLE THE COURTS TO APPLY TH E LAW IN A MEANINGFUL MANNER WHICH SUBSERVES THE ENDS OF JUSTI CE--THAT BEING THE LIFE-PURPOSE OF THE EXISTENCE OF THE INSTITUTIO N OF COURTS. A JUSTIFIABLY LIBERAL APPROACH HAS TO BE ADOPTED ON P RINCIPLE. 'EVERY DAY'S DELAY MUST BE EXPLAINED' DOES NOT IMPL Y A PEDANTIC APPROACH. THE DOCTRINE MUST BE APPLIED IN A RATIONAL, COMMON SENSE AND PRAGMATIC MANNER. THE DOCTRINE OF EQUALITY BEFORE LAW DEMANDS THAT AL L LITIGANTS, INCLUDING THE STATE AS A LITIGANT, ARE A CCORDED THE SAME TREATMENT AND THE LAW IS ADMINISTERED IN AN EVENHAN DED MANNER. THERE IS NO WARRANT FOR ACCORDING A STEP-MOTHERLY T REATMENT WHEN THE STATE IS THE APPLICANT PRAYING FOR CONDONATION OF DELAY. 'WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATI ONS ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED, FOR THE OTHER SIDE CANNOT CLAIM TO HAVE A VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON-DELI BERATE DELAY.' ITA NO. 333/JP/2013 M/S. SENDRA MARBLE CO. (P) LTD. VS. . ITO, WARD 2 (2), JAIPUR . 4 HENCE, IN VIEW OF THE DELIBERATIONS OF HON'BLE AP EX COURT IN THE CASE OF COLLECTOR , LAND ACQUISITION VS. MST. KATIJI AND OT HERS (SUPRA), THE DELAY IN FILING THE APPEALS IS CONDONED. 3.1 NOW WE TAKE UP THE GROUNDS OF APPEAL RAISED BY THE LD. AR THROUGH HIS WRITTEN SUBMISSION IN BOTH THE APPEALS AS UNDER :- TREATING THE LEASE / RENTAL INCOME AS INCOME FROM HOUSE PROPERTY AS AGAINST BUSINESS INCOME DECLARED BY THE ASSESSEE AND NOT ALLOWING THE BUSINESS EXPENDITURE. 3.2 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED ITS RETURN OF INCOME ON 27-09-2008 DECLARING ITS TOTAL INCOME OF RS. 1,63,310/- FOR THE ASSESSMENT YEAR 2007-08. THE SAME WAS PROCESSED U/S 143(1) OF THE ACT AND THUS THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. IT IS OBSERVED THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY REGI STERED ON 24.05.1983 AND DERIVES INCOME FROM RENT/LEASE ON ITS PROPERTY. DURING THE YEAR THE ASSESSEE HAS RECEIVED RENT/LEASE OF RS. 9,14,010/- AND SHOWN THIS INCOME UNDER THE HEAD BUSINESS INCOME OR PROFESSION. THE A SSESSEE HAD GIVEN ITS COMMERCIAL COMPLEX ON LEASE TO LIC OF INDIA, CMA, C GM, GLOBAL INDIA P. LTD. AND RELIANCE COMMUNICATION INFRA LTD. THE A SSESSEE FILED IT RETURN OF INCOME DECLARING THE INCOME OF RS. 1,63,1 30/- AFTER CLAIMING EXPENSES ON ACCOUNT OF THIS RENTAL BUSINESS. THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE INCOME SHOULD NOT BE ASSE SSED AS INCOME FROM ITA NO. 333/JP/2013 M/S. SENDRA MARBLE CO. (P) LTD. VS. . ITO, WARD 2 (2), JAIPUR . 