2017 (6) TMI 1184 - AT - Income Tax

Rental receipts from subletting of factory premises along with furniture & fixture after manufacturing activities have ceased should be taxed under the head Business income instead of income from other sources - Held that - This Tribunal in assessee s own case as above has held that the activity of the assessee cannot be treated to be that of letting of the property, but the same should be assessed under the business income as claimed by the assessee. Since the learned CIT(A) has followed the order of the ITAT, we do not find any infirmity in the order of learned CIT(A). Accordingly we uphold the same.

Summary

Issues:
1. Classification of rental receipts from subletting of factory premises under 'Business income' or 'income from other sources'.
2. Allowance of expenses claimed by the assessee against the rental income.

Analysis:

Issue 1:
The main issue in this case was whether the rental receipts from subletting of factory premises along with furniture and fixture after manufacturing activities have ceased should be taxed under the head 'Business income' or 'income from other sources'. The Revenue contended that the income should be classified as 'income from other sources', while the assessee argued for it to be considered as 'Business income'. The Tribunal noted that in a previous order dated 06.06.2014 in the assessee's own case, it was held that the activity cannot be treated as letting of the property but should be assessed under business income. As the CIT(A) followed the ITAT's order, the Tribunal found no infirmity in the decision and upheld the classification of the income under 'Business income'.

Issue 2:
The second issue pertained to the allowance of expenses claimed by the assessee against the rental income. The Revenue raised concerns about the expenses claimed. However, the Tribunal did not delve into this issue extensively as the primary focus was on the classification of income. Since the main issue was resolved in favor of the assessee, the Tribunal did not find it necessary to address the specific details of the expenses claimed. Consequently, the Tribunal dismissed the appeal filed by the Revenue, affirming the decision of the CIT(A) and upholding the classification of income under 'Business income'.

In conclusion, the Tribunal's judgment in this case clarified the classification of rental receipts from subletting of factory premises as 'Business income' based on a previous order in the assessee's own case. The decision highlights the importance of consistent interpretation and application of tax laws in similar cases.