2019 (11) TMI 1583 - HC - Income Tax

Income received on account of letting out of the property - house property or business income - HELD THAT - . The impugned order of the Tribunal dismissed the Revenue s appeal by following its order in respect of the same Respondent-Assessee for the Assessment Year 2007-08, 2008-09 and 2009-10 in holding that the income received on account of letting out of the property was a commercial activity by way of business income. Being aggrieved by the order of the Tribunal for the Assessment Year 2007-08, 2008-09 and 2009-10, the Revenue had preferred appeals to this Court who by order 2017 (7) TMI 779 - BOMBAY HIGH COURT dismissed the Revenue s appeal. Expenditure on account of interest - Appeal is admitted on substantial question of law at serial no.(ii) - Without prejudice, whether on the facts and circumstances of the case and in law, the Tribunal erred in allowing the interest deduction even though the transaction was that of share application money and not loan, and therefore, the expenditure on account of interest was not an allowable expenditure in terms of agreement dated 1 December 2007.

Summary

Issues Involved:
1. Interpretation of income received from properties leased out as house property.
2. Allowance of interest deduction on share application money transaction.

Analysis:

Issue 1: Interpretation of income received from properties leased out as house property
The appellant challenged the Tribunal's order regarding the assessment of income received from properties leased out to various parties. The Tribunal had considered the income as business income based on previous decisions for the same assessee. The appellant contended that the income should be assessed as house property income since the company was the owner of the property. However, the High Court noted that the Revenue's appeals for the Assessment Years 2007-08, 2008-09, and 2009-10 had already been dismissed by the Court in a previous order dated 18 July 2017. Consequently, the Court held that the question raised did not present any substantial question of law and thus was not entertained.

Issue 2: Allowance of interest deduction on share application money transaction
The second question raised was regarding the allowance of interest deduction on share application money transaction. The Court admitted this question as it raised a substantial question of law. The order directed the Registry to provide a copy of the order to the Tribunal for further proceedings related to the appeal.

In summary, the High Court dismissed the first question concerning the interpretation of income received from leased properties based on previous decisions. However, the Court admitted the second question regarding the allowance of interest deduction on a share application money transaction for further consideration.