Industrial shed rental income deemed 'income from house property' by court, consistent treatment prevails. Revenue appeal dismissed.

The court upheld the Income Tax Appellate Tribunal's decision to classify income derived from letting out industrial sheds as 'income from house property' rather than 'income from business.' The court emphasized the consistent treatment of the rental income in past assessments and dismissed the Revenue's appeal, noting that the legal precedents cited were not applicable to the unique circumstances of the case. The classification as 'income from house property' was affirmed based on the assessee's intention to earn rental income.

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Issues Involved:
1. Classification of income as income from house property or income from business.

Analysis:
The appellants-Revenue challenged the classification of income derived from letting out industrial sheds by the assessee as 'income from house property' instead of 'income from business.' The contention was based on the regular activity of the assessee in construction and letting out industrial sheds, supported by the borrowing of a loan for property construction. The Income Tax Appellate Tribunal (ITAT) held that the income should be treated as 'income from house property' in line with the assessee's intention to earn rental income. The Tribunal referenced legal precedents like the case of Chugandas and Co., emphasizing that even if income is earned in the course of business, it may fall under 'Income from House Property' if the property is owned by the assessee. The Tribunal also cited the decision in the case of Bhoopalam Commercial Complex and Industries Pvt. Ltd., highlighting that income earned from letting out a property must be taxed as 'Income from House Property.' The Tribunal concluded that the rental income in question was rightly assessed as 'Income from House Property' and not 'Income from Business,' aligning with past assessments of the same assessee.

In response, the appellants-Revenue argued that the ITAT erred in its classification, citing judgments in other cases. However, the court noted that for subsequent assessment years, the Department had consistently treated the rental income from the assessee's property as 'income from house property.' Given this consistent treatment and the absence of any challenge to the subsequent assessment, the court upheld the ITAT's decision. The court emphasized that the legal precedents cited by the appellants were not applicable to the unique circumstances of the present case, where past assessments had classified the income similarly. Consequently, the court found the appeal meritless and dismissed it, affirming the classification of the income from the property as 'income from house property' based on the assessee's intention to earn rental income.

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