Rental Income can be treated as ‘Business Income’ even if Principal Object of Company is not Letting out of Properties: Madras HC [Read Judgment]

The Madras High Court has held that the rental income received by the company is assessable as income from ‘Profits and Gains from Business and Profession’ even if the principal object of the company is not letting out of properties.

Earlier, the Tribunal concluded the matter in favour of the assessee and held that such income constitutes business income and not house property income.

Before the High Court, the Revenue pleaded that the ITAT was not right in allowing the rental income of the assessee as “business income” instead of “Income from house property” when the principal object of the assessee company is not letting out of properties.

According to the Revenue, the order of the Tribunal allowing the rental income of the assessee as “business income” ignored the Apex Court judgment in the case of Keyaram Hotels.

While dismissing the departmental appeal, Justice T.S Sivagnanam observed that the issue raised in the appeal is squarely covered by the judgment of this Court in the case of The Principal Commissioner of Income Tax-1, Coimbatore vs. M/s.Sakthi Sugars Ltd.