The Income Tax Appellate Tribunal (ITAT), Delhi bench, while applying the rule of consistency, held that the income received by a Company through letting out of Steel Units and Quarters along with the land shall be treated as house property income for the purpose of the Income Tax Act, 1961.
The assessee is a multi-unit manufacturing company filed the income tax return for the relevant assessment year. While completing the assessment proceedings, the Assessing Officer noticed that the assessee has gross income under the head “Income from House Property” at Rs. 1,72,39,509/- being the rent received from land given on rent to various persons, outsiders and sister concerns.
However, the assessee contended that the income shall be treated as income from house property against the AO’s decision to treat the same as “Business income” for the purpose of assessing the tax liability. A final assessment order was passed accordingly by the AO observing that as the said premises rented out by the assessee from part of fixed assets in the asessee’s balance sheet on which incidental expenses has been claimed and allowed by the revenue, and as such taxed the same as ‘Business Income’.
Declining the contention raised by the Revenue, the Tribunal held that undisputedly assessee has earned total rental income at Rs. 1,95,47,009/-, out of which assessee itself has treated an amount of Rs. 23,07,500/- as ‘Business Income’ against which expenses have already been claimed by the assessee.
“It is also not in dispute that in the earlier assessment year for A.Y. 2011-12 assessee’s claim to treat the rental income from its steel unit including that from buildings and quarters have been accepted by the Co-ordinate bench of Tribunal in ITA No. 1702/Del./2015, ITA No. 2640/Del/2015,” the Tribunal said.
Concluding the matter in favour of the assessee, the Tribunal held that “Ld. DR for the revenue has failed to bring on record any change in the facts and circumstances of the case to treat the income by way of rental income earned by the assessee from letting out of steel units and quarters situated therein to be treated as business income. When there is no change in the facts and circumstances of the case, and this rental income has been accepted as income from the house property in earlier assessment years for 2007-08, 2009-10, 2010-11 and 2011-12, there is no ground to depart from the “principles of Consistency”.
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