Company's mall leasing income treated as business income not house property under Section 22

The MP HC affirmed ITAT's decision that income from leasing properties in a shopping-cum-entertainment mall constitutes business income rather than house property income. The court held that where letting out property is the main object of a company, income must be computed under business head. The assessee consistently offered income from constructing, owning, developing, managing and leasing multiplex, cineplex, cinema halls and shopping malls as business income. The AO failed to establish that sub-leasing was merely incidental to the company's predominant business object. ITAT's factual findings attained finality as the last forum for factual determination, with no perversity demonstrated.

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Issues Involved:
The judgment involves appeals filed by the Principal Commissioner of Income Tax-1, Indore under Section 260-A of the Income Tax Act, 1961 against the consolidated order passed by the Income Tax Appellate Tribunal (ITAT) for various Assessment Years related to M/s. M.P. Entertainment & Developers Private Limited.

Income Tax Appeal No.180 of 2023:
The Assessee declared a total loss for the Assessment Year 2013-14, which was scrutinized by the Assessing Officer under Section 143 (3) of the Income Tax Act. The issue revolved around the claim of depreciation on a shopping-cum-entertainment Mall named "Malhar Megha Mall."

Income Tax Appeal No.216 of 2023:
Similar to the previous year, the Assessee declared a net loss for the Assessment Year 2012-13, which was also scrutinized by the Assessing Officer under Section 143 (3) of the Income Tax Act. The dispute involved the treatment of income derived from leasing properties in the Mall.

Income Tax Appeal No.217 of 2023:
For the Assessment Year 2011-12, the Assessee declared total income and claimed losses under different provisions of the Income Tax Act. The issue centered around the categorization of income from the Mall construction and renting activities.

Income Tax Appeal No.218 of 2023:
In the Assessment Year 2014-15, the Assessee declared a net loss, which was assessed by the AO under Section 143 (3) of the Income Tax Act. The dispute focused on the treatment of income from the Mall operations and rental activities.

The judgment analyzed the nature of income derived by the Assessee from leasing properties in the Mall and whether it should be categorized as "income from business" or "income from house property" under the Income Tax Act. The CIT (A) and ITAT decisions were challenged by the Income Tax Department, leading to a detailed examination of relevant case laws and legal principles.

The Court upheld the decisions of the CIT (A) and ITAT, concluding that the income from leasing properties in the Mall falls under the head of "income from business" based on the Assessee's business activities related to property development and leasing. The judgment referenced key legal precedents to support this conclusion, emphasizing the business nature of the Assessee's activities.

The Court dismissed the appeals filed by the Income Tax Department, finding no perversity in the findings of the ITAT and CIT (A). It was determined that the Assessee's income from leasing properties was integral to its business operations, justifying its classification as "income from business" rather than "income from house property."

The Court also addressed the issue of delay in filing the appeals, which was condoned based on reasons provided in the application supported by the Officer-in-Charge's affidavit. The judgment concluded by disposing of any pending interlocutory applications and directing a copy of the order to be kept in connected appeals.

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