Refund of Sewage Tax constitute ‘Business Income’: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Mumbai bench has held that the refund of sewage tax would be assessed as business income as the same was earlier claimed as business expenditure under the provisions of the Income Tax Act, 1961.

The assessee is a developer and builder. Undisputedly, assessee has not carried out any business activity during the period relevant to assessment year under appeal. During the relevant year, the assessee received the refund of Sewage Tax received from MCGM. The department held that the same is chargeable to income tax under the head “Income from Other Sources” against the assesses contention that the same amount to “Business Income.”

A division bench comprising Shri Vikas Awasthy, Judicial Member & Shri Gagan Goyal, Accountant Member has held that the assessee has assailed change of head of income of the refund of Sewage Tax received from MCGM.

“The assessee has offered the said refund as ‘Business Income’. The Assessing Officer has held that the refund is assessable as ‘Income from Other Sources’. We do not concur with the findings of Assessing Officer/CIT(A). Once, payment of Sewage Tax was claimed as business expenditure, refund of same would be liable to be assessed under the head ‘Business Income’. The ground No.2 of appeal is thus, allowed,” the Tribunal said.

Ms. Swati Banwat appeared for the assessee and Shri Azhar Zain appeared for the Revenue.

To Read the full text of the Order CLICK HERE

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