5 HOUSE PROPERTY RATHER THAN INCOME UNDER THE BUSINES S & PROFESSION AS DECLARED BY THE ASSESSEE. IN RESPONSE THERETO THE A SSESSEE FILED THE DETAILED REPLY TO THE AO BUT THE AO WAS NOT SATISFI ED WITH THE CONCLUSION THAT THE INTENTION OF THE ASSESSEE IS TO EARN INCOM E FROM LETTING OUT ITS HOUSE PROPERTY AND CLAIMING AS BUSINESS INCOME AND THUS AO HELD THAT THE LEASE RENT OF RS. 9,14,010/- RECEIVED BY THE AS SESSEE IS TAXABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY WITH FOLLOWING COMPUTATION. INCOME FROM BUSINESS OR PROFESSION RS. NIL INCOME FROM HOUSE PROPERTY RENT RECEIVED RS. 9,14 010 LESS: STATUTORY DEDUCTION U/S 24 @ 30% (INCLUDING RS. 39603 DEBITED TO P&L A/C) RS. 2,74,203 RS. 6,39,807/- INCOME FROM OTHER SOURCES INTEREST INCOME AS DISCUSSED ABOVE RS. 3,2 45/- TOTAL INCOME RS. 6,43,052/- ROUND OFF RS. 6,43,050/- 3.3 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTION OF THE AO BY FOLLOW ING OBSERVATIONS. 4.3.. ON PERUSAL OF THIS ORDER, IT IS SEEN T HAT THE FACTS ARE SIMILAR TO THE FACTS OF THE CASE OF THE A PPELLANT. THEREFORE, IN VIEW OF THE FINDINGS OF HON'BLE CALCUTTA HIGH C OURT, AS APPLICABLE TO THE FACTS OF THE CASE OF THE APPELLAN T, IT IS HELD THAT THERE WAS A RELATIONSHIP OF LANDLORD AND TENANTS BE TWEEN THE APPELLANT AND THE THREE LESSEES. THE DECISION OF TH E AO TO TREAT THE INCOME FROM RENT OF THESE 3 PROPERTIES AS INCOME FR OM HOUSE PROPERTY IS UPHELD AND THE ADDITION OF RS. 6,39,807 /- IS CONFIRMED. ITA NO. 333/JP/2013 M/S. SENDRA MARBLE CO. (P) LTD. VS. . ITO, WARD 2 (2), JAIPUR . 6 5.1 GIVEN THE ABOVE FINDING (REFER TO PARA 4.2 V) IT IS HELD THAT SINCE THE INCOME FROM PROPERTY HAS BEEN HELD T O BE INCOME FROM HOUSE PROPERTY AND THE STATUTORY DEDUCTION U/S 24 HAS ALREADY BEEN ALLOWED BY THE AO, THE EXPENDITURE OF RS. 6,17 ,718/- CLAIMED BY THE APPELLANT IN ITS P&L ACCOUNT CANNOT BE ALLO WED. THEREFORE, THE DISALLOWANCE OF RS. 6,17,718/- OF BUSINESS EXPE NDITURE IS CONFIRMED. 3.4 NOW THE ASSESSEE IS BEFORE ME AND FILED THE FOL LOWING WRITTEN SUBMISSION IN SUPPORT OF HIS CONTENTION. 1. DIRECTLY COVERED MATTER:: AT THE VERY OUTSET IT IS SUBMITTED THE LD. AO WHILE TREATING THE INCOME AS H OUSE PROPERTY INCOME AS AGAINST BUSINESS INCOME HAS ALSO RELIED U PON ON THE DECISION OF MADRAS HIGH COURT IN CASE CIT V/S CHENN AI PROPERTIES & INVESTMENT LTD. 266 ITR 685(MAD), THE SAID DECISI ON HAS NOW REVERSED BY THE HONBLE SUPREME COURT VIDE ORDER C HENNAI PROPERTIES & INVESTMENT LTD. V/S CIT 373 CTR 673(SC ) DT. 09.04.2015 (PB5-12 FOR A.Y. 2008-09) WHERE IN THE S AME FACTS THE RENTAL INCOME HAS BEEN TREATED AS BUSINESS INCOME. 