2016 (9) TMI 641 - AT - Income Tax

Assessee's Income Classified as 'Income From House Property'

Sushena Properties Ltd. Versus Asstt. Commissioner of Income Tax -1 (3), Mumbai. and Dy. Commissioner of Income Tax -1 (3), 564, Mumbai Versus Sushena Properties Ltd.

The Tribunal allowed the assessee's appeal and dismissed the revenue's appeal, directing the Assessing Officer to treat the assessee's income as 'Income ... Assessment of loss - under the head “profit and gains from business or profession” OR under the head “income from house property” - Held that:- In view of the decision of the Tribunal in group cases of the assessee, we are of the considered view that the facts of the assessee’s case is fully covered by the decision of the Tribunal and therefore, respectfully following the decision of the same allow the appeal of the assessee by setting aside the order of ld.CIT(A) and direct the AO to treat the income of the assessee as “Income From House Property”. Issues:1. Whether the assessee's loss should be assessed under 'profit and gains from business or profession' or 'income from house property.'Analysis:The cross-appeals were filed against the order passed by the ld.CIT(A)-7, Mumbai for the assessment year 2007-08. The primary issue raised was the classification of the assessee's loss under the head of income - whether it should be considered as 'profit and gains from business or profession' or 'income from house property.' The assessee claimed a loss of Rs. 85,15,655 under the head 'income from House Property,' which was contested by the AO. The AO assessed the income under the head 'business and profession' at NIL. The ld.CIT(A) dismissed the appeal, stating that the property was not lettable and expenses were pre-operative, hence rejecting the assessee's contentions.In support of the contentions, the ld.AR relied on the case of Vaidehi Estates Ltd V/s DCIT(OSD) where a similar issue was decided in favor of the assessee. The Tribunal held that the income should be computed as 'income from house property.' The ld. DR argued against this, citing a different case law. However, the Tribunal found the decision relied upon by the ld.DR to be distinguishable and not applicable to the present case. The Tribunal concluded that the assessee's case was fully covered by the decision in the group cases, allowing the appeal and directing the AO to treat the income as 'Income From House Property.'Regarding the revenue's appeal, the issue of deduction u/s 71B was decided in favor of the assessee by the ld. CIT(A). The Tribunal referred to a similar decision in the assessee's own case where the issue was decided in favor of the assessee. Following the Tribunal's order in the assessee's case, the revenue's appeal was dismissed.In conclusion, the Tribunal allowed the appeal of the assessee and dismissed the appeal of the revenue, directing the AO to treat the income of the assessee as 'Income From House Property.'This detailed analysis covers the issues involved in the legal judgment comprehensively, addressing the arguments presented by both parties and the Tribunal's decision based on relevant case laws and precedents.