Business income or house property income
Facts:
Assessee a BPO company had large non-current investments in
properties which was let out and the same was offered as income from house
property and standard deduction for repairs @ 30% was claimed. Invoking
revision powers the PCIT questioned the reasoning of assessee claiming standard
deduction citing that they should have offered it as a business income and thus
were not eligible for the standard deduction of 30% meant for house property
income only. On higher appeal -
Held in favour of the assessee that letting out of the
property was only incidental to their business income. As per the schedular
system of taxation income meant to be offered for house property cannot be read
as business income. The revision by PCIT was thus held to be incorrect.
Applied:
Raj Dadarkar & Associates (2017) 81 taxmann.com 193
(SC) : 2017 TaxPub(DT) 1173 (SC)
Meeraj Estate & Developers (2020) 113 taxmann.com 231
(Allahabad) : 2019 TaxPub(DT) 7131 (All-HC)
Dissented:
Chennai Properties & Investments Ltd. (2015) 56 taxmann.com 456
(SC) : 2015 TaxPub(DT) 2180 (SC)
Ed. Note: The epochal
verdicts of -
East India Housing and Land Development Trust Limited v.
CIT (1961) 42 ITR 49 (SC) : 1961 TaxPub(DT) 0132 (SC)
Sultan Brothers (P) Limited v. CIT (1964) 5 SCR (SC)
may be referred to wherein it was held that the legislature
has specifically carved a special provision for letting of property thus was
held as house property income.
The Apex court verdict of Chennai properties &
Investments case thus appears to be one rendered per incuriam in the
opinion of the editors.
Case: Effective
Teleservices (P) Ltd. v. Pr. CIT 2024 TaxPub(DT) 1125 (Ahd-Trib)