INCOME TAX ACT, 1961

Section 14

Head of Income - Business income or Income from house property - Rental income earned by assessee from leasing out its own property -

AO noticed that assessee-company earned income from leasing of property and offered such income to tax under the head 'house property'. However, AO proceeded to conclude that the said income would be taxable as 'business income' since the business of assessee was to lease out its property. Assessee contended that when subject property was owned by it and the same was leased on the basis of rental agreement, such rental income would be taxed under the head 'income from house property'. Held: It was found that Revenue had been accepting the rental income of the assessee qua the property in question for the last 15 years as 'income from house property' and in the subsequent years also, the same was treated as 'income from house property'. Further, it was not in dispute that assessee was owner of the property in question and the same leased out on the basis of rental agreement. Therefore, as rental income was earned by assessee from leasing out the property owned by it, such income would be chargeable to tax under the head 'income from house property'.

Followed:Raj Dadarkar & Associates v. ACIT-CC-46 (2017) 394ITR 592 (SC): 2017 TaxPub(DT)1173(SC) Radhasoami Satsang v. CIT (1992) 193 ITR 321 (SC): 1992 TaxPub(DT) 858 (SC) Select Infrastructure (P) Ltd. v. Addl. CIT, DCIT, New Delhi in (I.T.A. No. 3751/DEL/2013, dt. 4-10-2017)

REFERRED : M/s. Chennai Properties Reinvestments Ltd. v. The CIT (2015) 373 ITR 673 (SC): 2015 TaxPub(DT) 2180 (SC)

FAVOUR : In assessee's favour

A.Y. : 2014-15

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