2011 (11) TMI 754 - AT - Income Tax

License fee in respect of composite letting activity carried on by the assessee are chargeable to tax under the head income from house property - Held that - The license fee from letting out activity is assessable under the head income from house property and not income from business. See M/s. Shambhu Investment 2003 (1) TMI 99 - SUPREME Court . Computing the annual letting value (ALV) notional interest on the interest free deposits cannot be added - Held that - This issue also stands covered in favour of the assessee by the decision of the Hon ble High Court of Delhi (Full Bench) in the case of CIT vs. Monikumar Subba 2011 (3) TMI 497 - DELHI HIGH COURT

Summary

Issues:
1. Whether license fee from letting out activity is chargeable to tax under the head "income from house property"?
2. Whether notional interest on interest-free deposits can be added while computing annual letting value (ALV)?

Analysis:

Issue 1:
The first issue before the tribunal was whether the license fee from letting out activity should be taxed under the head "income from house property." The tribunal noted that the matter had been previously decided against the assessee in earlier years. The tribunal referred to its own decisions and the Supreme Court's ruling in a specific case to support the position that license fee should be taxed as income from house property. Consequently, the tribunal upheld that the license fee falls under the head "income from house property" and not income from business, dismissing the grounds raised by the assessee.

Issue 2:
The second issue involved whether notional interest on interest-free deposits should be added while computing the annual letting value (ALV). The tribunal considered a similar matter from previous years and cited relevant cases to support its decision. It referred to a decision of the Hon'ble Jurisdictional High Court and a specific case where it was held that notional interest should not be added to annual rent receipt. Additionally, the tribunal mentioned a decision of the Hon'ble High Court of Delhi that further supported the position that notional interest on interest-free deposits should not be included in the ALV calculation. Consequently, the tribunal upheld the order of the First Appellate Authority and dismissed the grounds raised by the revenue.

In conclusion, both the appeals, one by the assessee and the other by the revenue, were dismissed by the tribunal based on the above analysis of the issues presented before it. The tribunal provided detailed reasoning and legal references to support its decisions, ensuring clarity and consistency in the application of tax laws.