Tax on rental income from letting land to Food Corp. as 'Income from other sources' rather than 'Income from house property'.

The High Court determined that rental income from letting out open plinths to the Food Corporation of India should be taxed under 'Income from other sources' rather than 'Income from house property'. The Court clarified that only income from property consisting of buildings or land appurtenant thereto can be assessed as 'Income from house property'. Since no building was let out, the rent received for letting out land only cannot be considered as income from house property. The Court upheld the Tribunal's decision, ruling in favor of the Revenue.

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Issues involved:
The issue involves determining whether rental income from letting out open plinths to the Food Corporation of India should be assessed under the head 'Income from other sources' or 'Income from house property'.

Details of the judgment:
The Tribunal found that the open land with kutcha plinths leased to the Food Corporation of India cannot be considered as land appurtenant to a house, as it is not necessary or connected with the enjoyment of the house. The Tribunal held that the income derived from this arrangement should be taxed under 'Income from other sources' rather than 'Income from house property'. The claim for a fixed statutory deduction of 1/6th for repairs was also denied.

The High Court rejected the assessee's contention that the entire open land should be considered appurtenant to the residential house, as what was let out were kutcha plinths on open land, not house property. The Court clarified that under section 22 of the Income-tax Act, only income from property consisting of buildings or land appurtenant thereto can be assessed as 'Income from house property'. Since no building was let out in this case, the rent received for letting out land only cannot be considered as income from house property.

The Court emphasized that the concept of 'appurtenant' refers to land necessary for the enjoyment of a building, not just any land. A similar issue was decided against the assessee by the Madras High Court in a previous case. Therefore, the Court ruled in favor of the Revenue, deciding that the rental income should be assessed under 'Income from other sources'.

In conclusion, the High Court upheld the Tribunal's decision and disposed of the reference accordingly.

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