2016 (7) TMI 1447 - AT - Income Tax

Tribunal classifies rental income as business income, dismissing Revenue's appeal.

The Tribunal upheld the direction to treat rental income as business income instead of income from house property, based on previous decisions and legal ... Treatment to rental income - nature of income - business income OR income from house property - Held that:- Tribunal in the case of assessee itself [2011 (6) TMI 923 - ITAT MUMBAI] decided the issue in hand to treat the ‘rental income’ as ‘business income’. Before us the learned representatives from both sides fairly agreed that the impugned issue is covered in favour of the assessee. The Tribunal in the aforesaid orders has consistently held that income of the assessee should be assessed under the head ‘income from business’ and it should be allowed expenses, incurred by the assessee, in carrying out its business. Even the depreciation claimed by the assessee has been allowed by the Tribunal. Thus we find no infirmity in the conclusion of the learned CIT(A) to treat the rental income as business income instead of income from house property. - Decided against revenue Issues involved:1. Whether rental income should be treated as business income or income from house property.Detailed Analysis:1. The appeal pertained to the treatment of rental income as business income instead of income from house property. The Revenue challenged the direction of the Commissioner of Income Tax (CIT) to treat the rental income as business income. The Tribunal considered the argument put forth by the assessee's counsel, stating that the issue was covered by previous Tribunal decisions in favor of the assessee for assessment years 2005-06 and 2007-08.2. The Tribunal reviewed the material on record and referred to previous orders where the Tribunal had decided in favor of the assessee, treating rental income as business income. The assessee, engaged in services and leasing, had declared a total income of Nil, with the main issue revolving around the classification of rental income. The Assessing Officer (AO) had treated the rental income as income from house property, disallowing certain expenses and depreciation. The CIT(A) and the jurisdictional ITAT had consistently ruled in favor of the assessee, directing the AO to assess rental income as business income and allow related expenses and depreciation.3. During the hearing, both sides agreed that the issue was settled in favor of the assessee based on previous Tribunal decisions. The Tribunal affirmed that the income should be assessed under the head of income from business, allowing expenses and depreciation claimed by the assessee. The Tribunal noted that no contrary facts or decisions were presented, and the stand of the CIT(A) was upheld. The Tribunal also referred to a previous order affirming the decision in favor of the assessee based on relevant case law. Consequently, the appeal by the Revenue was dismissed.4. In conclusion, the Tribunal upheld the direction to treat the rental income as business income instead of income from house property, based on previous decisions and legal principles. The appeal by the Revenue was dismissed, and the order was pronounced in the presence of representatives from both sides.