Anurag Konduru Vs DCIT (ITAT Bangalore)
Salary Earner, Commercial Tenant, Sub-Lessor: Which Head Applies to the ₹95 Lakh Receipts?
A person takes commercial premises on lease, pays rent to the owner, sub-lets the entire space and provides facilities to the occupant. The payments he receives are described as “rent”. Must they be taxed as income from house property, or can they be business income?
The Bengaluru ITAT decided this question in favour of Anurag Konduru. It held that the receipts from the sub-lessee arose from the commercial exploitation of premises leased from BMTC, together with obligations to provide related services. The assessee was not the owner of the property, and the Tribunal directed the Assessing Officer (AO) to compute the income under “Profits and gains of business or profession” in accordance with law.
The arrangement with BMTC and the sub-lessee
For assessment year 2023–24, the assessee filed a return declaring total income of ₹18,01,930. During assessment, the AO noticed receipts of approximately ₹95 lakh from Reliance Projects and Property Management Services Limited in Form 26AS and AIS.
The assessee explained that he had entered into an agreement with the Bangalore Metropolitan Transport Corporation (BMTC) on 26 February 2022 for commercial office space. He subsequently entered into a lease deed dated 2 December 2022 with Reliance Projects and Property Management Services Limited, sub-letting the premises to that company.
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