The judgment revolves around three appeals under Section 260A of the Income Tax Act, 1961, challenging the Income Tax Appellate Tribunal’s decision to classify income received by the respondent-assessee from a self-owned property as “income from house property” instead of “business income,” as argued by the Revenue. The appeals pertain to the Assessment Years 2008-09, 2009-10, and 2010-11.
The respondent-assessee is engaged in the business of leasing properties and declared income from a self-owned property, MBC Tower in Chennai, as “income from house property,” while declaring rental income from sub-letting other properties as “business income.” The Assessing Officer, supported by the Commissioner of Income Tax Appeals (CIT-A), disagreed, treating the income from the MBC Tower property as “business income.” The Tribunal, ruled in favor of the assessee, referring past consistency in treating this income as “income from house property” and citing several Supreme Court decisions.
The Revenue’s argument centered on the contention that since the assessee was in the business of leasing properties, income from such properties should be categorized as “business income.” They relied on the Supreme Court’s ruling in *Chennai Properties & Investment Ltd.* to support this view. The Tribunal, however, emphasized that Section 22 of the Income Tax Act doesn’t differentiate based on whether the property owner is engaged in the business of leasing. It ruled that income from a property owned by the assessee, such as MBC Tower, should still be treated as “income from house property.”
The High Court upheld the Tribunal’s decision, stating that the principles of consistency should apply. It noted that in previous years, the Revenue had accepted this income as “income from house property” without any material change in circumstances. Furthermore, the Court highlighted that Section 22 of the Act permits income from a self-owned property to be classified as “income from house property” even if the assessee is in the business of leasing properties.
The Court found no substantial question of law in the appeals and dismissed them accordingly.
Cause title: Pr. Commissioner of Income Tax-3 Mumbai Vs. Banzai Estates P. Ltd.
INCOME TAX APPEAL NO. 1703 OF 2018
WITH
INCOME TAX APPEAL NO. 1727 OF 2018
WITH
INCOME TAX APPEAL NO. 1900 OF 2018
Judgement Pronounce by the Hon’ble Justice G. S. KULKARNI & by the Hon’ble justice SOMASEKHAR SUNDARESAN.