2016 (4) TMI 873

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....as a property at Hyderabad in which it has seven rooms. Assessee has entered in to various agreements with various companies for accommodating their employees from time to time in these rooms and received rental receipts to the extent of Rs. 87,70,615/- during the FY. 2006-07 relevant for AY. 2007-08. Assessee was incorporated in the year 2002 and such incomes have been accepted up to AY. 2006-07 as 'income from business'. However, in the impugned year Assessing Officer (AO) asked assessee to show cause why the income should not be treated as 'income from house property' as against 'profits and gains of business or profession'. Assessee submitted that it is carrying the business of hospitality since inception i.e., 19-04-2002 and its main o....

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....re the Ld. CIT(A) without much success. 4. Before us, assessee has raised as many as ten grounds and also additional grounds from 11 to 16 mainly on two issues, whether assessee's incomes are to be assessed as 'income from business' or 'income from house property' and if under the head 'business' i.e., expenditure can be disallowed as was done by the AO on protective basis. The additional grounds are legal in nature mainly pertaining to the disallowance of expenditure. Accordingly, they are allowed. 5. After considering the rival contentions, we are of the opinion that there is dispute with reference to certain facts; i) Assessee owns the property on which it is running the hospitality business; ii) Assessee has not let out property p....

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..... It may further be noted that in the return that was filed, entire income which accrued and was assessed in the said return was from letting out of these properties. It is so recorded and accepted by the assessing officer himself in his order. In the aforesaid circumstances, it is concluded that letting of the properties is in fact is the business of the assessee. The assessee therefore, rightly disclosed the income under the head income from business. It cannot be treated as 'income from the house property'. Accordingly, instant appeal is allowed and order of the High Court is set aside. In the above said case, assessee was acquiring the properties and let out those properties as well as making advance on security of lands and....

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.... (f) equipment; or (g) furniture; or (h) fittings, whether or not any or all of the above are owned by the payee; ii. ". 7.1. As can be seen from the above, the definition of rent includes any payment by whatever name called, for use of buildings including factory buildings, equipment, furniture or fittings. Even if machinery was leased, the consequent rent comes under the definition. But machinery lease can not be considered under 'income from House property'. That indicates that just because TDS was made u/s. 194-I, it cannot be treated as 'house property income' as the rent definition includes lease of equipment, lease of furniture, fittings which cannot be considered as 'house property'. AO's opin....