The Kolkata bench of Income Tax Appellate Tribunal (ITAT) in DCIT versus M/s Maa Amba Towers, held that the rental income earned from the warehouse is to be treated as business income under the provisions of the Income Tax Act, 1961.
In the instant case, the revenue approached this tribunal raising a grievance that to treat the rent from warehouses to be the income from house property instead of business income.
The CIT(A) observed from the memorandum of association that the objectives of the assessee company is to develop, operate & maintain a modern warehousing facility which could be used by the number of FMCG companies for storing numerous types of consumer products.
The authority also added that to do this activity assessee employed his skilled and semi-skilled staff and exploited the civic infrastructure and the activity carried by the assessee was regular and organized manner can be termed as the business.
The ITAT bench including Judicial Member S.S.Godara and Accountant Member M.Balaganesh made a keen observation on findings made by CIT (A) and said that object clause in the MOU duly contains the relevant stipulation regarding setting up of the warehouse in issue in the nature of its business activity.
The bench also relied on the case arose in assessee’s sister concern M/s Maa Amba Infrastructure (P) Ltd.’s and held that CIT (A) has rightly concluded assessee’s rental income from its warehouse facilities to be in the nature of business income than Income from House Property.
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