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2017 (10) TMI 1569 - AT - Income TaxRevision u/s 263 - computation of rental income under the head ‘income from house property’ - whether the rental income earned by the assessee should be assessed under the head ‘income from house property or ‘business income’? - HELD THAT:- Assessee ought to have submitted relevant information before the AO to substantiate that the income earned on leasing out the properties is assessable to tax under the head “property income”. AO had not indicated that he has actually called for any information to seek clarification as to whether the impugned income is assessable under the head “income from house property” or under the head “business income”. In the backdrop of the available rulings as observed (M/s Rayala Corporation Pvt. Ltd.[2016 (8) TMI 522 - SUPREME COURT] that in the event of leasing out property by a company, such income should be treated as its business income. Similar view has taken in the case of Chennai Properties & Investments Ltd. [2015 (5) TMI 46 - SUPREME COURT]. Since such matters have to be considered by analysing under broader aspects of law by referring to the facts of each case, it is the duty of the AO to have obtained the relevant information, but, the record does not indicate that the AO applied his mind. Under these circumstances, we are of the view that the case law relied upon by the assessee (Malabar Industrial Co. Ltd.[2000 (2) TMI 10 - SUPREME COURT] and other such cases taking a similar view) have no application to the instant case; in the aforecited cases, only AO has taken a specific stand upon application of mind, it is one of the views possible in the circumstances and those case law cannot be applied where the AO has not applied his mind. Having regard to the circumstances and for the detailed reasoning given by the revisional authority, we are of the view that the order passed by the AO is erroneous and prejudicial to the interests of revenue. Thus the issue as to whether the said income is assessable under the head “income from house property” or “income from business” has to be considered in the backdrop of the case law on the issue and therefore, the matter deserves to be set aside to the file of the AO instead of directing the AO to treat the income as income from business. Accordingly, we modify the order of revisional authority and direct the AO to reconsider the matter in accordance with law by properly analysing the facts and consider the issue on the touchstone of the case law available on the issue. Appeal filed by the assessee is treated as partly allowed for statistical purposes.
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