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2016 (8) TMI 522 - SUPREME COURT

2016 (8) TMI 522 - SUPREME COURT - [2016] 386 ITR 500 - Nature of Rental income - to be taxed under the head “Income from House Property” or “Profit and gains of business or profession” - Held that:- It is an admitted fact in the instant case that the assessee company has only one business and that is of leasing its property and earning rent therefrom. Thus, even on the factual aspect, we do not find any substance in what has been submitted by the learned counsel appearing for the Revenue. - .....

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s and allow these appeals with no order as to costs. We direct that the income of the assessee shall be subject to tax under the head “Profits and gains of business or profession”. - Civil Appeal No.6437 of 2016, Civil Appeal No.6438 of 2016, Civil Appeal Nos.6439-6440 of 2016, Civil Appeal No.6441 of 2016 - Dated:- 11-8-2016 - Anil R. Dave And L. Nageswara Rao, JJ. For the Appellant : Ms. Radha Rangaswamy, Adv. For the Respondent : Mrs. Anil Katiyar, Adv. JUDGMENT Anil R.Dave, J. 1. Being aggri .....

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and the assessee is receiving income from the said property by way of rent. The main issue in all these appeals is whether the income so received should be taxed under the head Income from House Property or Profit and gains of business or profession . The reason for which the aforestated issue has arisen is that though the assessee is having the house property and is receiving income by way of rent, the case of the assessee is that the assessee company is in business of renting its properties a .....

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v. Commissioner of Income Tax [2015] 373 ITR 673 (SC) that if an assessee is having his house property and by way of business he is giving the property on rent and if he is receiving rent from the said property as his business income, the said income, even if in the nature of rent, should be treated as Business Income because the assessee is having a business of renting his property and the rent which he receives is in the nature of his business income. 4. According to the learned counsel appea .....

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sub-letting is part of a trading operation. The dividing line is difficult to find; but in the case of a company with its professed objects and the manner of its activities and the nature of its dealings with its property, it is possible to say on which side the operations fall and to what head the income is to be assigned. 5. The learned counsel also submitted that the assessee is a private limited company and even as per its Memorandum of Association its business is to deal into real estate an .....

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the company is not having any other business and the said fact is not in dispute at all. 7. For the afore-stated reasons, the learned counsel submitted that the impugned judgment delivered by the High Court is not proper for the reason that the High Court has directed that the income earned by the appellant assessee should be treated as Income from House Property . 8. On the other hand, the learned counsel appearing for the respondent-Revenue made an effort to justify the reasons given by the Hi .....

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nue, leasing and letting out of shops and properties is not the main business of the assessee as per Memorandum of Association and therefore, the income earned by the assessee should be treated as income earned from House Property. He, therefore, submitted that the impugned judgment is just legal and proper and therefore, these appeals should be dismissed. 9. Upon hearing the learned counsel and going through the judgments cited by the learned counsel, we are of the view that the law laid down b .....

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