Rajesh Kumar Jaiswal Vs DC/ACIT(CNTRL) Income Tax Department (ITAT Allahabad)
ITAT Allahabad held that renting out of property on day-to-day basis and providing certain facilities to those who would be taking premises on rent seems to be an organized activity of composite nature. Hence, income from the same is treated as business income.
Facts- During the course of assessment, AO observed that the assessee had disclosed rental receipts of Rs.37,48,000/- from three house properties and after deducting house tax and claiming deduction under 24(a), a net income of Rs. 25,86,697/- had been disclosed under the head, ‘house property’. AO observed that in respect of two of the properties, the assessee had not let out the same on rent to any one person on a monthly or annual basis. Instead, he had employed one manager in each property to take care of it and given the same to pilgrims / travelers on a daily basis or for short periods. The income from these properties was also disclosed on a net basis i.e. after deducting all the expenses including the salaries of the managers. AO disallowed the deduction u/s. 24(a) amounting to Rs. 7,03,585/- on these properties. He also disallowed the house tax of Rs. 52,718/- for the property at Hewett Road. He, thereafter, decided to treat the net income of Rs. 23,98,000/- from the two properties as the assessee’s income from business.
