2009 (12) TMI 997 - AT - Income Tax

Summary

Issues involved:
The judgment involves issues related to the upholding of rental income as income from other sources and the disallowance of deduction u/s 24 of the Income Tax Act for the assessment years 2001-02 and 2004-05.

Upholding of Rental Income as Income from Other Sources:
The AO observed that the assessee had shown rental income under "income from house property" but was not the owner of the property at Centre Point, S. V. Road, Mumbai. The AO issued a show cause notice as to why the rent should not be considered as income from other sources. The assessee claimed to be the legal owner, but the AO rejected this, citing section 22 of the Income Tax Act which requires ownership for rental income to be considered as income from house property. The CIT(A) also rejected the claim, stating that the assessee did not qualify as a deemed owner under section 269 UA (f) of the Act. The Tribunal upheld these decisions, emphasizing the necessity of ownership for rental income to be treated as income from house property.

Disallowance of Deduction u/s 24 of the Income Tax Act:
The assessee challenged the disallowance of deduction u/s 24 of the Income Tax Act. The Counsel for the assessee argued that the leave and license agreement made the assessee the deemed owner of the property as per section 27 (iii b) of the Act. However, the Tribunal found that the agreement did not constitute a lease, as required by the relevant provisions, and thus, the assessee did not qualify as a deemed owner. Referring to a precedent, the Tribunal concluded that the income should be treated as from other sources, and the deduction was rightly disallowed.

Conclusion:
The Tribunal dismissed the appeals of the assessee, as the rental income was upheld as income from other sources due to the lack of ownership of the property. The disallowance of deduction u/s 24 was justified as the leave and license agreement did not meet the criteria for the assessee to be considered a deemed owner. The Tribunal found no merit in the appeals and upheld the decisions of the authorities below.