Knowell Realtors (India) Pvt Ltd Vs ACIT (Kerala High Court)
Kerala High Court held that as rental income of property already treated under the head ‘income from house property’, the sale of said property to be assessed under the head ‘capital gains’ and not as ‘business income’ since there is no change in any circumstance.
Facts- The appellant is a company. The issue involved in these appeals is regarding the head of income under which the receipts of rent collected by the appellant in relation to leased property should be classified for the purposes of the Income Tax Act. The said classification has a bearing on the treatment to be accorded to the receipts obtained by the appellant consequent to the sale of some of the said properties. The appellant had been declaring the receipts as Income from House Property during the various assessment years, and the returns so filed by the appellants were accepted by the Department in the past. For the assessment years 2012-13 and 2015-16 however, the Department took a different stand and assessed the rental receipts under the head ‘Business Income’. Consequently, the amounts received by the appellant on the sale of the property also came to be assessed as business income and not as capital gains as declared by the appellant.
