Income from letting property must be treated as income from house property under Section 22; prior consistent treatment upheld

HC held that income received by the assessee from property must be accepted as income from house property, not business income. The court rejected Revenue's broader reading of Section 22 to exclude taxpayers engaged in letting properties, finding no legislative basis for such a carve-out. The Tribunal's allowance based on consistent treatment in prior assessment years was upheld; absence of new facts justified maintaining that position. No substantial question of law was found.

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Issues Involved:
1. Classification of income from self-owned property as "income from house property" or "business income".
2. Treatment of rental income from properties taken on lease and sub-let by the assessee.
3. Consistency in income classification by the Revenue across different assessment years.

Detailed Analysis:

Issue 1: Classification of Income from Self-Owned Property
The primary issue in these appeals under Section 260A of the Income Tax Act, 1961, is whether the income received by the assessee from its self-owned property, MBC Tower, should be classified as "income from house property" or "business income". The Tribunal had allowed the assessee's appeal, treating the income as "income from house property". The Revenue contended that since the assessee was in the business of letting out properties, the income should be classified as "business income". However, the Tribunal referred to the Supreme Court's decisions in Raj Dadarkar & Associates v. Assistant Commissioner of Income-tax and Commissioner of Income-tax v. Shambhu Investment (P.) Ltd., concluding that Section 22 of the Act was applicable as the property was owned by the assessee. The High Court upheld the Tribunal's view, noting that the basic requirements of Section 22 were satisfied and that the income from the property owned by the assessee should be considered as "income from house property".

Issue 2: Rental Income from Properties Taken on Lease and Sub-Let by the Assessee
The Revenue also questioned the treatment of rental income derived from properties taken on lease and sub-let by the assessee. The Tribunal had treated this income as "income from house property". The High Court found that the Revenue's interpretation of Section 22 was incorrect. The Court emphasized that the legislature did not carve out any exceptions in Section 22 for businesses involved in letting out properties. Therefore, the assessee could categorize the rental income from properties it owned as "income from house property" and the income from sub-letting other properties as "business income".

Issue 3: Consistency in Income Classification by the Revenue
The High Court also addressed the principle of consistency, noting that the Revenue had accepted the assessee's classification of income from the MBC Tower property as "income from house property" in previous assessment years (2005-06, 2006-07, and 2007-08). The Court referred to the Supreme Court's ruling in M/s. Radhasoami Satsang v. Commissioner of Income Tax, which established that a consistent position should not be changed without any new material fact. The High Court also cited its own decision in Principal Commissioner of Income-tax v. Quest Investment Advisors (P.) Ltd, reinforcing the rule of consistency.

Conclusion:
The High Court concluded that the appeals did not raise any substantial question of law. It dismissed the appeals, affirming the Tribunal's decision to treat the income from the MBC Tower property as "income from house property" and maintaining the consistency in the assessee's income classification across different assessment years. The Court also clarified that the decision in Chennai Properties & Investment Ltd. v. Commissioner of Income-tax was not applicable in this case, as the facts were different.

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