1.2 FURTHER ALSO COVERED BY THE DECISION OF THIS HO NBLE BENCH IN THE CASE OF DCIT CIRCLE-2, JAIPUR V/S M/S RAJNANDANI CONSTRUCTION PVT. LTD. IN ITA NO. 839/JP/12 AND 775 /JP/2011 FOR A.Y. 2007-08 AND 2008-09 DT. 26.02.2014 (PB13-26 FO R A.Y. 2008-09). THIS DECISION WAS OF SAME RANGE AND SAME A.Y. 2. FURTHER OUR SUBMISSIONS ARE AS UNDER . THE LD. AO AS WELL AS THE LD. CIT()A HAS IGNORED THE FOLLOWINGS SUBMIS SIONS (A) MAIN OBJECT OF THE COMPANY : ORIGINALLY THE ASS ESSEE COMPANY WAS INCORPORATED ON 24.05.1983 WITH THE SOL E INTENTION & WITH MAIN OBJECT TO BE PURSUED IS TO HOLD, PURCHA SES, ACQUIRE, TAKE ON LEASE OR IN ANY OTHER LAWFUL MANNER ANY AREA, LA ND BUILDINGS, STRUCTURES AND TO SELL OR DEAL WITH OR BUILD, DEVEL OP, MAINTAIN AND TO ITA NO. 333/JP/2013 M/S. SENDRA MARBLE CO. (P) LTD. VS. . ITO, WARD 2 (2), JAIPUR . 7 ACT AS AGENTS, PROMOTERS, MANAGERS AND DEVELOPERS O F REAL ESTATE, LAND AND BUILDING. VIDE MEMORANDUM AND ARTICLE OF ASSOC IATION (PB10- 12A) SINCE BEING THE MAIN OBJECT IS PURSUED BY THE COMPANY BY GOING INTO AN AGREEMENT WITH ABODE BUILDERS & DEVEL OPERS PVT. LTD. TO DEVELOP THE COMMERCIAL COMPLEX AS BUSINESS VENTU RE. THE COMPANY WAS TAKEN A PLOT OF LAND ON LEASE TO DEVELO P A COMMERCIAL COMPLEX VIDE LEASE DEED TD. 11.07.1986. TO DEVELOP THE COMMERCIAL COMPLEX, THE ASSESSEE COMPANY WAS ASSIGNED THE WORK TO ABODE BUILDERS & DEVELOPERS PVT. LTD. (B) SERVICES OF COMPOSITE RENTING: THE ASSESSEE COM PANY HAS LEASED OUT THE SPARE SPACES ENTERED INTO AGREEMENT TO GIVE THE PROPERTIES ON LEASE AS WELL TO PROVIDE CERTAIN SERVICES, AMENI TIES AND FACILITIES WITH COMPOSITE RENTING BY PROVIDING THE PRIMARY SERVICES OF WATER, SECURITY GUARDING, ELECTRICITY, COMMON LIGHTS ETC. THE ASSES SEE IS CHARGING THE SERVICE CHARGES SEPARATELY AS WELL COMPOSITE RENTIN G FROM THE LESSEE. HENCE THE INCOME RECEIVED BY THE ASSESSEE TOWARDS D IFFERENT SERVICES RENDERED TO THE TENETS INCLUDING LEASE RENT SHOULD BE TREATED AS INCOME FROM PROFIT AND GAINS OF BUSINESS OR PROFESSIONS AN D ACCORDINGLY THE HEADS OF THE SAID INCOME. (C) NO BUILDING ASSETS IS CAPITAL OF THE ASSESSEE COMPA NY : THE ASSESSEE IS NOT HAVING THE BUILDING ASSETS, AS THE FINANCIAL STATEMENTS HELD WITH YOUR GOOD SELF, THE ASSESSEE HAS CAPITALIZED T HE LAND ONLY. THE ASSESSEE IS HAVING THE RIGHTS IN LEASED PLOT. (D) PROPERTY IS HAVING THE STATUS OF COMMERCIAL PR OPERTY: ADMITTEDLY THE LEASED OUT BUILDING IS THE COMMERCIA L COMPLEX, NOT DISPUTED BY THE AO AND CIT(A) AND IS BEING USED IN COMMERCIAL ACTIVITIES. THE LEASE DEED IS CLEARLY INDICATE THAT THE LAND IS TO BE USED ONLY FOR THE PURPOSE OF COMMERCIAL COMPLEX, WHICH I S HAVING THE BUSINESS OFFICES & SHOPS. THE PRESENT LESSEE ARE AL SO HAVING THE STATUS OF CORPORATE ASSESSEE BY CARRYING OUT THE BUSINESS ACT IVITIES. ITA NO. 333/JP/2013 M/S. SENDRA MARBLE CO. (P) LTD. VS. . ITO, WARD 2 (2), JAIPUR . 