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Issues involved: Appeal against order u/s 263 of the Income-tax Act, 1961 regarding treatment of lease rent income as business income.
Summary: 1. The appellant challenged the order of the Commissioner of Income Tax, Chennai-I u/s 263 of the Act, contending that the twin conditions stipulated in section 263 were not met. 2. The assessment for the relevant year was completed after scrutiny u/s 143(3) of the Act, accepting the loss claimed by the assessee. The CIT issued a notice u/s 263 as the Assessing Officer had not considered whether income from leased buildings should be treated as business income. The assessee argued that the rental income was rightfully claimed as business income due to the temporary nature of the arrangement. 3. The appellant submitted detailed information to the Assessing Officer supporting the claim that the lease income should be considered as business income. The A.O. had considered the replies and concluded that the rental income was indeed business income. The CIT, however, directed a fresh order, alleging lack of proper assessment by the A.O. 4. The Departmental Representative supported the CIT's order, claiming that the A.O. did not apply his mind while assessing the lease rent receipts. 5. The Tribunal observed that while the A.O.'s order lacked discussion on the treatment of lease rent income, the assessee had provided detailed explanations supporting the claim of business income. The Tribunal held that the A.O. had conducted a proper investigation and had applied his mind, thus rejecting the CIT's view. 6. The Tribunal emphasized that the A.O. had called for and received necessary information from the assessee, indicating a proper application of mind. As the A.O. had taken a lawful view after considering all relevant details, the Tribunal found no error in the A.O.'s order. The Tribunal cited legal precedents to support its decision. 7. Consequently, the Tribunal quashed the CIT's order u/s 263, allowing the appeal filed by the assessee. Judges' Names: Shri Abraham P. George, Accountant Member and Shri George Mathan, Judicial Member.
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