Rent from Mobile antennae installed at terrace taxable as House Property Income

Issue – whether or not deduction under section 24(a) @ 30% of the annual value is available in respect of computation of income under the head ‘income from house property’ in respect of income from renting of terrace for installation of mobile antenna.

Facts :– Briefly stated, the relevant material facts of the case are as follow. The assessee before us, an individual, had received sums aggregating to Rs. 2,91,723 from Bharati Airtel Limited and Idea Cellular Limited, towards renting out its terrace for the use by these companies as places where as, mobile communication service providers, the companies had installed antennas. The assessee had also claimed a deduction @ 30%, under section 24(a), from the rental income so received. However, this claim for deduction did not find favour with the Assessing Officer. In the course of scrutiny assessment proceedings, the Assessing Officer rejected this claim for deduction on the ground that, “income regarding installation of antenna” was taxable under the head “income from other sources” whereas deduction under section 24(a) could only be allowed in respect of such income as was taxable under the head “income from house property”. The deduction of Rs 87,516 was thus added back to income of the assessee. Aggrieved by the stand so taken by the Assessing Officer, assessee carried the matter in appeal before the CIT(A) but without any success. Learned CIT(A) upheld the stand of the Assessing Officer.

Observation of CIT (A)- A question was posed before the Hon’ble High Court of Calcutta in the case of Mukherjee State Pvt. Ltd. vs. CIT (2000) 244 ITR 1 (Cal) that when the hoardings are fixed to the building, the rent derived from such hoardings meant for advertisement purposes, be treated as income from property? The Hon’ble High Court has held that if the rent is only for fixing the hoarding, it cannot be treated as part of the building, nor could it be treated as land appurtenant thereto, therefore such income will have to be separately considered as income from other sources. On the same analogy, rent from the installation of mobile antennae which has been erected on the top at the building would not be taxable under the head “income from property” as the rent was only for providing space for installation of the mobile antennae on the top of building, and the same cannot be treated as part of the building nor can it be treated as land appurtenant thereto. Therefore, such income is taxable under the head income from other sources. The Assessing Officer has thus rightly treated the income from installation of mobile antennae as income from other sources and denied the deduction u/s 24(a) of the IT Act, 1961 claimed by the appellant. Accordingly, the Assessing Officer’s action is upheld.

Observation of ITAT

We find that so far as Hon’ble Calcutta High Court’s judgment in the case of Mukerjee Estates Pvt Ltd (supra) is concerned, it is wholly misplaced inasmuch as it was a case in which the Tribunal had given a categorical finding that the assessee had “let out the hoardings” and in which the  assessee’s claim that he had let out the roof for advertisement and hoarding remained to be unsubstantiated inasmuch as when “a query was put to him (i.e. the assessee) whether there was an agreement to this effect to conclude whether the hoarding was let out or the roof is let out”, the assessee “failed to produce that agreement nor there is (was) any reference to such an agreement before the authorities below”. It was in this backdrop that Hon’ble Calcutta High Court concluded as follows:

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