2018 (11) TMI 393

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...., the Ld. CIT(A) has erred in upholding the order passed by Id. AO treating income from leasing of warehouse taxable under the head "Income from House Property", instead of "Income from Business" as claimed by appellant, on the basis of dominant object of the rent agreement ignoring the fact the appellant's is primarily engaged in the business of leasing of warehouses. 3. The Ld. CIT(A) has erred, while disposing off the appeal, in distinguishing the Hon'ble Supreme Court judgement in case of Chennai Properties & Investment Limited vs. Commissioner of Income Tax (2015) 313 ITR 0673 (SC) and M/s Rayala Corporation Pvt Ltd., Vs ACIT and applying the law laid down in case of Raj Dadarakar and Associates vs ACIT 394 ITR 592 without un....

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....d property. However, while computing the income, assessee treated the same as business income and claimed expenses under the heads finance costs, depreciation and other expenses aggregating to Rs. 1,65,13,151/-. The AO proposed the assessee to assess the said business income as rental income on the ground that the dominant intention of letting out the said warehouse is receiving rental income in view of the lease executed between both the parties. The AO discussed the various clauses of the lease deed and arrived at the conclusion that letting out the warehouse by assessee was covered by the provisions of section 22 of the Act and income received out of it, has to be assessed as income from house property. Consequently, he computed the inco....

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.... 394 ITR 592 without understanding ratio of judgement in case of Raj Dadarakar and Associates (Supra) correctly and without appreciating that Hon'ble Apex court has neither dissented with the ratio of judgement in case of Chennai Properties and Investment Ltd. and Rayala Corporation Pvt Ltd. nor it has overruled such ratio in case of Raj Dadarakar and Associates (Supra). It was further submitted that Ld. CIT(A) has also erred in not adjudicating upon disallowance of expenses amounting to Rs. 1,65,22,093 claimed in the profit & loss account contested in second para of ground no. 1 of the appeal in as much as the said expense consist of expenses amounting to Rs. 3,33,663/- incurred for business purpose and an amount of Rs. 43,553/- being ....

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.... the main object clause of the assessee as per MOA and the rental income earned by assessee was treated as business income not income from house property. However, now the Hon'ble Supreme Court has settled the issue by considering these two cases alongwith other cases decided by them, as also referred by AO in the assessment order, in the case Raj Dadarakar and Associates vs ACIT 394 ITR 592. In this case, Hon'ble Court, after discussing its earlier decisions, has held that there may be instances where a particular income may fall under more than one head but where ever this is income from leasing out of premises and collecting rent, normally such an income is to be treated as income from house property, in case provisions of sectio....