Rent from letting out of Terrace Taxable as House Property Income: ITAT [Read Order]

Rent ITAT Open Terrace

The Income Tax Appellate Tribunal ( ITAT ), Mumbai bench has held that the rent received from letting out of the terrace shall be taxed under the head “Income from House Property” under the Income Tax Act.

The Assessing Officer was of the view that for assessing an income earned in respect of a property as an income from house property, the property in question should be fit for habitation. He also observed that an open plot/ terrace cannot be termed as house property as it is the common amenity for use of Members of society and cannot be used for habitation. According to him, the income from letting out the terrace is not assessable under the head ‘income from house property’ and he taxed the same as ‘income from other sources’ and disallowed the claim for deduction under section 24(a) of the Income Tax Act.

The Tribunal recalled its earlier order in a similar case wherein the Tribunal concluded the matter in favour of the assessee and held that income from letting out of the terrace has to be assessed under the head ‘income from house property’ subject to deduction under section 24 of the Act as against income from other sources as assessed by the AO.

Applying the above case in the present matter, the Tribunal held that “Since in the present case, the facts in dispute are identical and no difference in facts could be pointed out by the Ld. DR of the Revenue, respectfully following this order of the Tribunal, I decide the issue in favour of the assessee.”

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