Rental income from let out property without any additional services is income from house property: ITAT Delhi

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Rental income from let out property without any additional services is income from house property: ITAT Delhi

Here is an interesting case before Delhi ITAT on taxation of Rental income from property. The case detail is as under:

DCIT, Circle-27(1), New Delhi Vs. U & I Business Services Pvt. (ITA No. 5912/Del/2019)

Let us have a short overview of the case:

Facts:

1. The assessee is a resident corporate entity engaged in leasing property. The return of income was filed, declaring income of Rs.3,95,29,220.

2. The Assessing Officer observed rental income from a property leased to Reliance Retail Ltd. and treated it as business income. The property was let out without any additional/associated services.

3. The Assessing Officer issued a show cause notice and examined the Memorandum of Association, concluding that the rental income should be treated as business income.

4. The learned Commissioner (Appeals) accepted the assessee’s claim, assessing the rental income as income from house property.

5. So the main issue was regarding the disallowance of Rs.1,17,26,787 under Section 24(a).

ITAT Delhi held as below:

1. The property let out to Reliance Retail Ltd is without any additional benefits unlike other properties let out by the assessee which have been assessed as income from business.

2. In the last years too the property was offered to tax as income from house property.

3. So we are inclined to uphold the decision of learned First Appellate Authority in treating the rental income as income from house property and allow deduction under Section 24(a) of the Act.

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