Case Law Details
Mahle Filter Systems Pvt. Ltd. Vs Add. CIT (ITAT Delhi)
The issue under consideration is whether A.O. is correct in treating the ‘rental income’ as ‘income from other sources’?
The assessee has disclosed rental receipts from its factory building and after deducting 30% as per provisions of section 24 of the Act, income from house property has been disclosed. The Assessing Officer found that the assessee has entered into a ‘Leave and License’ Agreement and not ‘Lease Rental’ Agreement. According to the Assessing Officer, ‘Lease Rental Agreement’ is different from ‘Leave and License Agreement’ and therefore, rental income received by the assessee cannot be treated as income from house property. Accordingly, the Assessing Officer taxed the entire receipts as income from other sources.
ITAT states that there is no dispute that the factory building owned by the assessee was let out to M/s Anand Engines Component Ltd., for which the assessee earned rental income. Whether there existed ‘leave and licence’ agreement and not ‘rental agreement’ would not change the colour of receipts in the hands of the assessee. The unchanged fact is that the assessee has earned rental income from letting out its property and the same has to be taxed under the head ‘income from house property’ eligible for deduction as per the provisions of section 24 of the Act. ITAT, accordingly, direct the Assessing Officer to tax rental income under the head ‘income from house property’ as per provisions of law. Therefore, appeal is allowed in favour of Assessee.
FULL TEXT OF THE ITAT JUDGEMENT
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