ACIT Vs IHDP Globals Pvt Ltd (ITAT Delhi)
Income Tax Appellate Tribunal (ITAT) Delhi has dismissed an appeal filed by the Assistant Commissioner of Income Tax (ACIT) against IHDP Globals Pvt Ltd for the Assessment Year 2017-18. The Tribunal’s decision upholds the ruling of the Commissioner of Income Tax (Appeals) that rental income generated by the company from leasing out a property should be taxed under the head “Income from House Property” rather than “Profits and Gains from Business and Profession.” This judgment emphasizes the principle of consistency in tax assessments, particularly when no material change in facts has been demonstrated by the Revenue.
Background of the Dispute
IHDP Globals Pvt Ltd, a private limited company primarily engaged in the business of carpet fabrication, filed its Return of Income for AY 2017-18, declaring an income of approximately Rs. 9.94 crores. During this period, the company also earned substantial rental income, amounting to Rs. 12,13,92,238/-, from leasing out a building located at Plot no. 7, Sector-127, Taj Expressway, Noida, to various tenants, including M/s Alstom India Ltd.
During the assessment proceedings under Section 143(2) of the Income Tax Act, 1961, the Assessing Officer (AO) noted that while the rental income was accrued, it was not included in the income declared by the assessee in its return. The AO further challenged the company’s classification of this rental income as “Income from House Property” and consequently disallowed a deduction of Rs. 4,75,55,130/- claimed under Section 24(a) of the Act. The AO’s position was that this income should correctly be taxed as “Business Income.”
