2017 (8) TMI 570 - HC - Income Tax

Income from three properties given on rent - business income or income from house property - Held that - ITAT has taken note of the fact that income from at least two of the three properties in question had been consistently treated as income from house property and accepted as such by the Revenue. Regarding the income from the third of those properties, although a remand was ordered by the ITAT to the AO for redetermination, the Assessee has chosen not to go in appeal since the amount involved was insignificant. The plea of the Revenue that, even in respect of the other two properties, the order should be remanded to the AO does not find favour with the Court. Unless any material change in the circumstances has occurred from the earlier AYs, where the income from the letting of the premises has been consistently treated as income from house property, there was no occasion for a changed stand on the part of the Revenue. - Decided against revenue.

Summary

Issues:
1. Delay in filing applications for exemptions in ITA No. 504/2017.
2. Appeal by Revenue against ITAT's order for AY 2007-08 in ITA No.733 and 788/Del/2013.
3. Classification of income from properties as business income or income from house property.
4. Discrepancy in AO's stand on income classification for the Assessee.
5. ITAT's decision on income classification and remand for redetermination.
6. Revenue's plea for remand and Court's stance on consistency in income treatment.

Analysis:
1. The Court allowed exemptions subject to all just exceptions in the delay application for ITA No. 504/2017.
2. The Revenue appealed against ITAT's order for AY 2007-08 in ITA No.733 and 788/Del/2013.
3. The key issue was whether income from properties rented by the Assessee should be classified as business income or income from house property.
4. The Assessee had historically treated the income as 'income from house property,' but the AO changed the classification for the AY in question.
5. The ITAT recognized the historical treatment of two properties as income from house property and remanded the third property for redetermination.
6. The Court dismissed the Revenue's plea for remand, emphasizing the importance of consistency in income treatment unless significant changes occurred.

In conclusion, the Court found no substantial question of law for consideration and dismissed the appeals, affirming the historical treatment of income from properties as 'income from house property' in most cases.