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2019 (5) TMI 1875 - AT - Income TaxCorrect head of income - Rental Income received by the assessee on leasing properties - income from house property OR profits and gains of business/profession - HELD THAT:- Lease rental is to be paid to the lessor only after the lessor i.e assessee herein, completes all the interior, fittings and furniture works and has provided the infrastructural facilities and materials to the lessees as per Annexure – A to the agreement. Therefore, it is not mere bare structure that is provided by the assessee to the tenant on rent but it is with furniture and fixtures along with power back up and AC facility. On perusal of the returns of income for earlier assessment years, we find that the assessee had let out properties at Hyderabad, Mumbai & Delhi, but the income from said properties is not offered during the relevant assessment year. Whether such properties were let out since they were unsold during the relevant period and whether they were sold subsequently to which, there is no rental income during the relevant assessment year is not clear from the details filed before us. Unless the assessee is carrying on a systematic and organized activity to exploit the property commercially, it cannot be taxed as business income. We find that except for creating the infrastructure as per the requirement of the lessee, the assessee is not providing any other service during the year as is evident from the profit and loss account of the assessee for the relevant assessment year. The only expenses claimed by the assessee are interest, salaries & administrative expenses. Therefore, it is clear that the assessee’s intention is to enjoy the rental income on a long term basis by leasing out the premises and not to exploit the same commercially on short term basis. We are inclined to accept the contentions of the assessee that the rental income is to be assessed as ‘income from house property’ as offered by the assessee and as accepted by the Revenue in the earlier years up to A.Y 2011-12. Appeal filed by the assessee is allowed.
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