2010 (11) TMI 1052 - AT - Income Tax

Summary

Issues involved: Determination of whether the rent received by the assessee for leasing out part of the club premises should be classified as income from house property or business income.

Summary:

Issue 1: Nature of Income
- The assessee leased out club rooms and infrastructures to an educational trust, claiming the income as business income.
- The AO considered it as "income from house property" based on TDS deduction and disallowed expenses.
- The CIT(A) upheld the AO's decision, stating that the property was leased out as the owner, not for business exploitation.
- The AR argued that the premises were temporarily leased to exploit business assets until construction was completed, citing relevant court decisions.
- The DR contended that the premises were not used for business activities as per the Memorandum of Association.
- The Tribunal noted that the premises were not utilized for the assessee's business activities and were leased out to an educational institution, not for business purposes.
- Citing Supreme Court decisions, the Tribunal concluded that the rent received should be classified as income from house property, affirming the CIT(A)'s decision.

Conclusion:
- The appeal by the assessee was dismissed, and the income from the leased premises was categorized as income from house property.