2012 (7) TMI 952 - AT - Income Tax

Summary

Issues Involved:
The main dispute involves the assessment of lease rental income under the head 'business' or 'house property income' and the consideration of additional evidence by CIT(A) in violation of Rule 46A of the Act.

Assessment of Lease Rental Income:
The assessee, a group concern deriving income from manufacturing, received lease rent from a portion of business assets. The assessing officer treated the entire lease rent as income from other sources, contrary to the assessee's claim of it being business income. The CIT(A) accepted the assessee's contention based on case law and held that the lease rental should be assessed under the head 'business income'. The Revenue appealed against this decision.

Violation of Rule 46A:
The Revenue contended that the CIT(A) erred in admitting additional evidence without giving the assessing officer an opportunity to offer comments, thus violating Rule 46A of the Act. The Departmental Representative argued that the lease rental should be assessed under 'other sources', relying on TDS certificates, while the assessee's counsel maintained that the lease rental income was part of the business income.

Judgment:
The ITAT upheld the CIT(A)'s decision, stating that the assessing officer did not make sufficient effort to determine the appropriate head for assessing the lease rental income. The CIT(A) considered the factors presented by the assessee and concluded that the lease rental income should be taxed as business income. The ITAT found no violation of Rule 46A and dismissed the Revenue's appeals, affirming the CIT(A)'s orders.

Conclusion:
The ITAT dismissed all three appeals by the Revenue, upholding the assessment of lease rental income as business income and finding no fault in the CIT(A)'s decision.