Tribunal treats lease rent as 'Income from other sources' for 2007-08 assessment year

The Tribunal allowed the Revenue's appeal, ruling that the income from lease rent should be treated as "Income from other sources" for the assessment year 2007-08. The Tribunal found that despite assertions of steps being taken to revive business activities, there was a lack of supporting evidence after over 12 years, leading to the reversal of the Ld. CIT(A)'s decision and restoration of the Assessing Officer's view.

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Issues:
Whether the income from lease rent should be assessed under the head "Income from business" or "Income from other sources."

Analysis:
The appeal filed by the Revenue challenged the order of the Ld. CIT(A) holding that the assessee intended to revive business activities, thus making the income from lease rent assessable under the head "Income from business" for the assessment year 2007-08. The assessee had leased out its plant and machinery to another company and claimed the lease rent as business income, while the Assessing Officer assessed it under "Income from other sources."

The Ld. DR argued that since the assessee had not commenced the business since 1995, the income from lease rent should be categorized under "Income from other sources." On the other hand, the Ld. AR contended that previous decisions by ITAT in the assessee's case supported the claim that the intention to continue business activities existed, citing a similar view taken by the Bench for the assessment year 2003-04.

The Tribunal emphasized that the determination of the assessee's intention to revive business activities is a factual inquiry based on the circumstances of each year. While previous decisions favored the assessee due to a narrow gap between closure and assessment years, the Tribunal found that for the assessment year 2007-08, over 12 years had passed without concrete evidence of intent to revive business. Despite the Ld. AR's assertion of steps being taken, the Tribunal noted the lack of supporting materials, leading to the reversal of the Ld. CIT(A)'s decision and restoration of the Assessing Officer's view.

In conclusion, the Tribunal allowed the Revenue's appeal, ruling that the income from lease rent should be treated as "Income from other sources" for the assessment year 2007-08.

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