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2019 (1) TMI 112 - HC - Income TaxNature of income - income received on letting out - business income or house property - Held that - In the present facts it is undisputed that the assessee is in the business of development of real estate projects and letting of property is not the business of the assessee. In both the decisions relied upon by Mr. Pinto i.e. Chennai Properties (2015 (5) TMI 46 - SUPREME COURT) and Rayala Corporation (2016 (8) TMI 522 - SUPREME COURT) found that the appellant was in the business of letting out its property on lease and earning rent therefrom. Clearly it is not so in this case. Further, Ms. Khan the learned counsel appearing for the respondent-assessee invites our attention to the decision of this Court in CIT v/s. Sane & Doshi Enterprises (2015 (4) TMI 882 - BOMBAY HIGH COURT) wherein on identical facts this Court has taken a view that rental income received from unsold portion of the property constructed by real estate developer is assessable to tax as income from house property. Disallowance under Section 80IB on common expenses relatable to Poiser Project and Saki Naka Project - Held that - This issue stands concluded against the revenue and in favour of the assessee by virtue of the orders of this Court in respect of assessment years 2006-07 and 2007-08 decided in CIT v/s. M/s. Gundecha Builders 2013 (3) TMI 801 - BOMBAY HIGH COURT and 2013 (3) TMI 800 - BOMBAY HIGH COURT Appeal admitted on the substantial question of law at question no.(ii) - Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that receipts from the sale of stilt parking as part of the residential unit and therefore also eligible for a deduction under Section 80IB(10)?
Issues:
1. Classification of income received on letting out as house property income. 2. Eligibility of receipts from the sale of stilt parking for deduction under Section 80IB(10). 3. Deletion of disallowance under Section 80IB on common expenses. Issue 1: Classification of income received on letting out as house property income: The respondent, engaged in real estate projects, claimed income from letting out as house property income, which was initially rejected by the Assessing Officer as business income. The CIT(A) allowed the appeal, classifying the income as house property income. The Tribunal, citing the Supreme Court's decision in Sambhu Investment (P) Ltd. v/s. CIT, upheld the classification. However, the appellant argued that subsequent Supreme Court decisions favored their stance. The High Court noted that the respondent was not in the business of letting out property, distinguishing it from the cases cited by the appellant. Referring to CIT v/s. Sane & Doshi Enterprises, the Court affirmed that rental income from unsold property is taxable as house property income, dismissing the appeal. Issue 2: Eligibility of receipts from the sale of stilt parking for deduction under Section 80IB(10): The revenue sought clarification on whether receipts from the sale of stilt parking could be eligible for deduction under Section 80IB(10). The Court acknowledged that similar issues had been addressed in previous cases involving the same respondent. The CIT(A) and the Tribunal had found that the stilt parking was integral to the housing project, aligning with the decision in CIT v/s. Purvankara Projects Limited. The Court decided to admit the appeal for final disposal alongside related cases, considering the issue's coverage by the previous court decisions. Issue 3: Deletion of disallowance under Section 80IB on common expenses: The revenue conceded that the issue was decided against them in previous court orders related to different assessment years. Citing CIT v/s. M/s. Gundecha Builders, the Court noted that the question did not present a substantial legal issue and hence was not entertained. The Court directed the appeal to be listed for final hearing along with related income tax appeals for further proceedings. This judgment addressed various issues related to income classification, deduction eligibility, and disallowance under the Income Tax Act, providing detailed analysis and referencing relevant legal precedents to arrive at decisions for each issue raised in the appeal.
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