Rental income earned by assessee – developer is House property income or business income

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Rental income earned by assessee – developer is House property income or business income  

Fact : Assessee was in the business and developers and during the year under consideration , the assessee earned income from units leased out to certain parties and such leasing was done for long tenures . Assessee had claimed the lease rental income to be  income from house property , but the same was rejected by the AO and the Co-ordinate Bench of  ITAT in assessee’s own case in ITA NO.7119/Mum/13 for assessment year 2010-11 had passed orders in favour of assessee, wherein it was held that the lease rental income be assessed under income from house property . CIT(A) held that rental income be assessed under income earned by the assessee be treated under the head “house property” .

 

It is Held that : The units provided on tenacy had been made for a tenure ranging between 3 to 9 years, which showed that the intention of the assessee was to earn lease rental income and not to exploit the immovable property . Assessee was in the business of development of real estate projects and letting of property was not the exclusive business of the assessee, therefore, rental income earned by the assessee was rightly treated as income under the head House Property by CIT(A) Moreover no new  facts had been brought on record before Tribunal in order to controvert or rebut the findings so recorded by the CIT (A) . Hence , the findings so recorded by the CIT(A) were judicious and were well reasoned . reasoned .Resultantly , these grounds raised by the revenue stood dismissed.

 

Dt.Order : 1 March 2019

Followed :  CIT v. Gundecha Builders ITA No. 347 of 2016 & 4475/Mum/2011 for assessment year 2008 -09  Relied : Raj Dadarkar & Associates v. Asstt CIT (2007) 81 taxman.com 193 9(SC) :2017 taxpub(DT) 11739(SC) Distinguished : Chennai properties and investments Ltd. V. CIT (2015) 377 ITR 673(SC) :2015 Taxpub(DT) 2180 (SC) , CIT v. Sane & Doshi Enterprises (2015) 377 ITR 165 (Bom) : 2015Taxpub(DT)2590 (Bom –HC) East India Housing and Land Dvelopment trust Ltd. V. ACIT (1962) 42 ITR 49 (SC) : 1961 Taxpub(DT) 132 (SC) and pr. Quest Investment Advisors (P) ltd. (2018) 257 Taxman 211 (Bom –HC) : 2018 Taxpub(DT) 4218 (Bom – HC)

Asstt. CIT v. Ashapura Developers (2019) 167 (A) 391 (Mum – trib) : 2019 taxpub (DT) 176 (Mum – Trib)

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