2021 (2) TMI 710 - AT - Income Tax

Correct head of income - rental income from Operating Family Entertainment Center cum Mall and Maintenance Charges - Income from House Property or Profit and Gains from Business or Profession - HELD THAT - Rental income should be assessed as business income is covered in favour of the assessee by the following decisions in assessee's own case 2019 (2) TMI 360 - ITAT MUMBAI , . 2017 (10) TMI 1419 - ITAT MUMBAI , 2017 (7) TMI 779 - BOMBAY HIGH COURT Respectfully following the aforesaid precedence we hold order of learned CIT(A) not upholding the action taken by the AO in treating the rental income from Operating Family Entertainment Center cum Mall and Maintenance Chargesas Income from House Property against the assessee's claim of Profit and Gains from Business or Profession . - Decided in favour of assessee.

Summary

Issues:
1. Classification of rental income from Operating Family Entertainment Center cum Mall and Maintenance Charges as "Income from House Property" or "Profit and Gains from Business or Profession"
2. Treatment of interest expenditure under section 24(b) of the Act in relation to the income classification

Issue 1 - Classification of Rental Income:
The appeal by the Revenue challenged the order of the learned Commissioner of Income Tax (Appeals) regarding the treatment of rental income and maintenance charges as "Income from House Property" for the assessment year 2015-16. The assessing officer contended that the income should be categorized as income from house property despite previous favorable decisions by the jurisdictional High Court in the assessee's own case. The assessing officer disallowed a sum under section 24(b) of the Act. The learned CIT(A) ruled in favor of the assessee, citing the previous High Court decision and held that the income from operating income and maintenance charges should be considered as business income, allowing business expenses against the same.

Issue 2 - Treatment of Interest Expenditure:
The assessing officer disallowed interest expenditure under section 24(b) of the Act based on previous years' decisions. However, the learned CIT(A) allowed the interest expenses as business expenses since the rental income was classified as business income. The appellate tribunal upheld the decision of the learned CIT(A) based on precedence and the classification of the assessee's income as business income. Therefore, the interest expenditure was considered allowable as business expenditure.

In conclusion, the appellate tribunal dismissed the appeal filed by the revenue, upholding the learned CIT(A)'s decision regarding the classification of rental income and interest expenditure for the assessment year 2015-16. The tribunal followed the precedence set by previous decisions in the assessee's own case and maintained that the rental income should be treated as business income, allowing corresponding business expenses.