2021 (7) TMI 1069 - AT - Income Tax

Tribunal rules leased rental income as 'Business Income' for Assessment Years 2009-10 and 2011-12

The Tribunal affirmed the classification of leased rental income as 'Business Income' instead of 'Income from House Property' for Assessment Years 2009-10 ... Correct head of income - treatment to assessee’s leased rental income - Business Income or Income from House Property - HELD THAT:- The issue on merits in AY 2010-11 [2019 (9) TMI 310 - ITAT MUMBAI] stood covered in assessee’s favor wherein the rental income has finally been accepted as ‘Business Income’. The issue in AY 2012-13 [2019 (5) TMI 1675 - ITAT MUMBAI] has also attained finality since no appeal was preferred by the department against appellate order for that year. The revisional order passed u/s 263 has already been quashed by the Tribunal. For the stated reasons, no infirmity could be found in the impugned order. Therefore, revenue’s appeal stand dismissed. CIT(A) correctly allowed assessee’s appeal and directed Ld. AO to assess the rental income as ‘Business Income’. - Decided in favour of assessee. Issues involved:- Whether leased rental income should be treated as Business Income instead of Income from House Property for Assessment Years 2009-10 & 2011-12.Analysis:1. The appeals by the revenue for Assessment Years 2009-10 & 2011-12 challenged separate orders of the first appellate authority. However, since the facts and issues were identical, the appeals were heard together. The primary issue was whether the leased rental income should be classified as Business Income or Income from House Property.2. The revenue contended that the leased rental income was erroneously categorized as 'Business Income' by the first appellate authority, while it was originally assessed as 'Income from House Property' by the Assessing Officer. The arguments presented by the parties were duly considered, and the Tribunal proceeded to examine the matter.3. The assessment for the year under consideration was reopened based on a previous assessment year's order, where it was decided that the leased rental income should be treated as 'Income from House Property'. The assessee, a property developer, argued that the rental income was rightfully classified as 'Business Income' due to its business activities related to infrastructural facilities.4. During the appellate proceedings, the assessee challenged the validity of the reopening, citing previous tribunal orders that favored treating the rental income as 'Business Income'. The CIT(A) observed similar issues in prior assessment years and concluded that the income should be assessed as 'Business Income', following the principle of consistency.5. The Tribunal noted that the issue regarding the classification of rental income had been previously adjudicated in favor of the assessee for the assessment year 2010-11. Additionally, for the assessment year 2012-13, the income was also considered as 'Business Income' by the first appellate authority, with no appeal filed by the revenue department against that decision.6. Based on the previous orders and the principle of consistency, the Tribunal found no fault in the impugned order categorizing the rental income as 'Business Income'. Consequently, the revenue's appeal was dismissed for both assessment years 2009-10 and 2011-12.7. The Tribunal reiterated that the facts and issues for the assessment year 2011-12 were similar to those of 2009-10, and the decision taken for the former year would apply mutatis-mutandis. Therefore, the appeal for the assessment year 2011-12 was also dismissed.8. In conclusion, both appeals were dismissed, affirming the classification of leased rental income as 'Business Income' for the relevant assessment years. The judgment was pronounced on 6th May 2021.