The Delhi bench of the Income Tax Appellate Tribunal (ITAT) rental amount received from real estate business cannot be treated as ‘Income from House Property’ under the provisions of the Income Tax Act, 1961.
Assessee, M/s Zever Tower Pvt. Ltd. engaged in the business of real estate and property development and purchase and sale of lands and flats etc. During the relevant assessment year, assessee declared the rental income received so as business income. However, the Assessing Officer rejected the return and completed assessment by treating the income as “income from House property” u/s 22 of the Income Tax Act and has allowed the statutory deduction u/s 24.
Dismissing the departmental appeal, the division bench ruled that the Assessing Officer was not justified in converting the rental income from the real estate business to house property income and in allowing statutory deduction u/s 24 @ 30%.
“We note that the assessee is in the real estate business and also in the jewellery business and as such the income of the assessee is to be assessed as business income. Moreover, if the action of the AO is confirmed the assessee will be claiming additional deduction u/s 24 @ 30% in addition to the business and administrative expenses as the assessee is in the real estate business and the income of the assessee will be assessed lower than the returned income,“ the bench said.
Read the full text of the Order below.
