| The Tax Publishers2020 TaxPub(DT) 0824 (Mad-HC) : (2020) 422 ITR 0497 : (2020) 317 CTR 0172 INCOME TAX ACT, 1961
Section 14
Since earning of rental income was the exclusive or predominant business of assessee, income earned by way of lease money or rentals by letting out of the property could not be taxed under the Head 'Income from house property', but had to be taxed as business income.
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Head of income - Income from house property or business income - Earning of rental income being exclusive/predominant business of assessee -
Assessee company was incorporated to carry out the business of providing infrastructure amenities, work space for IT companies and constructed the property in question and let it to one such IT company M/s. Cognizant Technology Solutions India Ltd. It claimed the rental income to be taxable as 'Business Income' but AO held such income to be income from house property. Held: It was not even in dispute that all the exclusive and main source of income of assessee was only the rentals and lease money received from the lessees and AO took a different and contrary view mainly to deny the claim of depreciation out of such business income in the form of rentals, without assigning any proper and cogent reason. Merely because lease income or rental income earned from lessees, could be taxed as 'Income from House Property', ignoring the fact that that such rentals were the only source of 'Business Income' of assessee, AO had fallen into error in holding that income was taxable under the Head Income from house property. Amended section 22, now defines 'Income from House Property' as annual value of property, as determined under section 23, consisting of buildings or lands appurtenant thereto of which assessee is the owner, other than such portions of property, as he may occupy for the purposes of any business or profession carried on by him, profits of which are chargeable to income tax, would be chargeable to Income Tax under the head 'Income from house property'. Thus, even the amended definition intends to tax notional income of self-occupied portion of property to run assessee's own business therein as business income. Therefore, other rental income earned from letting out of the property, which was the business of assessee itself, could be taxed as Income from house property.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
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