Tribunal rules property income over business income for rental company, denies expense deduction.

The Tribunal upheld the assessment treating the income as property income rather than business income for a company deriving revenue solely from property rental. The company's claim for deduction of administrative expenses against rental income was denied due to the absence of evidence of commercial activity. The Tribunal emphasized the importance of the primary intention behind property exploitation in determining income nature and affirmed that income falling under one category cannot be taxed under another. The appeal was dismissed, supporting the CIT(A)'s decision.

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Issues:
1. Whether the income derived from the property should be treated as income from business or property.
2. Whether the claim of deduction for administrative expenses should be allowed against rental income.

Analysis:
1. The case involved a company engaged in construction but deriving income solely from letting out a property. The Assessing Officer (AO) treated the rental income as income from house property, limiting the deduction to 30% of the Annual Letting Value (ALV). The company argued that letting out property was a main objective and income should be assessed as business income. The CIT(A) referred to Supreme Court judgments and concluded that the income falls under section 22 of the Income Tax Act as income from house property. The Tribunal upheld this decision, stating that the company did not engage in any commercial activity related to the property, and the income was correctly assessed under "Property Income."

2. Regarding the claim for deduction of administrative expenses against rental income, the company contended that such expenses were allowable even if the income was treated as income from house property. The company cited administrative expenses listed in its schedule, arguing for consistency with previous assessments. However, the Tribunal noted the absence of evidence of commercial activity by the company and upheld the CIT(A)'s decision to disallow the deduction. The Tribunal emphasized that without any business activity or intention shown by the company, the claim for additional expenditure could not be considered. Therefore, the appeal filed by the company was dismissed, affirming the CIT(A)'s order.

In conclusion, the Tribunal found no infirmity in the assessment treating the income as property income and disallowing the claim for additional administrative expenses deduction. The judgment highlighted the importance of the primary intention behind exploiting the property in determining the nature of income and reiterated the principle that income includible under one head of income cannot be taxed under another head.

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