2021 (4) TMI 294

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.... the circumstances of the case. 2. The Learned Commissioner of Income-Tax (Appeals) erred in holding that the lease income from property let out should be assessed as business income, on the facts and in the circumstances of the case. 3. The Learned Commissioner of Income-Tax (Appeals) erred in not appreciating the facts, that, since the entire Hospital Building has been let out, the rent therefrom should be assessed as income from House Property and not as income from Business, on the facts and in the circumstances of the case. 4. The appellant craves leave to add to, alter or amend any of the aforesaid grounds as advised, on or before the date of hearing." 2. Brief facts of the case are that the assessee is a firm running Hospital ....

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....for the entire year. Since the assessee had claimed the lease rent receipts as income from house property, the AO asked the assessee to explain the same and the assessee vide letters dated 19/11/2018 and 11/12/2018 submitted its reply, which was extracted by the AO in his order at pages 3 & 4. The AO rejected the submissions of the assessee and assessed the income of the assessee at Rs. 86,90,073/- as business income instead income from house property as claimed by the assessee. 3. Aggrieved, the assessee preferred an appeal before the CIT(A), who confirmed the order of the AO. 4. Still aggrieved the assessee is in appeal before the Tribunal. 5. Before us, the ld. AR of the assessee submitted that the main objects of the assessee was nev....

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....the management of Thumbay Hospital India Pvt. Ltd. and agreed to the lease proposal in accordance with the terms of the agreement, which is placed at pages 169 to 205 of the paper book. In the original return of income filed by the assessee, it had offered it as business income. During the scrutiny proceedings, the assessee filed revised return of income wherein claimed the rent received as "income from house property" and claimed depreciation as per the Act for the whole year. On careful reading of the agreements, which are placed in its paper book, we find that the assets leased out to the Thumbay Hospital India Pvt. Ltd. were using as commercial assets before letting it out by the assessee. Therefore, subsequently, the rent receipts on t....

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....the main object of the assessee was to run classes and to do educational activities and the property which has been let out by the assessee was a commercial property and was also used by the person to whom it was leased, for the purpose of educational activities. We further find that Hon'ble Gujarat High Court in the case of New India Industries (supra) and after relying on various decisions has laid down various tests to determine the head of income under which the rental income is to be assessed. The tests inter alia lays down the principle that when an assessee derives income from a commercial asset which is capable of being used as a commercial asset and the asset would not cease to be commercial asset simply because temporarily it ....