CIT v. Chennai Properties & Investments Ltd.

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers2005 TaxPub(DT) 1247 (Mad-HC) : (2005) 005 (I) ITCL 0070 : (2005) 274 ITR 0117 : (2006) 153 TAXMAN 0224 CIT v. Chennai Properties & Investments Ltd. () INCOME TAX --Head of income----BUSINESS INCOME OR INCOME FROM HOUSE PROPERTYRental income from house property--Held: The Tribunal was not correct in holding that rental income derived by the assessee-company from house property would be assessed under the head 'business' instead of 'Income from house property'. Income Tax Act, 1961 s.14 Income Tax Act, 1961 s.22 Income Tax Act, 1961 s.28(i) CIT v. Chennai Properties & Investments Ltd. In The Madras High Court N. V. Balasubramanian & S. Sardar Zackria Hussain JJ. Tax Case No. 281 of 2001 20 January 2005. Counsel : Mrs. Pushya Sitaraman, for the Commissioner (P) (P) S. janardhanaraja, for the Assessee. JUDGMENT N.V. Balasubramanian J. The Income Tax Appellate Tribunal has stated a case and referred the following question of law for our consideration under section 256(1) of the Income Tax Act, 1961 : 'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the rent receipts derived by the assessee -company from letting out of properties should be assessed under the head 'Business' thereby allowing the expenses incurred for letting out of properties as business expenditure ?' The assessment year involved in this case is 1987-88. The assessee is a company deriving, inter alia, rental income from the properties. In the assessment proceedings for the said assessment year, the rental income derived by the assessee- company was assessed under the head 'House property', which was objected to by the assessee. The assessee carried the matter in appeal before the CIT(A), and the said authority allowed the appeal holding that the income from the property should be assessed under the head 'Business'. The revenue challenged the order of the CIT(A) before the Income Tax Appellate Tribunal. The Appellate Tribunal followed its own order rendered in the assessee's own case for the assessment year 1985-86 and held that the income derived from the property should be assessed under the head 'Business'. The Income Tax Appellate Tribunal, at the instance of the revenue, has stated a case and referred the question of law set out earlier. It is stated by learned standing counsel for the revenue that the order of the Income Tax Appellate Tribunal for the assessment year 1985-86 along with other years was the subject-matter of reference in Tax Cases Nos. 95, 197 and 209 of 2000 and this court in CIT v. Chennai Properties and Investments Ltd. (2004) 266 ITR 685, held that the income derived from letting out the property should be assessed as income from the 'house property, and not under the head 'Business'. Following the same, we hold that the Tribunal was not correct in holding that the rental income from the property should be assessed under the head 'Business' as there is no dispute that the factual situation remains the same as that of the earlier assessment years. Consequently, we answer the question of law referred to us in the negative, in favour of the revenue and against the assessee. No costs. Mr. (P) (P) S. Janardhana Raja, learned counsel for the assessee, submits that the Supreme Court has granted special leave to appeal against the judgment of this court cited supra, in S. L. (P) No. 13876 of 2003 dated 23-7-2004, and seeks oral leave for the grant of certificate for leave to appeal to the Supreme Court. We find that the Supreme Court has already granted special leave to appeal against the judgment of this court in the case of CIT v. Chennai Properties and Investments Ltd. (2004) 266 ITR 685, which we followed in this judgment. Further, it is stated that the appeal is pending before the Supreme Court, and also taking note of the fact that the points raised in the tax case are bound to recur in subsequent assessment years as well, we grant the necessary leave to appeal to the Supreme Court of India and also the certificate that this case is a fit case for appeal to the Supreme Court of India. OPEN SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2005 TaxPub(DT) 1247 (Mad-HC) : (2005) 005 (I) ITCL 0070 : (2005) 274 ITR 0117 : (2006) 153 TAXMAN 0224

CIT v. Chennai Properties & Investments Ltd. ()

INCOME TAX

--Head of income----BUSINESS INCOME OR INCOME FROM HOUSE PROPERTYRental income from house property--Held: The Tribunal was not correct in holding that rental income derived by the assessee-company from house property would be assessed under the head 'business' instead of 'Income from house property'.

Income Tax Act, 1961 s.14

Income Tax Act, 1961 s.22

Income Tax Act, 1961 s.28(i)

CIT v. Chennai Properties & Investments Ltd.

In The Madras High Court N. V. Balasubramanian & S. Sardar Zackria Hussain JJ.

Tax Case No. 281 of 2001 20 January 2005.

Counsel : Mrs. Pushya Sitaraman, for the Commissioner (P) (P) S. janardhanaraja, for the Assessee.

JUDGMENT

N.V. Balasubramanian J.

The Income Tax Appellate Tribunal has stated a case and referred the following question of law for our consideration under section 256(1) of the Income Tax Act, 1961 :

'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the rent receipts derived by the assessee -company from letting out of properties should be assessed under the head 'Business' thereby allowing the expenses incurred for letting out of properties as business expenditure ?'

The assessment year involved in this case is 1987-88. The assessee is a company deriving, inter alia, rental income from the properties. In the assessment proceedings for the said assessment year, the rental income derived by the assessee- company was assessed under the head 'House property', which was objected to by the assessee. The assessee carried the matter in appeal before the CIT(A), and the said authority allowed the appeal holding that the income from the property should be assessed under the head 'Business'. The revenue challenged the order of the CIT(A) before the Income Tax Appellate Tribunal. The Appellate Tribunal followed its own order rendered in the assessee's own case for the assessment year 1985-86 and held that the income derived from the property should be assessed under the head 'Business'. The Income Tax Appellate Tribunal, at the instance of the revenue, has stated a case and referred the question of law set out earlier.

It is stated by learned standing counsel for the revenue that the order of the Income Tax Appellate Tribunal for the assessment year 1985-86 along with other years was the subject-matter of reference in Tax Cases Nos. 95, 197 and 209 of 2000 and this court in CIT v. Chennai Properties and Investments Ltd. (2004) 266 ITR 685, held that the income derived from letting out the property should be assessed as income from the 'house property, and not under the head 'Business'. Following the same, we hold that the Tribunal was not correct in holding that the rental income from the property should be assessed under the head 'Business' as there is no dispute that the factual situation remains the same as that of the earlier assessment years.

Consequently, we answer the question of law referred to us in the negative, in favour of the revenue and against the assessee. No costs.

Mr. (P) (P) S. Janardhana Raja, learned counsel for the assessee, submits that the Supreme Court has granted special leave to appeal against the judgment of this court cited supra, in S. L. (P) No. 13876 of 2003 dated 23-7-2004, and seeks oral leave for the grant of certificate for leave to appeal to the Supreme Court. We find that the Supreme Court has already granted special leave to appeal against the judgment of this court in the case of CIT v. Chennai Properties and Investments Ltd. (2004) 266 ITR 685, which we followed in this judgment. Further, it is stated that the appeal is pending before the Supreme Court, and also taking note of the fact that the points raised in the tax case are bound to recur in subsequent assessment years as well, we grant the necessary leave to appeal to the Supreme Court of India and also the certificate that this case is a fit case for appeal to the Supreme Court of India.

OPEN