TaxTMI 
TaxTMI 
TaxTMI 
2004 (7) TMI 69
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....perty should be treated as business income in the hands of the assessee and allowing depreciation for the same, on the following substantial questions of law: (i) Whether on the facts and circumstances of the case, the Tribunal was right in holding that the residential properties let out to employees of sister concerns are to be treated as business assets and depreciation allowed? and (ii) Whether on the facts and circumstances of the case, the Tribunal was right in holding that income from letting out of property should be treated as business income in the hands of the assessee? In brief, the properties at No. 18, Jawahar Road, Madurai, and 20, Cenotaph Road, Madras, were under the occupation of the respondent's subsidiary companies, M/....
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....tra, the appellant/Revenue contended that the contention of the respondent/assessee is not tenable, in view of the clear language employed in sections 22 and 28 of the Act, particularly, since it is not in dispute that the respondent/assessee is the owner of the property in question; that they are not in occupation of the premises for the purpose of business of the respondent/assessee; and that they have rented out the properties to the employees of the sister concern and receiving the rental income which has to be construed only as the income from house property falling under section 22 of the Act, but not as the profits and gains of the business falling under section 28 of the Act. The appellate authority, by order dated November 9, 1995....
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....assessee concededly is the holding company and the tenants are the subsidiary company. Therefore, it is contended that, in the strict sense, the property in question is in occupation of the respondent/assessee, a holding company through the subsidiary company for having let it to the employees of the subsidiary company. In such event, it is contended that the respondent/assessee is entitled to assess the said properties and to charge the rental income from the same under section 28 of the Act as profits and gains of the business and consequently, they are entitled for the allowable depreciation. In this regard, learned counsel for the respondent/assessee places reliance on the decision of the Full Bench of the Delhi High Court reported in C....
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....hole or any portion of house property for the purposes of his business carried on by him, the profits of which are chargeable to income-tax, the annual value of the whole or that portion of the property, as the case may be, will not be chargeable to tax under the head "Income from house property". In order to claim exemption in respect of the income from house property under section 22 of the Act, the assessee must satisfy two conditions, viz., (1) the property or portion thereof must be occupied by the assessee for the purposes of his business or profession; and (2) the profits of such business should be chargeable to income-tax. There is no dispute that profits of the assessee-company, which is stated to be "occupying" the property are c....
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....at the respondent/assessee is the holding company of the tenants to whose employees the impugned properties were let out and consequently, the property cannot be assessed under section 22 of the Act and the income or the profit thereon cannot be charged under section 22 of the Act and it can be assessed and charged only under section 28 of the Act, allowing the depreciation thereon. It is true that the Full Bench of the Delhi High Court in CIT v. Modi Industries Ltd. [1994] 210 ITR 1 taking note of the fact held that when a house is occupied as residence by the employees or its directors, whether on payment of rent or otherwise to enable them to discharge their functions efficiently and the letting out of the property is subservient and inc....