Assessee Income from business can't be treated as 'income from house property'.
Assessee Income from business can't be treated as 'income from house property'.
Assessee rented properties & showed rental income as income from business in return filed by assessee. AO denied taxing it as business income. CIT(A) confirmed it on appeal. On appeal, HC held, income derived by letting out properties would not be income from business but could be assessed only income from house property. SC held, assessee rightly disclosed income u/h Income from business. It can't be treated as 'income from house property'-000430
Facts in Brief:
1. Assessee Company incorporated under the Indian Companies Act.
2. The assessee had rented out such properties and the rental income received therefrom was shown as income from business in the return filed by the assessee.
3. The assessing officer, however, refuse to tax the same as business income. According to the assessing officer, since the income was received from letting out of the properties, it was in the nature of rental income.
4. He, thus, held that it would be treated as income from house property and taxed the same accordingly under that Head.
5. On appeal, Commissioner of Income Tax (Appeals) allowed same by his orders holding it to be income from business and directed that it should be treated as such and taxed accordingly.
6. Aggrieved by that order, the Department filed appeal before the Income Tax Appellate Tribunal which declined to interfere with the order of the Commissioner of Income Tax (Appeals) and dismissed the appeal.
7. Appeal of Department has been allowed by the High Court holding that the income derived by letting out of the properties would not be income from business but could be assessed only income from house property.
On appeal, SC held a under:
8. We are conscious of the aforesaid dicta laid down in the Constitution Bench judgment. It is for this reason, we have, at the beginning of this judgment, stated the circumstances of the present case from which we arrive at irresistible conclusion that in this case, letting of the properties is in fact is the business of the assessee. The assessee therefore, rightly disclosed the income under the Head Income from Business. It cannot be treated 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 orders as to costs.
Case Reference-Chennai Properties & Investments Ltd. v. Commissioner of Income-tax, Central -III, Tamil Nadu
SUPREME COURT OF INDIA
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