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2016 (6) TMI 648 - KARNATAKA HIGH COURT

2016 (6) TMI 648 - KARNATAKA HIGH COURT - TMI - Rental income derived from the industrial sheds - ‘income from house property’ OR ‘income from business’ - Held that:- It is not the case of the appellants-Revenue that thedecision of the regular assessment for the assessment year 2007-08 has been carried before the higher forum or a different view is taken. Under the circumstances, when the aforesaid stand of the department in respect of the very assessee for the subsequent assessment year is acce .....

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ng that the income of the assessee has to be treated income from house property and not as income from business even when the assessing authority rightly treated income of assessee as business income since assessee had systematically involved in the business of letting out industrial sheds with all facilities and carried out composite activity of constructing sheds and letting out for business purpose alone which was sole intention of assessee? 2. We have heard Mr.E.I.Sanmathi, learned Counsel a .....

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on of another property and the interest is also debited. Under these circumstances, the Income Tax Appellate Tribunal (hereinafter referred to as the Tribunal for the sake of brevity) ought not to have held that the income is to be treated as the income from house property and not the business income . 4. The learned Counsel relied upon the decision of this Court in case of Commissioner of Income Tax Vs. Velankani Information Systems (P.) Ltd. reported at (2013) 218 TAXMAN 0088 (Karnataka) and a .....

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hat he has been offering to tax the rental income received from the letting out of these properties as Income from House Property since Assessment Year 2003-04 onwards and the same has been accepted by the Department. The learned Authorised Representative has also drawn our attention to pages 54 and 57 of the Paper Book filed on 4.3.2015, which is the assessment order passed under Section 143(3) rws 147 of the Act for Assessment Year 2007-08 dt.21.12.2010 in the assessee s own case, wherein the .....

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t must therefore be held that even if an item of income is earned in the course of business, it will not necessarily fall within the head Profit and Gains from Business and held that if an assessee carries on the business of purchasing and selling buildings, the income earned from the properties so long as they are owned by the assessee will be shown under the head Income from House Property and not under the head Profits and Gains from Business. In the case on hand, even assuming for a movement .....

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come from House Property and not under the head, Profits and Gains from Business. 6.3.3 The Hon ble Karnataka High Court in the case of Bhoopalam Commercial Complex and Industries Pvt.Ltd. (supra) following the decision of the Hon ble Apex Court in the case of Podar Cements P.Ltd.(supra), held that despite the fact that the assessee had as one of its objects the activity of constructing commercial complexes and earning rent therefrom, the fact that the rent is earned from out of letting out of a .....

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In the factual matrix of the case on hand, it is clear that the intention of the assessee is to earn rental income from letting out of the property and therefore the same rental income ought to be assessed as Income from House Property and not as Income from Business . In this context, we find that the decisions of the Hon ble Apex Court and the Hon ble High Court of Karnataka relied upon by the assessee, are squarely applicable to the case on hand and therefore hold that the rental income earn .....

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sment year 2007-2008, the regular assessment proceedings were undertaken and the order under Section 143(3) read with Section 147 of the Income Tax Act, dated 21.12.2010 was passed, whereby the rental income received from letting out the assessee s property was treated as income from house property . 6. Be it recorded that in the present case, the assessment year was of 2005-2006, whereas for the subsequent year as referred to hereinabove for 2007- 2008, the Department has accepted the rental in .....

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