2011 (9) TMI 1109 - AT - Income Tax

Summary

Issues involved: Disallowance of property tax and treatment of rent received.

Dispute 1 - Disallowance of property tax:
The appeal was against the disallowance of property tax amounting to Rs. 24,59,281 by the Assessing Officer (AO) for the assessment year 2004-05. The AO disallowed the claim as he found that the property tax was the liability of the purchasers based on the agreements. The Assessee contended that the municipal tax was paid as per BMC demand and should be deductible. However, the tribunal upheld the disallowance stating that as per the agreements, the purchasers were liable to pay the municipal tax, and hence, the deduction claimed by the Assessee was not allowable.

Dispute 2 - Treatment of rent received:
The second dispute was regarding the treatment of rent received from BPL Mobile Company. The AO assessed the rental income as business income, considering it as temporary exploitation of a commercial asset. The Assessee argued that the income should be treated as income from house property as it was received for letting out space on the terrace. The tribunal upheld the AO's decision, stating that the rental income from the commercial exploitation of a business asset should be assessed as business income, not income from house property.

In conclusion, the tribunal dismissed the appeal of the Assessee, upholding the disallowance of property tax and the treatment of rent received as business income.