The Income-tax Appellate Tribunal (ITAT), held that AO correctly treated rental income from commercial properties as income under the head ‘House Property’ instead of Income from Business.
The assessee, M/s. Discovery Estates Pvt. Ltd. was engaged in the business of construction of the commercial complex and also earning rental income. The return of income was filed by the assessee for the year under consideration declaring income or Rs.2,67,02,200. The case was selected for scrutiny and assessment under Section 143(3) of the Income-tax Act, 1961 was completed after treating the rental income under the head ‘Income from House Property’ instead of income under the head “Profit and Gains of Business or Profession’ offered by the assessee in the return of income.
The CIT(A) following the finding of the Delhi High Court in the case of assessee itself passed in earlier years, upheld the finding of the Assessing Officer. Aggrieved, the assessee is in appeal before the Tribunal raising the grounds as reproduced above.
The Coram of Suchitra Kamble and O.P. Kant held that the assessee is earning rental income from commercial malls and offered the same under the head ‘Profit and Gains of Business or Profession’. The rental income has been generated from commercial units which remained unsold and were held as stock in trade in desire of an acceptable sale price. The Assessing Officer has taxed the said rental/lease income under the head “income from house property”.
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