Nahalchand Laloochand (P.) Ltd. v. DCIT – [2020] 115 taxmann.com 367 (Mumbai – Trib.)

Assessee took premises on lease which was further let out to a bank for more than 12 years.

 Assessee filed return of income declaring rental income taxable under the head ‘Income from business or profession’.

Assessing Officer (AO) treated assessee as deemed owner of property and held that lease rentals received was taxable as ‘income from house property’.

Assessee contened that tenancy was on month to month basis which could be terminated by tendering 15 days notice.

Thus, it couldn’t be treated as house property income.

The Mumbai ITAT held that from the perusal of lease agreements entered into by assessee with bank, it was observed that assessee had entered into a long-term lease agreement for period exceeding 12 years and that too with a nationalized bank who requires the approval of regulatory authority to open or operate the branches.

Therefore, it could safely be gathered that the Bank was assured of peaceful enjoyment of the said premise for the agreed period of lease without any interruptions.

Hence, it couldn’t be accepted that the tenancy was on ‘month to month’ basis and the assessee was covered in the exceptions contained in Section 27(iiib).

Accordingly, for the purpose of Section 27(iiib) read with section 269UA(f)(i), the assessee was deemed owner of the property and therefore, the stated income was rightly brought to tax by revenue authorities as ‘Income from House Property’.