AI Drafter 
TaxTMI 
TaxTMI 
2025 (7) TMI 809
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....nder the Act. The delay of 11 days in filing the present appeal is due to the unavoidable circumstances as the Assessing Officer was put into Election Duty for General Elections of 2024 held in the month of April, 2024. 3. On the other hand, the learned AR of the assessee has not opposed the condonation of delay of 11 days in filing the present appeal by the Revenue. 4. We have considered the rival submission and carefully perused the contents of the affidavit filed by the Assessing Officer. The relevant part of the affidavit explaining the cause of delay is as under: The learned Commissioner of Income-Tax (Appeals) disposed of the appeal vide order in ITA no ITBA/NFAC/S/250/2023-24/1061173477(1), dated 20-02-2024. The appeal before the Hon'ble ITAT is being filed on 20-04-2024. There is a delay of 11 days. The petitioner humbly submits that the delay of 11 days is for the reason that the petitioner i.e. Assistant Commissioner is on election duty for the General Elections,2024 as Nodal Officer for the Districts of Guntur, Bapatla and Palnadu. As the petitioner attends meetings with the District Collectors and also attends enquiries outside of the office.....
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....head income from house property. The assessee claimed standard deduction @ 30%, interest expenses and Municipality taxes total amount of Rs. 8,08,17,246/- against the rental income. The Assessing Officer during the assessment proceedings noted that the assessee is in the business of real estate as well as leasing out/letting out of the property etc., and therefore, in view of the judgment of the Hon'ble Supreme Court in the case of Chennai Properties & Investments Ltd vs. CIT reported in 373 ITR 673, the rental income from the business of letting out the property to be assessed as business income and not as income from house property. The learned DR has further submitted that the Hon'ble Supreme Court in case of Rayala Corporation (P) Ltd vs. ACIT reported in 386 ITR 500 has held that where the business of the company is to lease out its property and to earn rent, then the income so earned should be treated as its business income and not as income from house property. The learned DR has referred to the memorandum of association of the assessee and submitted that to carry on business of letting/hiring properties is one of the main objects of the assessee company and therefor....
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...., the rental income accepted in the earlier years as income from house property cannot be treated as business income of the assessee for the year under consideration. He has relied upon the following decisions in support of his contention: i) Raj Dadarkar & Associates vs. ACIT (2017) 394 ITR 0592 (S.C) ii) Shambhu Investment (P) Ltd vs. CIT (2003) 263 ITR 0143 iii CIT vs. Shambhu Investment (P) Ltd (2001) 249 ITR 0047. iv) Dy. CIT vs. Cache Properties (P) Ltd (2021) 89 ITR (Trib) 0038 (Hyderabad) (SN). 9. Thus, the learned AR has submitted that the learned CIT(A) is justified in allowing the claim of the assessee for the rental income as income from house property. He has supported the impugned order of the learned CIT(A) and submitted that the learned CIT(A) has followed the decision of the Hyderabad Benches of the Tribunal in case of Dy. CIT vs. Cache Properties (P) Ltd (Supra). 10. We have considered the rival submission as well as the relevant material available on record. The assessee declared the rental income in the return of income as income from house property which was treated by the Assessing Officer as business income of the ass....
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....tate Agency and without limiting the generality above, to-acquire by purchase, exchange, rent or otherwise deal in lands, buildings hereditaments or any estate or interest therein and any rights over or connected with lands so situated and to turn the same to account in any way as may seem expedient and in particular by laying out, developing or assist in developing, preparing land and building and preparing building sites by planning, paving, drawing and by constructing, re-constructing pulling, down, altering, improving, decorating, furnishing and maintaining offices, flats, service flats, houses, hotels, restaurants, bungalows, chawls, warehouses, shops, cinema houses, shopping and commercial complexes, buildings, works and conventions of all kinds by consolidating or subdividing properties, by leasing, letting or renting, selling (by installments), ownerships, hire purchase basis or otherwise or disposing of the same. 2. To carry on the business of Developers, Builders, Contractors and Sub Contractors, for construction, designing, execution, control and/or erection of all kinds of super-structures and erections like building for residential, and other purposes, water t....
