The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has held that lease rental income received from letting out of school buildings with amenities should be treated as Income from House Property.
The assessee Kanakia Gruhnirman Pvt. Ltd. is engaged in the business of ‘Real Estate Development’. After filing the return of the income, the assesse’s case was selected for scrutiny.The Assessing Officer (AO) noticed that no real estate development activity was carried out by the assessee and the assessee has shown rental income from letting out of school building, capital gain on redemption of preference shares, interest on fixed deposits and interest from partnership firm and dividend on shares.
Further, the AO Asked to show cause as to why the composite rent income received under the head house property should not be brought to tax under the head other sources in view of section 56(2)(ii) of the Income Tax Act, 1961.
The assesee submitted that the lease rental is taxable under the head house property and not under the other sources. Hence, the depreciation is allowable as a deduction. After verifying the the submissions of the assessee, the AO rejected the claim.
Aggrieved by the order, the assesee filed an appeal before the CIT(A), who dismissed the appeal of the assessee. Thus, the assessee filed a second appeal before the tribunal.
Anuj Kisnadwala, the counsel for the assessee submitted that the lease rental income received from letting out of school building along with infrastructure and other amenities should be treated as “Income from House property”. Also, similar issues were allowed in favour of assessee in the assessment year 2011-12 and 2012-13.
Rajesh Meshram, counsel for the revenue, supported the decision of the lower authorities.
After considering the facts, the two- members bench Vikas Awasthy (Judicial Member) and S. Rifaur Rahman (Accountant Member)observed that the assessee declared the income earned from letting of school building with amenities under the Head `income from House Properties’ from assessment year 2009-10. This issue was decided by the CIT(A) and ITAT in favour of the assessee till the assessment year 2012-13
Therefore, the bench allowed the appeal filed by the assessee.
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