8 (E) IT IS LEASED OUT NOT RENTED OUT: FURTHER THERE IS BASIC DIFFERENCE IN LEASED OUT AND RENT OUT THE IMMOVABLE PROPERTIES. THE AGREEMENT OF LEASE IS HAVING ALL THE TERMS AND COND ITIONS PRE-DETERMINED AND CANNOT BE BROKEN WITHOUT BREAKING THE LEASE AGR EEMENT, WHERE AS IN THE RENTALS AGREEMENT, THE TERMS CAN BE CHANGE WITH MUTUAL AGREED UP-ON THE PARTIES. THE LEASE AGREEMENT IS A CONTRACT OR I NSTRUMENT CONVEYING PROPERTY TO ANOTHER FOR A SPECIFIED PERIOD, WHEREAS RENTING IS AN AGREEMENT WHERE A PAYMENT IS MADE FOR THE TEMPORARY USE OF A GOOD OR PROPERTY OWNED BY ANOTHER PERSON. (F) COMMERCIAL VENTURE TO EARN THE PROFIT: LEASED O UT THE ASSETS AND ALSO PROVIDING THE FACILITIES FOR MAINTAINING T HE PROPERTY AS WELL AS OTHER SERVICES, SUCH COMPOSITE LETTING OUT OR IMMOV ABLE PROPERTY ALONG WITH ADDITIONAL FIXTURES, WHICH RESULT IN PROVISION OF FACILITIES WOULD AMOUNT TO A BUSINESS VENTURE AS IT MAY REQUIRE PARTICIPATION OF THE INVESTOR IN RUNNING AND MAINTENANCE OF THE COMMERCI AL COMPLEX. MAINTENANCE OF COMMON AREA, COMMON LIGHT, WATER, DR AINAGE, ELECTRIC TRANSFORMER ETC. CLEARLY ESTABLISHED THAT ENTIRE AC TIVES CARRIED OUT IN AN ORGANIZED & PHASED MANNER TO EARN PROFIT FROM INVES TMENTS MADE BY THE ASSESSEE IS COMMERCIAL VENTURE. LOOKING TO ABOVE FACTS AND CIRCUMSTANCES, MERELY BE CAUSE INCOME IS ATTACHED TO IMMOVABLE PROPERTY, IT CANNOT BE SAID T HE SOLE FACTOR FOR ASSESSMENT OF SUCH INCOME AS INCOME FROM HOUSE PROP ERTY. THE ABOVE ASPECTS HAS ALSO BEEN CONSIDERED BY THE HONBLE SUPR EME COURT AND THIS HONBLE BENCH AS CITED IN PARA 1 ABOVE. FOLLOWING (I) IN THE CASE OF SAIYANA WAREHOUSE (P) LTD. VS. ACIT (2014) 90 CCH 0032 (CHEN HC) (II) IN THE CASE OF CIT VS. INFORMATION TECHNOLOGY PARK (2014) 369 ITR 0460 (KARN) (III) CIT VS. VELANKANI INFORMATION SYSTEMS (P.)LTD. (201 4) (265) CTR (KAR) 0250 ITA NO. 333/JP/2013 M/S. SENDRA MARBLE CO. (P) LTD. VS. . ITO, WARD 2 (2), JAIPUR . 9 4. VIEW FAVORABLE TO ASSESSEE : IT IS ALSO SETTLED LEGAL POSITION THAT WHERE ARE TWO VIEW, THE VIEW FAVAURABLE TO THE ASSE SSEE SHOULD BE TAKEN AS HELD THE HONBLE SUPREME COURT IN THE CASE OF CI T V/S VEGETABLE PRODUCT LTD 88 ITR 192(SC) AND FOLLOWED BY THE HONB LE ITAT JAIPUR BENCH IN THE CASE OF ACIT CIR.4 JAIPUR V/S GIRDHARI LAL BARGOTI 54 TW 163(JP). ITA NO. 757/JP/12 5. HENCE IN VIEW OF THE ABOVE SUBMISSIONS THE ADDIT ION SO MADE MAY KINDLY BE DELETED