2014 (2) TMI 314 - AT - Income Tax

Income derived on providing amenities - Held that - Relying upon the decision in Shambu Investments Pvt. Ltd. Vs. CIT 2003 (1) TMI 99 - SUPREME Court - Income derived by assessee by letting out furnished premises on monthly rent basis to various parties along with furniture, fixtures, light, air-conditioners, etc., for being used as table space and also providing them common services like watch and ward staff, electricity, water and other amenities without any separate charges was assessable as income from property and not business income - The CIT(A) treated the receipts as income from from house property keeping in view the nature of amenities provided - Decided against Revenue.

Summary

Issues:
Taxing charges received towards amenities as income from 'other sources' or 'house property.'

Issue 1: Tax Treatment of Charges for Amenities
The primary issue in this case revolves around the tax treatment of charges received for amenities by the appellant from tenants. The Assessing Officer treated the maintenance charges as income from other sources, disallowing the deduction claimed under section 24 of the Act. The appellant contended that the charges were collected separately to reduce municipal taxes, as these charges were not subject to municipal tax. The CIT(A) noted that the Assessing Officer did not specify the amenities provided by the appellant in the agreement. Despite the lack of conclusive evidence, the CIT(A) leaned towards treating the receipts as income from house property due to the absence of a corresponding liability under section 57 for income from other sources.

Issue 2: Judicial Precedents and Interpretation
The CIT(A) referred to the judgment of the Hon'ble High Court of Madras in a similar case, emphasizing that income from property under section 22 is not limited to income from dwelling houses but extends to all buildings. The court held that rental income from commercial buildings falls under the ambit of 'income from house property.' Additionally, the CIT(A) cited the Supreme Court's decision in Shambu Investments Pvt. Ltd. Vs. CIT, where income from letting out furnished premises with amenities was assessed as income from property, not business income. Relying on these precedents, the CIT(A) directed the AO to treat the receipts as 'income from house property' and allow applicable deductions.

Conclusion
The Appellate Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeals for the assessment years 2004-05 and 2005-06. The Tribunal concurred with the CIT(A)'s decision to treat the entire receipts as 'income from house property' based on the nature of the agreements and the absence of specific services provided beyond letting out the premises. The judgment emphasized the broad interpretation of 'income from property' under the law, encompassing various types of buildings for taxation purposes.