Petition dismissed: factory building rent classified as business income, consistent assessment since AY 1984-85; no costs ordered

HC dismissed the petition, upholding the Tribunal and CIT(A)'s conclusion that rental income from the factory building is income from business rather than income from house property. The court noted Assessing Officers had consistently classified the income as business income since AY 1984-85 and no distinguishing feature for the year in question was shown to justify a different treatment. Petition dismissed with no order as to costs.

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Issues involved:
The issue involves the classification of rental income from a factory building as either "income from business" or "income from house property."

Summary:

The petition under section 256(2) of the Income-tax Act, 1961 was filed by the Revenue seeking a direction to the Income-tax Appellate Tribunal to refer a question regarding the classification of rent received from a factory building. The Assessing Officer initially treated the income as "income from house property," but the Commissioner of Income-tax (Appeals) and the Tribunal considered it as "business income" due to the assessee carrying on business activities in the premises.

The Tribunal noted that in previous years, the income from the factory building had consistently been treated as business income by the Assessing Officers. Without any distinguishing features presented for the current assessment year, the Tribunal upheld the treatment of the income as business income. The court emphasized the importance of consistency in such matters unless there is a material change in facts.

The court, after hearing arguments from both sides, found no reason to question the Tribunal's decision. It was highlighted that for the sake of consistency, the same treatment should continue unless there are significant changes in circumstances. As no distinguishing features were identified for the current assessment year, the petition was dismissed with no costs imposed.

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