The Income Tax Appellate Tribunal (ITAT) Jaipur Bench held that Income from letting out properties along with other amenities are chargeable to tax under the head of Income from business . Therefore, the bench deleted the revision order passed under Section 263 of the Income Tax Act, 1961.
The assessee Agrani Buildestate engaged in the business of letting out of properties. The firm also rendered various services like provision of security services, lift maintenance, upkeep of properties and cleaning services, etc
After completing assessment assessee case was selected for scrutiny ,After the scrutiny AO passed assessment order .Therfater The PCIT issued notice under Section 263 of Income Tax Act and contented that The income of the assessee is not covered by the Circular No.16/2017 dated 25.04.2017. Therefore, the rental income of the assessee from aforesaid concems was required to be taxed under the head “Income from House Property but the AO failed to do so and passed revision order.
Aggrieved by the revision order, the assessee filed an appeal before the tribunal.
During the appeal proceedings Rajeev Sogani , counsel for the assessee submitted that income earned from letting out of properties along with various services to lessees, the income has taxed under the head Income from business and profession.
Further, during the scrutiny AO verified all documents and partnership deed which was submitted. Also looked in to the complete explanation. The AO observed that the income falling under the head “Income from business and profession”.
A.S. Nehra, Counsel for the revenue argued that assessment order dated 15.02.2021 for A.Y. 2018-19 passed by the AO is held erroneous in so far as it is prejudicial to the interest of the revenue for the purpose of section 263 of the Income Tax Act. The AO has not verified the details which were required to be verified under the scope of scrutiny.
Further, the counsel point out that the assessee has earned income from letting out of the properties along with various services to the lessees, therefore, assesee failed to offer the said income to under the head ‘’Income from House Property.
It was observed by the tribunal that the assessee was selected for scrutiny for specific purpose for verification of refund claim and income from house property and, therefore, there cannot be any presumption of lack of enquiry .
Moreover as per the CBDT Circular No. 16/2017 dated 25-04-2017 a business of lease rent received from letting out the properties along with other amenities was chargeable to tax under the head ‘’Income from Business and not under the head ‘’Income from House Property
After reviewing the facts and submission the two member bench of the tribunal comprising Rathod Kamlesh Jayantbhai (Accountant Member) and Sandeep Gosain, (Judicial Member) allowed the appeal filed by the assessee and dismissed the revision order passed by the Principal commissioner of Income Tax Act.
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