The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ), in DCIT v. M/s. Tierra Landpro LLP, held that the income received under a Leave & License Agreement constitute “Profit and Gains from Business or Profession” and not “Income from House Property”.
While dismissing an appeal filed by the Revenue against the order of the Commissioner of Income Tax (Appeals), the Tribunal also allowed administrative expenses treating the same as business expenditure.
Assessee, an LLP, received Rs. 1, 45,67,300/- under Leave & License Agreement and other income of Rs. 9,99,783/-. For the relevant assessment year, they claimed administrative and general expenditure of Rs.1,06,91,783/-. However, the Assessing Officer treated the entire rent receipt as income from House Property, after allowing Standard Deduction under Section 24(a) of the Income Tax Act. He also did not allow the administrative expenses as claimed by the appellant.
The Revenue contended that the income arising to the assessee was to be assessed under the head income from house property and that no expense was to be allowed in that regard. The FAA granted relief to the assessee on the first appeal.
Allowing the contentions of the assessee, the Tribunal held that the assessee was carrying on business. Therefore, the order of the FAA needs no interference. The expense incurred by the assessee under various heads were incurred wholly and exclusively for its business.
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