IN FULL. 6. FURTHER THE AFTER HAVING DECIDED THE HEAD OF INC OME UNDER WHICH THE RECEIPTS OF THE ASSESSEE ARE TO BE TAXED, THE N EXT QUESTION WHICH NOW ARISES IS THAT ALLOW ABILITY OF THE EXPENSES CLAIME D BY THE ASSESSEE. THE ASSESSEE HAS DEBITED A SUM OF RS.12,07,353/- AS EXP ENSES AGAINST RENTAL INCOME WHICH ARE NARRATED AS UNDER: 1. DIRECTOR REMUNERATION 2. AUDITOR REMUNERATION 3. BANK CHARGE 4. ELECTRICITY EXP. 5. INSURANCE 6. INTEREST PAID 7. LEGAL CHARGES 8. MAINTENANCE OF BUILDING 9. NEWS PAPER EXP. 10. OFFICE EXPENSES 11. POSTAGE AND COURIER 12. TELEPHONE & MOBILE 13. PRINTING & STATIONARY 14. TRAVELLING 15. VEHICLE RUNNING & MAINTENANCE 16. SALARY TO STAFF COPY OF P&L ACCOUNT IS ENCLOSED (PB27-28) EXAMINATION OF THESE HEADS, CLEARLY SHOWS THAT NONE OF THE EXPENSES EXCEPT INTEREST AND MAINTENANCE ARE ALLOWA BLE AGAINST RENTAL ITA NO. 333/JP/2013 M/S. SENDRA MARBLE CO. (P) LTD. VS. . ITO, WARD 2 (2), JAIPUR . 10 INCOME. WHILE THE MAINTENANCE EXPENSES WILL BE TAKE N CARE OF WHILE GIVING STATUTORY DEDUCTION U/S 24, THE INTEREST EXP ENSES HAVE TO BE EXAMINED IN DETAIL. INTEREST EXPENDITURE AGAINST HO USE PROPERTY IS ALLOWABLE ONLY WHEN THE INTEREST IS PAID FOR CAPITA L BORROWED FOR CONSTRUCTION/ALTERATION/REPAIR OF THE HOUSE PROPERT Y. THIS IS NOT THE CASE OF THE ASSESSEE. RATHER, IN THE CASE OF THE ASSESSEE, THE INTEREST EXPENDITURE IS A FIGURE OBTAINED AFTER NETTING OF INTEREST RECEIVE D AND INTEREST PAID. 7. THE LD. AO NOWHERE DISPUTED THESE EXPENSES AND ALS O NOT MADE ANY ADVERSE COMMENTS THAT THE BUSINESS EXPENSES OR BUSINESS LOSS IS NOT ALLOWABLE AGAINST THE RENTAL INCOME. HENCE ASSESSEE IS ENTITLED FOR THE BUSINESS LOSS ON ACCOUNT OF THESE BUSINESS EXPENSES TO SETT OF AGAINST THE HOUSE PROPERTY INCOME OR ANY OTHER INCOME OTHER THA N TO CAPITAL GAIN AS PER SEC. 71(1) OF THE IT ACT. 8. HENCE ALSO THE AO MAY KINDLY BE DIRECTED TO ALLOW THE BUSINESS EXPENDITURE WHICH IS ALLOWABLE AS PER LAW (SEC. 71( 1) IF THE INCOME IS ASSESSED OR HELD AS INCOME FROM HOUSE PROPERTY INCO ME. 3.5 THE LD. DR RELIED ON THE ORDERS OF THE LOWER AU THORITIES. 3.6 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE INVOLVED IN BOTH THE APPEAL IS RELATING TO RENTAL INCOME/ LEASE INCOME RECEIVED BY THE ASSESSE E. THE ASSESSEE HAS DECLARED THE INCOME AS INCOME FROM BUSINESS AND THE AO HAS TREATED THE SAME AS INCOME FROM HOUSE PROPERTY RELYING ON THE J UDGEMNET OF HON'BLE CHENNAI HIGH COURT IN THE CASE OF CIT VS. CHENNAI P ROPERTIES AND INVESTMENT LTD., 266 ITR 685. THE LD. CIT(A) HAS CO NFIRMED THE ACTION OF THE AO. IT IS OBSERVED THAT JUDGEMNET OF HON'BLE CHENNAI HIGH COURT IN THE CASE OF CIT VS. CHENNAI PROPERTIES AND INVES TMENT LTD. (SUPRA) HAS ITA NO. 333/JP/2013 M/S. SENDRA MARBLE CO. (P) LTD. VS. . ITO, WARD 2 (2), JAIPUR . 