Tax Appeal: Tenancy Rights Income Taxed as House Property, Not Business

The Revenue's appeal against the CIT(A)-22, New Delhi's decision on assessing income from tenancy rights as house property or business income under the Income Tax Act was dismissed. The CIT(A) determined that income from sub-license of property should be taxed as house property income, not business income, based on past assessments and legal decisions. The Bench upheld this decision, emphasizing consistency in tax assessments and rejecting the Revenue's argument for treating each year as a separate event.

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Issues involved:
The appeal by the Revenue against the order of CIT(A)-22, New Delhi regarding the assessment of income from tenancy rights as income from house property or business income under the Income Tax Act, 1961.

Issue 1 - Nature of Income:
The assessee claimed income from tenancy rights as income from house property, while the Revenue argued it should be considered as business income due to revenue generation from letting out commercial complex and maintenance charges.

The Ld. CIT(A) examined the factual matrix, noting the consistent acceptance of taxability of leased rental as income from house property in previous assessments. Referring to relevant legal decisions, the Ld. CIT(A) concluded that income from sub-license of property should be taxed as income from house property, not business income. The Revenue raised grounds challenging this decision.

Issue 2 - Principle of Consistency:
The Revenue contended that each year is a separate event and the principle of res judicata does not apply. However, the appellant argued for consistency based on past assessments where income from rent was accepted as income from house property.

The Bench observed that the Revenue's reliance on a Supreme Court judgment regarding property letting for business purposes was not applicable to the current case. Considering the past acceptance of income as house property, the Bench upheld the Ld. CIT(A)'s decision based on the principle of consistency and legal precedents.

Conclusion:
The appeal by the Revenue was dismissed, affirming the Ld. CIT(A)'s decision to treat the income from tenancy rights as income from house property based on past acceptance and legal interpretations. The principle of consistency in tax assessments was upheld, emphasizing the importance of treating similar income sources consistently over different assessment years.

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