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2014 (12) TMI 794 - AT - Income TaxTreatment of rental income as income from house property – assessee into the business of letting out/renting out of business centre – Deduction u/s 24(1) disallowed – Held that:- The asset which is let out is held as investment and not as stock in trade - In all the preceding years, rental income is shown as income from house property and which has been accepted by the Revenue as such - the rule of res-judicata does not apply to income tax proceedings but, at the same time, the rule of consistency does apply - when the facts are similar and rental income from the same property is accepted as income from house property in the preceding years, there cannot be any justification to treat the rental income as business income in the year under consideration without there being any change in the facts or in law - assessee is not carrying on any activity which can be said to be in the nature of business activity. It is simply receiving the rent of the building owned by it – the similar issue has already been decided in Asstt. Commissioner of Income Tax Versus M/s Atria Partners, DLF Centre [2014 (3) TMI 500 - ITAT DELHI] - the partnership deed has mentioned not only the setting up of the commercial complex for sale but also mentioned for letting out and earning rental income - That it is a common practice that the partnership deed or a memorandum of association of the company are drafted covering large number of activities but which of several activities mentioned in the partnership deed or memorandum of association is carried on by the assessee will be relevant for the purpose of assessment under the Income Tax Act - the assessee owns a commercial complex for letting out and earning rental income than merely because the partnership also permits the assessee to sale the commercial complex will not change the nature of rental income - the rental income from a building is to be assessed under the head income from house property – thus, the order of the CIT(A) is upheld – Decided against revenue. Allowance of expenditure from income from other sources u/s 57(iii) – Whether the assessee could not prove that such expenditure was expended wholly & exclusively for the purpose of earning such income – Held that: CIT(A) was rightly of the view that the assessee has not been able to justify the claim of the entire expenses - However, it would not be judicious to assume that no expenses whatsoever has been incurred for earning an income of over ₹ 60 lacs from other sources - assessee has income from other sources, out of which, the total expenses allowed by the CIT(A) were only ₹ 1,20,000/- which is approximately 2% of the income from other sources and remaining 98% has been taxed - Incurring of 2% of the expenses on office maintenance, salary, conveyance, legal and professional fee etc. cannot be said to be excessive or unreasonable – thus, the order of the CIT(A) is upheld – Decided against revenue.
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