AI Drafter 
TaxTMI 
TaxTMI 
2019 (3) TMI 383
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...., the Ld.CIT(A), erred in allowing the claim of assessee to treat rental income of Rs. 34,13,95,611/- as income from House Property instead of Business Income as assessed by the AO, without appreciating the fact that rental income was received from the business asset of unsold flats shown as stock-in-trade. The Ld. CIT(A) also failed to appreciate the fact that the assessee has included rental income in arriving at its gross sales appearing in its building and construction account and thereby arriving at the gross profit which in turn taken to the Profit & Loss account to arrive at Net Profit." 2. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) failed to appreciate the decision of Hon'ble Apex Court dated 9th April 2015 in the case of Chennai Properties and Investments Ltd. Vs. CIT, Central-Ill, Tamil Nadu (2015) reported in 373 ITR 673, as reiterated in the case of M/s. Rayala Corporation Pvt. Ltd. Vs. ACIT (Civil Appeal No.6473 of 2016 dated 11.08.20146) has held that "if an assessee is having his house property and by way of business he is giving the property on rent and if he is receiving rent from the said property as his business....
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....rom the business asset of unsold flats shown as stock-in-trade. It was submitted that the Ld. CIT(A) also failed to appreciate the fact that the assessee had included rental income in arriving at its gross sales appearing in its building and construction account and thereby arriving at the gross profit which in turn taken to the Profit & Loss account to arrive at Net Profit. Ld. DR further submitted that Ld.CIT(A) had failed to appreciate the decision of Hon'ble Apex Court dated 9th April 2015 in the case of Chennai Properties and Investments Ltd. Vs. CIT, Central-III, Tamil Nadu (2015) reported in 373 ITR 673, as reiterated in the case of M/s. Rayala Corporation Pvt. Ltd. Vs. ACIT (Civil Appeal No.6473 of 2016 dated 11.08.2014), wherein it was held that "if an assessee is having his house property and by way of business he is giving the property on rent and if he is receiving rent from the said property as his business income, the said income, even if in the nature of rent, should be treated as 'business income'." 7. On the other hand, Ld. AR relied upon the orders passed by the Ld. CIT(A) and reiterated the same arguments as were raised by him before Ld. CIT(A) and also ref....
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....r in favour of the assessee. The facts and circumstances of this case is quite similar to the facts and circumstances of the present case. In both the case the assessee have constructed commercial complex and rented out the unsold shops/ offices on lease. In case of the Hon'ble Bombay High Court, Commissioner of Income Tax 12 Vs M/s Sane & Doshi Enterprises decided on 9 April, 2015 the income of the assessee was treated as income from house property. Finding identical facts and circumstances of the present case, we are of the view that in the present case the law is quite applicable and the income of the assessee is liable to be treated as income from the house property and accordingly he would be entitled exemption u/s 22 of the Act. Hence in view of the above said law we set aside the finding of the CIT(A) in question and direct the AO to re-assess the income of the assessee in view of the observation made above. " 3.4 Since, on similar facts the highest fact finding authority i.e. the ITAT has already decided that the rental income shown by the appellant is liable to be treated as income from house property, following the judgment of the Hon'ble ITAT the grounds of ....
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....from house property' and thus claimed stipulated 30% deduction. It was further submitted that long lease given by the assessee indicates the intention of the assessee is to permanently letting out the propert, which is not the business of the assessee rather the assessee is into the business of development of the property. It was also submitted that AO had made additions without finding any fault or omission in the audited financial statement prepared on the basis of governing accounting standards and the presentation of such financial statements. It was also submitted that AO had not made verification with regard to period of lease which is stipulated in the register leave and license agreements and thus had not considered the intention of the assessee, which is important crieteria for deciding the taxability of a particular income under a significant head of income from among the five heads of income prescribed under the Income Tax Act. 12. From the arguments of the parties as well as from the records, we found that the facts in the present case are not in dispute, but the thrust of the revenue to treat the income of rental as 'business income' is mainly on the basis of judgme....