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....e assessee in their books of account. Even the outstanding lease rental is also shown as trade receivables which shows the nature of the income as recognized by the assessee and reported in the audited books of account as business income. The Hon'ble Supreme Court in the case of Chennai Properties & Investments (P) Ltd vs. CIT (Supra) while considering an identical issue has held in para 4.2 to 11 as under: "4. We have heard the learned counsel for the parties on the aforesaid issue. Before we narrate the legal principle that needs to be applied to give the answer to the aforesaid question, we would like to recapitulate some seminal features of the present case. 5. The Memorandum of Association of the appellant-company which is placed on record mentions main objects as well as incidental or ancillary objects in clause III. (A) and (B) respectively. The main object of the appellant company is to acquire and hold the properties known as "Chennai House" and "Firhavin Estate" both in Chennai and to let out those properties as well as make advances upon the security of lands and buildings or other properties or any interest therein. What we emphasise is that holdin....
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....e the company, which was the assessee, was formed with the object, inter alia, of acquiring and disposing of the underground coal mining rights in certain coal fields and it had restricted its activities to acquiring coal mining leases over large areas, developing them as coal fields and then subleasing them to collieries and other companies. Thus, in the said case, the leasing out of the coal fields to the collieries and other companies was the business of the assessee. The income which was received from letting out of those mining leases was shown as business income. Department took the position that it is to be treated as income from the house property. It would be thus, clear that in similar circumstances, identical issue arose before the Court. This Court first discussed the scheme of the Income Tax Act and particularly six heads under which income can be categorised / classified. It was pointed out that before income, profits or gains can be brought to computation, they have to be assigned to one or the other head. These heads are in a sense exclusive of one another and income which falls within one head cannot be assigned to, or taxed under, another head. Thereafter, the Cou....
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....y that a particular activity is business because it is concerned with an asset with which trade is commonly carried on. We find nothing in the cases referred, to support the proposition that certain assets are commercial assets in their very nature." 11. We are conscious of the aforesaid dicta laid down in the Constitution Bench judgment. It is for this reason, we have, at the beginning of this judgment, stated the circumstances of the present case from which we arrive at irresistible conclusion that in this case, 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'. We, accordingly, allow this appeal and set aside the judgment of the High Court and restore that of the Income Tax Appellate Tribunal. No orders as to costs." 14. The Hon'ble Supreme Court has specifically observed that letting out of the property is in fact the business of the assessee and therefore, the same was rightly disclosed as income under the head "income from business". Similarly, in the case of Rayala Corporation (P) Ltd vs....
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....l income is the only income reported by the assessee as business income in the books of account/audited financials. We found that the claim of the assessee in the return of income declaring the rental income as income from house property is contrary to the facts as recorded in the books of account as well as the terms and conditions of the lease agreement. Therefore, this is not a case of exploiting the property by the owner for rental income but it is one of the main objects of the assessee company and the only business income of the assessee company. The decisions relied upon by the learned AR of the assessee has been considered by the Hon'ble Supreme Court in the judgments in the case of Chennai Properties & Investments (P) Ltd vs. CIT (Supra) as well as Rayala Corporation (P) Ltd vs. ACIT (Supra). Even otherwise, in case of Raj Dadarkar & Associates vs. ACIT (Supra), the primary question involved was whether the assessee was the owner of the shopping centre within the meaning of section 32 r.w.s. 27 of the I.T. Act, 1961 and once this issue was decided against the assessee by treating the assessee as deemed owner of the leasehold premises acquired for more than 12 years, th....
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.... not adjudicate the issue of disallowance of expenses made by the Assessing Officer. Accordingly, this issue is remanded to the record of the learned CIT(A) for adjudication on merits. Needless to say, the assessee shall be given an appropriate opportunity of hearing before passing the fresh order. 20. In the result, Revenue appeal is allowed and the C.O of the assessee is partly allowed for statistical purposes. Order pronounced in the Open Court on 1^st April, 2025. ============= Document 1 35 ECM ESTATES PRIVATE LIMITED Details of items relating to financial statements for the year ending on March 31, 2020 Note No. Particulars Amount in Amount in Rs. 16 Cash and Cash Equivalents Details of bank balance IFSC Code IDBI Bank 128103000001007 26,147.00 Indus Ind Bank - 200998880541 15,844.66 Lakshmi Vilas Bank - 0161351000004840 24,279.00 State Bank of India - 34146473898 SBIN0013483 64,134.65 Axis Bank Current Account No.919020087072962 24,45,854.22 25,76,259.53 Details of Fixed deposits - Date of Maturity SBI FD No. 35117048136 42,255.00 SBI FD No. 35118281648 27,982.00 SBI FD No. 35132811103 27,355.00 SBI....