INCOME TAX ACT, 1961

Section 14

Head of Income - Income from renting of commercial property, owned by assessee - 'Income from house property' or 'Business Income' -

Assessee-firm was owner of a commercial property. It showed rental income from the said property under the head 'Business Income'. AO was of the view that such rental income would be assessable under the head 'Income from house property' as the assessee was the owner of such property. Assessee contended that it was engaged in business of renting of commercial property and there was no other income earned by it and hence, the said rental income would be treated as business income. Held: It was found that assessee was mainly engaged in business of leasing of properties and its substantial income was also from leasing of properties and it was carrying out all the activities, which were relevant for earning the income for those properties by extending various facilities. Thus, it could be said that holding of properties and earning income by letting out those properties was the main objective of the assessee. Further, it was also an admitted fact that the assessee had only one business that was of leasing its property and earning rent therefrom. Therefore, the income arising therefrom was necessarily assessable under the head 'Business Income'.

REFERRED : Rayala Corporation Pvt. Ltd. v. Asstt. CIT (2016) 386 ITR 500 (SC) : 2016 TaxPub(DT) 3682 (SC) Chennai Properties & Investments Ltd. v. CIT (2015) 373 ITR 673 (SC) : 2015 TaxPub(DT) 2180 (SC) Universal PlastLtd. &Ors. v. CIT (1999) 237 ITR 454 (SC) : 1999 TaxPub(DT) 1236 (SC) Narain Swadeshi Weaving Mills v. Commissioner of Excess Profits Tax (1955) SC 176 : (1954) 26 ITR 765 (SC) : (1955) 1 SCR 952 (SC) : 1954 TaxPub(DT) 0121 (SC)

FAVOUR : In assessee's favour

A.Y. : 2013-14, 2010-11 & 2011-12

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