Case Law Details
DCIT Vs Gulmohar Park Mall Pvt. Ltd (ITAT Ahmedabad)
ITAT Ahmedabad held that assessee was engaged in business of leasing out its house properties to earn rent, income so earned as rent should be treated as ‘business income’, and not as ‘income from house property’.
Facts- During the year under consideration, the assessee earned income of Rs. 7,14,14,205/- from its mall operating business, and offered the same to tax as its “business income”. The assessee had also claimed business expenditure namely; administration, finance, other miscellaneous expenditure etc. against such business income. However, during the course of assessment, the Assessing Officer held that the aforesaid income earned by the assessee from letting out the space and house property is taxable as “income from house property” and cannot be taxed as “business income”.
CIT(A) allowed the appeal. Being aggrieved, revenue has preferred the present appeal.
Conclusion- In the case of Chennai Properties & Investments Ltd., the Hon’ble Supreme Court held that where in terms of memorandum of association, main object of assessee-company was to acquire properties and earn income by letting out same, said income was to be brought to tax as “business income” and not as “income from house property”. In the case of Rayala Corporation (P.) Ltd., the Hon’ble Supreme Court held that where assessee-company was engaged in business of leasing out its house properties to earn rent, income so earned as rent should be treated as ‘business income’, and not as ‘income from house property’.
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