January 2019

Sections 28, 40A(2)(b) - If the assessee derives income from developing properties and leasing them out, income is chargeable to tax as ‘business income’ following the concept of consistency. No disallowance u/s. 40A(2)(b) can be sustained if the AO fails to specifically bring the actual fair market value on record on basis of corroborative evidences.

Jagdish T. Punjabi / Devendra Jain / Tejaswini Ghag
Chartered Accountants

25.  (2018) 66 ITR (Trib.) 116 (Mumbai) ACIT vs. Grew Industries Pvt. Ltd. ITA No.: 5427/Mum/2016 A.Y.: 2011-12 Dated: 9th May, 2018

 

Sections 28, 40A(2)(b) - If the assessee derives income from developing properties and leasing them out, income is chargeable to tax as ‘business income’ following the concept of consistency.

 

No disallowance u/s. 40A(2)(b) can be sustained if the AO fails to specifically bring the actual fair market value on record on basis of corroborative evidences.

 

FACTS


Briefly, facts were that the assessee - a company, was engaged in the business of development of commercial properties including I.T. Parks, offices etc., and given them on lease. The Assessing Officer (AO) intended to treat the lease rent as ‘Income from house property' as against 'Business income' as offered by the assessee. Upon this, the assessee explained that the I.T. Park was developed by Salarpuria Properties Pvt Ltd (SPPL) on the land belonging to the assessee. That the assessee developed the property to be used as I.T. Park in Bangalore keeping the need of I.T Sector in Bangalore and office premises of several I.T Companies were located in the I.T. Park. Also, the development and maintenance of I.T. Park was a very complex commercial activity, which required continuous and considerable efforts so as to provide services round the clock. It was submitted, as per secti

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