2014 (1) TMI 908 - AT - Income Tax

Nature of Income - Whether income from letting out should be considered as house property income or business income Held that - There is no strait jacket formula prescribed for categorizing income under one head or other - When the facts of the appeals in the batch have already been considered and decided by the Tribunal in its earlier order - the rental income should considered as Income from house property and not as Business income and further no deduction for depreciation allowance or other administrative expenses should be allowed. Condonation of delay in filing cross objection No addition to be made u/s 153A r.w. Section 143(3) of the Act Held that - The cross objections were filed by the assessee on 16.08.2011 challenging the jurisdiction of the Assessing Officer to pass order u/s 153A read with section 143(3) when no incriminating materials were found during the course search - it cannot be accepted as a reasonable cause for the delay because the Special Bench order was passed on 6th July, 2012 as against the date of filing of the instant cross objections of 16.08.2011 - the benefit of such Special Bench order can be available only after the date of its passing and not before that - the justification for the delay of around four years in presenting the cross objections cannot be accepted - the delay is not condoned and the cross objections are accordingly dismissed Decided in favour of Revenue and against Assessee.

Summary

Issues Involved:
- Determination of whether income from letting out properties should be considered as 'Income from house property' or 'Business income'.
- Jurisdiction of the Assessing Officer to pass orders under section 153A read with section 143(3) when no incriminating materials were found during the search.

Analysis:

1. Issue 1 - Income Categorization:
The judgment dealt with a batch of 15 appeals involving two assesses with eight appeals by the Revenue and seven cross objections by the assessee. The primary issue revolved around the categorization of income from letting out properties as either 'Income from house property' or 'Business income'. The case originated from a search conducted on the assessee group, leading to the assessment year 1999-2000. The Assessing Officer initially treated the rental income as 'Income from house property', disallowing deductions claimed by the assessee. However, the CIT(A) reversed this view, categorizing the income as 'Profits and gains of business or profession', allowing deductions under Chapter IV-D. The Revenue appealed this decision. The Tribunal, after considering past decisions, upheld the categorization of rental income as 'Income from house property', denying deductions for depreciation and other expenses. The Tribunal emphasized that the classification depends on the specific facts of each case, and since a similar issue was previously decided in the assessee's favor, the current appeals could not warrant a different conclusion.

2. Issue 2 - Jurisdiction of Assessing Officer:
Regarding the jurisdiction of the Assessing Officer to pass orders under section 153A read with section 143(3) without incriminating material found during the search, the assessee filed cross objections challenging the jurisdiction. The cross objections were filed after a significant delay of 1439 days, citing a subsequent favorable Special Bench order as the reason for the delay. The Tribunal, however, dismissed the cross objections, noting that the delay was not justified as the Special Bench order was passed after the date of filing the objections. Consequently, the Tribunal allowed the Revenue's appeals and dismissed the assessee's cross objections.

In conclusion, the judgment clarified the categorization of rental income as 'Income from house property' based on specific facts and upheld the Assessing Officer's jurisdiction to pass orders under section 153A read with section 143(3) in the absence of incriminating material found during the search.