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of <h1>Rental income from house property qualifies for Section 32AB deduction when part of unified business operations</h1> <h3>Indian Express Newspapers (Bombay) Ltd. Versus The Commissioner of Income Tax, City I, Mumbai</h3> Indian Express Newspapers (Bombay) Ltd. Versus The Commissioner of Income Tax, City I, Mumbai - [2024] 468 ITR 778 (Bom) Issues Involved:1. Whether the rental income assessed under the head 'Income from house property' qualifies for deduction under Section 32AB of the Income Tax Act, 1961.Summary:Issue 1: Deduction u/s 32AB for Rental Income- The appellant contested the ITAT's judgment denying deduction u/s 32AB for rental income assessed under 'Income from house property.'- The Assessing Officer restricted the deduction to Rs. 2,85,024/- against the appellant's claim of Rs. 76,97,918/-, excluding Rs. 1,27,11,742/- rental income from the computation.- The CIT(A) and ITAT upheld this view, stating rental income does not qualify as 'profits of eligible business or profession' for Section 32AB.Appellant's Arguments:- The term 'eligible business or profession' in Section 32AB (2)(i) includes all activities resulting in profits except those specified.- The rental income's assessment under 'Income from house property' does not alter its inherent character as business income.- Cited precedents: Commissioner of Income Tax V/s. Diners Club India Ltd. and Apollo Tyres Ltd. V/s. Commissioner of Income Tax, supporting the inclusion of such income for Section 32AB deduction.Respondent's Arguments:- Section 32AB pertains specifically to 'profits and gains of business or profession,' excluding income from house property, capital gains, and other sources.- The computation of business income must adhere strictly to Sections 28 to 44D, and deductions under Section 32AB cannot extend to other income heads unless explicitly provided.Court's Analysis:- The court examined Sections 32AB (1), (2), and (3) of the Act, noting the requirement for income to be chargeable under 'profits and gains of business or profession.'- The court emphasized the broad definition of 'eligible business or profession,' which includes various business activities beyond manufacturing or production.- The appellant's accounts, prepared per the Companies Act, included rental income as business income, aligning with the definition of eligible business.- The court rejected the dichotomy between rental and business income for Section 32AB purposes, noting the unified management and accounting treatment.Conclusion:- The court ruled that rental income, as part of business income, qualifies for deduction under Section 32AB.- The question of law was answered in the negative, favoring the appellant's claim for deduction on rental income.Disposition:- The appeal was disposed of accordingly, allowing the rental income assessed under 'Income from house property' to qualify for deduction under Section 32AB.
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