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The Tax Publishers Asstt. CIT v. Renken Partner [ITA No. 707/Del/2014, dt. 29-4-2016] : 2016 TaxPub(DT) 2211 (Del-Trib) Property or business income. Allowability of penal interest on foreclosure of fixed deposits on which interest were offered as income in earlier year on accrual basis. *Facts:* Assessee firm part of the DLF group had owned a property which was not held as a stock in trade. The assessing officer sought to read income arising from it as business income on plea that the partnership deed had clauses to let out commercial complex for sale along side letting out of rental properties. In the earlier years the same were offered as house property. This was reversed by the Commissioner (Appeals). On further appeal: Assessee had offered interest on fixed deposits as income on accrual basis in earlier years, the said deposits were foreclosed thus the penal interest was claimed as expense under section 57(iii) which was refused by the assessing officer as prior period expense. On appeal Commissioner (Appeals) allowed the same. On further appeal by department: Held in favour of the assessee on both points that the income was house property and the foreclosure interest as an allowable expenditure in the current assessment year.

The Tax Publishers

Asstt. CIT v. Renken Partner [ITA No. 707/Del/2014, dt. 29-4-2016] : 2016 TaxPub(DT) 2211 (Del-Trib)

Property or business income.

Allowability of penal interest on foreclosure of fixed deposits on which interest were offered as income in earlier year on accrual basis.

Facts:

Assessee firm part of the DLF group had owned a property which was not held as a stock in trade. The assessing officer sought to read income arising from it as business income on plea that the partnership deed had clauses to let out commercial complex for sale along side letting out of rental properties. In the earlier years the same were offered as house property. This was reversed by the Commissioner (Appeals). On further appeal:

Assessee had offered interest on fixed deposits as income on accrual basis in earlier years, the said deposits were foreclosed thus the penal interest was claimed as expense under section 57(iii) which was refused by the assessing officer as prior period expense. On appeal Commissioner (Appeals) allowed the same. On further appeal by department:

Held in favour of the assessee on both points that the income was house property and the foreclosure interest as an allowable expenditure in the current assessment year.