Gogia Developers Vs Assessment Unit (ITAT Delhi)
Rental Income from Let-Out Office Taxable as House Property Income, Not Business Income; ITAT Delhi Allows Section 24(a) Deduction; Holds Rental Income Taxable Under House Property; GST on Rent Does Not Convert House Property Income into Business Income: ITAT Delhi
The appeal before the Income Tax Appellate Tribunal, Delhi, arose from the order of the Commissioner of Income Tax (Appeals) dated 21.01.2026, which had upheld a reassessment order passed under Sections 147 and 144B of the Income-tax Act, 1961 for Assessment Year 2020-21.
The assessee, a partnership firm, had not filed its return of income under Section 139. Based on information received through the Insight Portal under the Risk Management Strategy indicating receipt of rental income of ₹20,73,600 without filing a return, reassessment proceedings were initiated. The Assessing Officer followed the procedure under Section 148A, issued a notice under Section 148 after passing an order under Section 148A(d), and subsequently issued notices under Sections 142(1) and 143(2). Although the assessee initially did not participate, it later filed a belated return in response to the Section 148 notice declaring income of ₹5,23,250 after treating the rental receipts as “Income from House Property” and claiming deductions under Sections 24(a) and 24(b). The assessee had obtained a loan of ₹70,00,000 by mortgaging the rented property and used the loan proceeds to purchase another property. During assessment proceedings, the assessee withdrew its claim for deduction under Section 24(b) and instead claimed the interest as a business expenditure, contending that it was engaged in the business of sale, purchase, construction, development, and leasing of land and buildings.
