2010 (11) TMI 1052 - AT - Income Tax

Tribunal classifies club premises rent as house property income, not business income.

The Tribunal upheld the decision classifying the rent received for leasing club premises as income from house property, dismissing the assessee's appeal. ... - Issues involved: Determination of whether the rent received by the assessee for leasing out part of the club premises should be classified as income from house property or business income.Summary:Issue 1: Nature of Income- The assessee leased out club rooms and infrastructures to an educational trust, claiming the income as business income.- The AO considered it as 'income from house property' based on TDS deduction and disallowed expenses.- The CIT(A) upheld the AO's decision, stating that the property was leased out as the owner, not for business exploitation.- The AR argued that the premises were temporarily leased to exploit business assets until construction was completed, citing relevant court decisions.- The DR contended that the premises were not used for business activities as per the Memorandum of Association.- The Tribunal noted that the premises were not utilized for the assessee's business activities and were leased out to an educational institution, not for business purposes.- Citing Supreme Court decisions, the Tribunal concluded that the rent received should be classified as income from house property, affirming the CIT(A)'s decision.Conclusion:- The appeal by the assessee was dismissed, and the income from the leased premises was categorized as income from house property.