Tribunal rules lease income as 'House Property', dismisses interest disallowance.

The Tribunal ruled in favor of the appellant, holding that the lease rental income should be assessed under 'Income from House Property' rather than 'Profits & gains of Business or profession'. The Tribunal emphasized the consistent treatment of the income as 'house property' in previous and subsequent years, highlighting the lack of evidence supporting a business income classification. The second issue regarding the disallowance of interest on late TDS deposits was not pursued during arguments and was consequently dismissed. The appeal was partly allowed, with the judgment issued on May 28, 2019.

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Issues:
1. Assessment of lease rental income under 'Profits & gains of Business or profession' instead of 'Income from House Property'.
2. Disallowance of interest paid on late TDS deposits.

Analysis:

Issue 1: Assessment of lease rental income
The appellant sought to set aside the order assessing lease rental income under 'Profits & gains of Business or profession' instead of 'Income from House Property'. The appellant argued that the income should be taxed under 'Income from House Property' as consistently declared since inception. The Assessing Officer (AO) concluded that the income from leasing property should be taxed as business income due to the nature of the company's operations. The appellant contended that the rental income was accepted as 'income from house property' in previous and subsequent years. The Revenue argued that since the appellant claimed depreciation on the property, the income should be taxed under 'business and profession'. The Tribunal referred to Supreme Court decisions emphasizing that income from leasing premises should be treated as 'income from house property' unless specific conditions dictate otherwise. The Tribunal held that the rental income, being the primary source of revenue for the appellant, should be taxed under 'Income from House Property' based on Section 22 provisions. The Tribunal also noted the lack of evidence to classify the leasing as a commercial trading transaction, further supporting the 'house property' classification. The Tribunal ruled in favor of the appellant, following consistency principles and legal precedents.

Issue 2: Disallowance of interest on late TDS deposits
The second issue regarding the disallowance of interest paid on late TDS deposits was dismissed as it was not pressed during arguments. The Tribunal partly allowed the appeal, ruling in favor of the appellant on the first issue related to the assessment of lease rental income. The judgment was pronounced on May 28, 2019, by the Tribunal members.

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