Case Law Details
In the present case, the rents are received on a property purchased for setting up of the project and is inextricably linked to the completion of the project. Considering the fact that the assessee had taken steps to evict tenants and also paid compensation to them while getting vacant possession for completing the project, the rental receipts received during the period have to be set off to the cost of project. Accordingly, I am of the opinion that the said amounts cannot be brought to tax as ‘income from house property’, and as assessee has rightly treated them as ‘capital receipts’ and set off to work-in-progress, the stand of the assessee is consistent with the principles governing such receipts. Accordingly, the orders of the Ld. CIT(A) and A.O. are set aside and assessee’s grounds on the issue are treated as allowed. The receipts are to be considered as capital receipts only.
Full Text of the ITAT Order is as follows:-
These four appeals are filed by the assessee against the order of CIT (A)-5, Hyderabad, dated 28.12.2016. Since common issue is involved in all these appeals and as a common order was passed by Ld. CIT(A), the appeals are heard and disposed of by this common order.
2. The only issue for adjudication in all the appeals is whether the rentals received during the period of project completion is taxable or not and if so, under what head.
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