2009 (10) TMI 554 - HC - Income Tax

Income received from building - under the name Konny Building is business income or not - assessee is engaged in letting out rooms in the lodging house and the Konny Building is one rented out to the bank on long-term lease - Held that - letting out building on long-term lease is not a business activity at all - letting out building to the bank cannot be treated as business. It is to be assessed as income from property - Appeal is dismissed

Summary

Issues:
1. Determination of whether income from "Konny Building" is business income or income from property.
2. Liability for interest under sections 234A and 234B.

Issue 1:
The first issue in the judgment pertains to the nature of income received from the "Konny Building" - whether it should be categorized as business income or income from property. The appellant argued that since the building was rented out to a bank on a long-term lease, it should be considered as business income. However, the court disagreed with this contention, stating that letting out a building on a long-term lease does not constitute a business activity. While income from lodging houses is treated as business income, income from letting out a building to a bank is to be assessed as income from property. The court upheld the Tribunal's decision regarding the classification of income from the Konny Building as income from property, not business income.

Issue 2:
The second issue addressed in the judgment concerns the liability for interest under sections 234A and 234B. The court referred to a single Bench decision in Seapearl Enterprises v. Deputy CIT and a Full Bench decision in Parkash Agro Industries v. Deputy CIT, both of which supported the imposition of interest under the relevant sections. The court found no reason to deviate from the views expressed in these decisions and, consequently, dismissed all appeals filed by the assessee. The liability for interest under sections 234A and 234B was thus affirmed based on the precedents cited in the judgment.

This comprehensive analysis of the judgment from the Kerala High Court provides a detailed overview of the issues involved, the arguments presented by the parties, and the court's reasoning leading to the final decision on each issue.