Tribunal confirms rental income as 'house property' over 'business' for 2010-11 assessment

The Tribunal upheld the CIT(A)'s decision to treat the income as 'income from house property' instead of 'income from business' for the assessment year 2010-11. Despite past rulings in favor of the assessee, the Tribunal found that there was no intention to restart the business since its discontinuance in 1988. The assessee had let out the premises for rent with no substantial efforts to resume operations. Consequently, the appeal was dismissed, affirming the income assessment as 'income from house property.'

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Issues:
Assessment of income as 'income from business' or 'income from house property' for the assessment year 2010-11.

Analysis:
The appeal was filed by the assessee against the order of the learned CIT(A)-XIII, New Delhi dated 11th September, 2014. The main ground of appeal was that the CIT(A) erred in directing the Assessing Officer to treat the entire income assessed as income from house property rather than income from business, as declared by the assessee. The assessee argued that in previous years, the CIT(A) had decided in their favor regarding the income from factory premises being assessed as 'income from business,' and the Revenue had not appealed against those decisions. The assessee emphasized that they intended to restart the business and had only let out the factory premises due to pending litigations. However, the Department contended that the assessee had no intention to resume the business since its discontinuance in 1988, and therefore, the income should be considered as 'income from house property.'

Upon reviewing the submissions and the orders of the Assessing Officer and the CIT(A), the Tribunal noted that the assessee had not restarted the business since 1988 and the chairman of the company was 88 years old. Despite past decisions in favor of the assessee, the Department was not precluded from assessing the income from the factory under the correct head. The Tribunal observed that the amount involved in litigations was not substantial enough to prevent the assessee from resuming business over the past 27 years. It was concluded that the assessee had lost interest in restarting the business and had let out the premises with machinery, furniture, and fixtures for a fixed rent. Therefore, the CIT(A)'s decision to treat the income as 'income from house property' was deemed justified, and the appeal by the assessee was dismissed.

In the final decision pronounced on 3rd August 2015, the Tribunal confirmed the CIT(A)'s order, dismissing the appeal of the assessee regarding the assessment of income for the assessment year 2010-11.

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