Western Industrial Cooperative Estate Limited Vs DCIT (ITAT Mumbai)
The present decision of the Income Tax Appellate Tribunal (ITAT), Mumbai, concerns appeals filed by a co-operative society for Assessment Year 2017–18 against orders passed by the National Faceless Appeal Centre (NFAC). The central dispute related to the correct head of income under which rental receipts from the society’s administrative building were taxable, along with consequential deductions and other related disallowances.
The assessee, a registered co-operative society located in a MIDC industrial estate, had been allotted land by MIDC and had constructed multiple buildings for its members. One building, measuring about 17,500 square feet, was retained for administrative purposes and was sub-let on a leave and licence basis. From inception, the assessee had consistently offered rental income from this administrative building under the head “Income from House Property,” a position accepted by the Department in earlier years.
For the relevant assessment year, the assessee declared total income including rental income under “Income from House Property” after claiming statutory deductions under section 24(a), sub-letting charges paid to MIDC, and interest on borrowed capital used for construction. The Assessing Officer, however, assessed the rental income as “Income from Other Sources,” disallowed the standard deduction of 30%, sub-letting charges, and interest on borrowed capital, and further disallowed expenses claimed against laboratory testing charges and miscellaneous income. A deduction claimed under section 80P in respect of storage charges was also denied.
