2012 (10) TMI 580 - AT - Income Tax

Income from licence fee - income from house property v/s business income - Held that - The assessee was the owner of a factory shed measuring 1210 sq. yards out of which he was in possession of an area of 135 sq. yards where he was running a proprietary business of M/s Supreme Auto Works. The remaining portion of the factory premises was found to be in the possession of other persons, from whom, the assessee was charging licence fee. The AO treated the licence fee as income from house property, following the Tribunal orders in the assessee s own case, for A.Y.s 1990-91 to 1993-94. It is the very same licence fee earned by the assessee during the year under consideration, which is under challenge herein - against assessee.

Summary

Issues:
1. Classification of income from licence fee as income from house property or business income.

Analysis:
The appeal was filed by the assessee against the order upholding the assessment of the income from licence fee as income from house property instead of business income. The assessee was engaged in job work for auto batteries and declared gross receipts from job work and income from licence fee. The Assessing Officer treated the licence fee as income from house property based on previous Tribunal orders in the assessee's case for earlier assessment years. The CIT (A) confirmed this action.

The assessee argued that the Tribunal orders from the earlier years were challenged before the High Court and relied on a case law where income from property taken on lease was considered as business income. The Revenue, however, supported the impugned order, stating that the previous Tribunal findings were undisturbed. The Tribunal noted that for the earlier years, the licence fee was considered income from house property and found no difference in the facts for the year under consideration. As the Tribunal orders were not stayed by the High Court, the CIT (A) order was upheld.

Regarding the case law cited by the assessee, the Tribunal distinguished it, stating that the facts were different as the Tribunal did not hold the licence fee as income from house property in that case. Consequently, the assessee's appeal was rejected, and the order confirming the income classification as income from house property was upheld. The appeal filed by the assessee was dismissed, and the decision was pronounced in open court on a specific date.