11 BEEN REVERSED BY THE HON'BLE SUPREME COURT VIDE IT S ORDER DATED 09-04- 2015 WHILE DECIDING THE CIVIL APPEAL NO. 4494 OF 2 004 IN THE CASE OF M/S. CHENNAI PROPERTIES & INVESTMENT LTD. VS. CIT, CENTRAL-III, TAMIL NADU WHEREIN THE HON'BLE COURT HELD AS UNDER:- WE ARE CONSCIOUS OF THE AFORESAID DICTA LAID DOWN IN THE CONSTITUTION BENCH JUDGEMENT. IT IS FOR THIS REASON , WE HAVE, AT THE BEGINNING OF THIS JUDGMENT, STATED THE CIRCUMSTANCE S OF THE PRESENT CASE FROM WHICH WE ARRIVE AT IRRESISTIBLE CONCLUSIO N THAT IN THIS CASE, LETTING OF THE PROPERTIES IS IN FACT IS THE B USINESS OF THE ASSESSEE. THE ASSESSEE THEREFORE, RIGHTLY DISCLOSED THE INCOME UNDER THE HEAD INCOME FROM BUSINESS. IT CANNOT BE T REATED AS INCOME FROM THE HOUSE PROPERTY. WE, ACCORDINGLY, ALLOW THIS APPEAL AND SET ASIDE THE JUDGMENT OF THE HIGH COURT AND RESTORE THAT OF THE INCOME TAX APPELLATE TRIBUNAL. NO ORDER S AS TO COSTS. CIVIL APPEAL NOS. 4491-4493 OF 2004 THE APPEALS ARE DISPOSED OF IN TERMS OF THE AFORESA ID ORDER IN CIVIL APPEAL NO. 4494 OF 2004. 3.7 THE LD. AR OF THE ASSESSEE HAS ALSO DRAWN OUR A TTENTION TOWARDS MEMORANDUM AND ARTICLE OF ASSOCIATION OF THE ASSESS EE COMPANY WHEREIN THE MAIN OBJECTS TO BE PURSUED BY THE ASSES SEE COMPANY WERE TO HOLD, PURCHASE, ACQUIRE, TO TAKE ON LEASE OR IN ANY OTHER LAWFUL MANNER ANY AREA, LAND, BUILDINGS, STRUCTURES AND TO SELL O R DEAL WITH OR BUILD, DEVELOP, MAINTAIN AND TO ACT AS AGENTS, PROMOTERS, MANGERS AND DEVELOPERS OF REAL ESTATE, LAND AND BUILDING AND AL SO TO LET OR DISPOSE OFF THE SAME ON INSTALMENT BASIS, RENT- PURCHASE BASIS. IN VIEW OF THESE FACTS ITA NO. 333/JP/2013 M/S. SENDRA MARBLE CO. (P) LTD. VS. . ITO, WARD 2 (2), JAIPUR . 12 AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDER ED VIEW THAT THE FACTS OF THE ASSESSEE CASE ARE SIMILAR TO THE FACTS DECID ED BY THE HON'BLE SUPREME COURT IN THE CASE OF M/S. CHENNAI PROPERTIE S AND INVESTMENTS LTD. VS. CIT-III, TAMIL NADU (SUPRA). HENCE, RESPEC TFULLY FOLLOWING THE SAME I ALLOW BOTH THE APPEALS OF THE ASSESSEE. 4.0 IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02 /0 6/2016 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 02/06/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. SENDRA MARBLE CO. (P) LTD. , JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 2 (2), JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 333/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR