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2016 (9) TMI 199 - ITAT DELHI

2016 (9) TMI 199 - ITAT DELHI - TMI - Treatment to rental income - “Business Income” OR “Income from House Property” - Held that:- As decided in assessee's own case we are of the view that Ld. CIT(A) has rightly held that the rental income should be assessed as Income from House Property. Therefore, AO is not justified in treating the above income as business income and CIT was rightly directed to allow deductions claimed by the appellant u/s. 24. - Decided against revenue - ITA Nos. 4550-4553/D .....

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cal, hence, the appeals were heard together and are being disposed of by this common order for the sake of convenience, by dealing with ITA No. 4550/Del/2014 (AY 2005-06). 2. Since the grounds in all the four appeals are common, hence, we are reproducing the following grounds of appeal of ITA No. 4550/Del/2014 only, for the sake of brevity. 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in treating the rental income of the assessee as Business Income instead o .....

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tances of the case and in law, the Ld. CIT(A) has erred in relying on the High Court decision in assessee s own case in earlier year ignoring the fact that the department has not accepted the decision of the Hon ble High Court on merits. However, in the light of the CBDT s Instruction No. 3/2011 due to low tax effect did not contest in the Hon ble Supreme court. 4. The appellant craves to be allowed to add any fresh grounds of appeal and / or delete or amend any of the grounds of appeal. 3. The .....

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ssee, in its income from house property. Accordingly, notice u/s. 148 of the Act, was issued on 28.3.2012 and served upon the assessee on 30.3.2012, after recording reasons for the same on 28.3.2012 and approved by the appropriate authorities. In compliance of the notice u/s. 148 of the Act, the assessee filed its reply dated 7.6.2012 and requested that the original return filed u/s. 139(1) on 27.10.2007 may be treated as filed in response to this notice. 3.1 The Assessee company was formed in 1 .....

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s Authorised Representative attended the assessment proceedings and filed the details from time to time. Thereafter, AO observed that it is clear that the letting out of unsold flats in Mercantile House from which the assessee derives income from rent has a definite and indentifiable nexus with the business of the assessee. Hence, the said income has to be assessed as Income from Business and not as income from House Property . Accordingly, deduction claimed by the assessee u/s. 24 of the Act a .....

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iled the present appeal before the Tribunal. 6. At the time of hearing Ld. DR relied upon the order of the AO and reiterated the contentions raised by the Revenue in the grounds and requested that addition made by the AO may be upheld. 7. On the contrary, Ld. A.R. of the assessee relied upon the order of the ld. CIT(A). He draw our attention towards the Hon ble High Court judgment dated 17.5.2013 passed in ITA No. 238-240/Del/2013 in the case of assessee titled as New Delhi Hotels Ltd. vs. ACIT .....

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Ld. First Appellate Authority has elaborately discussed the issue in dispute by considering the submissions of the assessee and adjudicated the issue in dispute vide para no. 4.1 to 4.2 at pages 3 to 5 in his impugned order. The said relevant para 4.1 to 4.2 of the impugned order is are reproduced as under:- 4.1 I have carefully considered the submissions of the A/R of the appellant company, the facts of the case as well as the findings of the A.O. Ground no. 1 of appeal is general in nature an .....

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Gurgaon. The company has main object of all kinds of construction work and sale/purchase of roperties. The assessee has shown unsold flats as its stock-in-trade as per Schedule 6 of Balance Sheet and rent from unsold fl.ats at Mercantile House, Connaught Place was shown as Income from House Property. The assessee has earned income of ₹ 1,88,23,077/- from letting out of the said property and after claiming deduction uls 24 of ₹ 40,86,258/- and payment of house tax of ₹ 52,02,21 .....

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ting thereto should be assessed as business income. Therefore, income from rent of property is treated by the AO as business income and the deductions claimed uls 24 of the IT Act, 1961 amounting to ₹ 40,86,258/- is added back to the income of the assessee. 4.2 It is seen that identical addition was made by the AO in A Y 2004-05, 2008-09 and 2009-10. In the above assessments, AO disallowed the claim of deduction u/s 24 and rent from property held as stock-in-trade was treated as business i .....

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009-10 upheld the view of the ld. CIT(A) that rental income should be assessed under the head Income from House Property as under :- "4. The Tribunal held that it would fall under the head of "profits and gains from business and profession", whereas it is the appellant/assessee's contention that it would fall within the head "income from house property". It appears that this issue is no longer debatable in view of the decision in the case of CIT v Ansal Housing Finan .....

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m the business and not under the head "income from house property"?" This court answered that question in the negative by ITA Nos. 238/13,239/13&240/13 Page 2 of 4 following the decision in the case of Ansal Housing Finance & Leasing Co. Ltd (supra). 5. Mr Maratha appearing on behalf of the revenue contended that Ansal Housing Finance & Leasing Co. Ltd (supra) was a decision where the question was with regard to deemed rent on the basis of annual letting value (ALV) wh .....

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estion as to whether the Income-tax Appellate Tribunal was right in holding that rental income should be assessed under the head of "profits and gains from business and profession" and not under the head "income from house property", we answer the same in the negative. We may add, however, that the learned counsel for the appellant had also taken the plea of consistency ITA Nos. 238/13,239/13&240/13 Page 3 of 4 but, we have not examined the same as it was not necessary fo .....

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After going through the findings of the Ld. CIT(A) as aforesaid, we have seen that identical addition was made by the AO in AY 2004-05, 2008-09 and 2009-10. In the above assessments, AO disallowed the claim of deduction u/s 24 and rent from property held as stock-in-trade was treated as business income as against assessee s claim of the same as Income from House Property. Ld. CIT(A) allowed the appeal of the assessee and upheld the claim of the assessee that the rental income is to be treated a .....

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from business and profession", whereas it is the appellant/assessee's contention that it would fall within the head "income from house property". It appears that this issue is no longer debatable in view of the decision in the case of CIT v Ansal Housing Finance & Leasing Co. Ltd. decided on 31.10.2012 in ITA No. 18/1999. That decision has, subsequently, been followed in CIT v. Discovery Estates Pvt. Ltd (in ITA Nos. 1089/11 and 1090/2011) and CI v. Discovery Holding Pvt. .....

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Ansal Housing Finance & Leasing Co. Ltd (supra). 5. Mr Maratha appearing on behalf of the revenue contended that Ansal Housing Finance & Leasing Co. Ltd (supra) was a decision where the question was with regard to deemed rent on the basis of annual letting value (ALV) whereas in the present appeals, the issue is with regard to the actual rent received in respect of flats let out by the appellant/assessee. However, we find that in Discovery Estates Pvt. Ltd and Discovery Holding Pvt. Ltd .....

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