INCOME TAX ACT, 1961

Section 143(3) Section 22

Assessment - Protective assessment of lease rentals in assessee's hands - Assessee not being de facto owner -

Assessee entered into agreement with M/s. A whereby assessee gave interest-free deposits of Rs. 75 lakhs to M/s. A in return of right to receive rental income arising out of lease of retail space/shops. Rental income so received was offered by the assessee as income from house property and assessee claimed standard deduction of 30%, thereagainst. AO held that lease rental could not be taxed in hands of assessee, but in hands of actual owner of property, being M/s. A. Also, AO denied standard deduction of 30% as claimed by the assessee.Held: Since assessee was not the de facto owner but received rental income from leased premises which was originally owned by M/s. A such rental income should be assessed in hands of M/s. A by virtue of sections 22 and 27 and, therefore, protective assessment made in hands of assessee to the extent of lease rental income deserved to be deleted. Also, assessee could not be allowed to claim standard deduction under such circumstances in respect of rental income. Accordingly, AO was directed to tax rental income in hands of M/s. A by granting standard deduction available as per law.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2009-10 to 2011-12

INCOME TAX ACT, 1961

Section 60

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