2019 (2) TMI 283 - AT - Income Tax

Deduction u/s. 24 (a) - AO disallowed the rent received from Reliance Telecom by holding that if income is liable to be taxed as income from other sources and not under the head Income from House Property - Held that - As relying on MATRU ASHISH CO-OPERATIVE HOUSING SOCIETY LTD. VERSUS INCOME-TAX OFFICER 2010 (8) TMI 1035 - ITAT MUMBAI that income from letting out of the terrace has to be assessed under the head income from house property subject to deduction u/s. 24 of the Act as against income from other sources as assessed by the AO. Since in the present case the facts in dispute are identical and no difference in facts could be pointed out by the Revenue respectfully following this order of the Tribunal decide the issue in favour of the assessee.

Summary

Issues:
1. Disallowance of deduction under section 24(a) of the Income Tax Act, 1961 for rental income received by a cooperative society for letting out building terrace and permitting erection of cell phone towers.
2. Assessment of rental income under 'Income from House Property' or 'Income from other sources'.

Issue 1 Analysis:
The appeals were filed against the order of the Ld. Commissioner of Income Tax (Appeals) for the AYs 2013-14 & 2014-15, concerning the disallowance of deductions under section 24(a) of the Income Tax Act, 1961 for rental income received by a cooperative society. The AO had taxed the income as 'income from other sources' instead of 'income from house property.' The Ld. AR argued that the income should be assessed under 'income from house property' based on the property being fit for habitation. The Tribunal referred to a similar case involving Matru Ashish Co-operative Housing Society Ltd. and held in favor of the assessee, allowing the deductions claimed under section 24(a).

Issue 2 Analysis:
The issue revolved around whether the rental income from letting out the terrace and installing cell phone towers should be assessed under 'Income from House Property' or 'Income from other sources.' The Tribunal referred to previous rulings in similar cases, emphasizing that the terrace constitutes an integral part of the building and should be taxed as 'income from house property.' The Tribunal upheld the assessee's claim for deductions under section 24 of the Act, following consistent precedents. The Tribunal's decision favored the assessee, allowing the appeals and directing the assessment of income from letting out the terrace under 'income from house property.'

In conclusion, the Tribunal ruled in favor of the assessee, allowing the appeals and directing the assessment of rental income from letting out the terrace and permitting cell phone towers under 'income from house property' while permitting deductions under section 24 of the Income Tax Act, 1961. The judgment highlighted the importance of considering the nature of the property and established precedents in determining the appropriate tax treatment for such income.