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2015 (1) TMI 1247 - AT - Income TaxTreatment to rental income - income from other sources OR income from house property - disallowance of deductions claimed u/s 24 on such rental income - Held that - Keeping in view the decision of the Hon ble Delhi High Court in the case of Niagara Hotels & Builders (P) Limited 2015 (4) TMI 625 - DELHI HIGH COURT as well as the decision of Manpreet Singh (2015 (2) TMI 159 - ITAT DELHI ), which is squarely applicable in the facts of the present case, I hold that the amount in question received by the assessee from M/s. Dishnet Co. Limited for use of terrace of the assessee s house property for installation of tower is chargeable to tax under the head income from house property as claimed by the assessee. Accordingly, direct the Assessing Officer to bring the said amount to tax in the hands of the assessee under the head income from house property and allow deduction under section 24 of the Act, as claimed by the assessee. - Decided in favour of assessee.
Issues Involved:
1. Classification of rental income from the use of terrace space for tax purposes. 2. Eligibility for deductions under Section 24 of the Income Tax Act. Issue-wise Detailed Analysis: 1. Classification of Rental Income: The primary issue in this case was whether the rental income of Rs. 92,129/- received by the assessee from Dishnet Wireless Limited for allowing the use of the terrace space for the installation of a tower should be classified as "income from house property" or "income from other sources." The Assessing Officer (AO), relying on the decision of the Hon'ble Calcutta High Court in Mukherjee Estate Pvt. Limited vs. CIT, classified the income as "income from other sources," thereby disallowing the standard deduction claimed under Section 24. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this decision, citing the same precedent and a similar decision by the Hon'ble Delhi Bench of ITAT in the case of JMD Realtors (P) Limited vs. DCIT. The Tribunal, however, considered the submissions of the assessee's counsel, who argued that the issue was covered in favor of the assessee by the Hon'ble Delhi High Court's decision in Niagara Hotels & Builders (P) Limited vs. CIT and the Delhi Bench's decision in Manpreet Singh vs. ITO. These cases held that rental income from the use of terrace space for installing mobile towers should be classified as "income from house property." The Tribunal found that the roof or terrace is an integral part of the building, and therefore, the rent received for its use should be classified under "income from house property." 2. Eligibility for Deductions under Section 24: Given the classification of the rental income as "income from house property," the assessee claimed standard deductions under Section 24 of the Income Tax Act. The Tribunal noted that the CIT(A) had erroneously interpreted the decision in Mukherjee Estate Pvt. Limited, which dealt with hoardings, not terrace space. The Tribunal emphasized that the rent was for the space on the terrace, not for the antenna itself, and thus should be treated as part of the building. Consequently, the Tribunal directed the AO to classify the income as "income from house property" and allow the deductions under Section 24 as claimed by the assessee. Conclusion: The Tribunal concluded that the rental income from the use of terrace space for installing a tower should be classified as "income from house property," allowing the assessee to claim deductions under Section 24. This decision was based on precedents from the Hon'ble Delhi High Court and the Delhi Bench of ITAT, which clarified that terrace space is part of the building, and thus its rental income falls under "income from house property." The appeal of the assessee was allowed, and the AO was directed to adjust the tax treatment accordingly.
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