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Issues involved:
The issues involved in the judgment are: 1. Validity of notice issued u/s 148 of the Income Tax Act. 2. Classification of income as either "income from house property" or "business income." 3. Allowability of expenses incurred by the appellant u/s 57 and 56 of the Act. Validity of Notice u/s 148: The appellant challenged the validity of the notice issued u/s 148 of the Income Tax Act. The Assessing Officer's jurisdiction under this section was questioned by the appellant. However, the CIT(A) upheld the order, leading to this appeal. The appellant's contention was that the notice was not compliant with the mandatory requirements for assuming jurisdiction under section 148. During the hearing, the appellant did not press this ground, and it was dismissed as not pressed. Classification of Income: The main issue revolved around determining whether the income in question should be classified as "income from house property" or "business income." The Assessing Officer assessed the income as "income from house property" based on the rental income received by the appellant. The appellant failed to provide details of the portion of the property given on rent. The CIT(A) confirmed the assessment under the head "house property." The appellant argued for the assessment under the head "business income," claiming to provide infrastructure facilities to tenants. However, the Tribunal found that the true legal relation arising from the transaction determined the taxability of the receipt under the Income-tax Act. The dominant intention of the appellant was deemed to be earning income through letting out the property, leading to the income being computed under "income from house property." Allowability of Expenses: The appellant also contended for the allowance of various expenses incurred under section 57 of the Act, which were related to the service charges. The Tribunal considered the agreements between the appellant and sister-concerns, finding that the appellant had given the entire building on rent to these concerns. The Tribunal concluded that the appellant's dominant intention was to earn income through letting out the property, justifying the classification under "income from house property." The Tribunal upheld this classification and allowed the appellant to apportion the income between property income and service charges. Following precedents, the Tribunal determined that 60% of the amount should be treated as rent and 40% as service charges, allowing deductions accordingly. In conclusion, the appeal filed by the appellant was partly allowed, with the Tribunal ruling on the validity of the notice u/s 148, the classification of income, and the allowability of expenses incurred by the appellant.
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