2021 (4) TMI 112 - AT - Income Tax

Correct head of income - head under which rental income is to be taxed - assessee is earning rental income from commercial malls and offered the same under the head Profit and Gains of Business or Profession - AO has taxed the said rental/lease income under the head income from house property - HELD THAT - Hon ble Delhi High Court in DISCOVERY ESTATES PVT. LTD. 2013 (3) TMI 124 - DELHI HIGH COURT has directed to treat the rental income earned by the assessee from commercial properties as income under the head House Property instead of Income from business or profession. As the learned CIT(A) has followed the binding precedent in the case of the assessee itself, we do not find any error in the order of the learned CIT(A) on the issue in dispute and accordingly uphold the same. The grounds of the appeals are dismissed.

Summary

Issues:
1. Treatment of rental income under the head 'House Property' instead of 'Income from Business Income.'
2. Applicability of past judgments on similar issues.
3. Non-representation of the appellant during the hearing.

Analysis:

Issue 1: Treatment of Rental Income
The case involved a dispute over the appropriate classification of rental income earned from commercial properties by the assessee. The Assessing Officer had categorized the rental income under the head 'Income from House Property' instead of 'Profit and Gains of Business or Profession' as declared by the assessee. The Tribunal noted that the rental income was generated from unsold commercial units held as stock in trade. The Assessing Officer's decision was based on the treatment of such income as 'income from house property.'

Issue 2: Applicability of Past Judgments
The Tribunal highlighted that a similar issue had been raised in the past assessment years 2006-07 and 2007-08. The matter had previously reached the Hon'ble Delhi High Court, which had directed the treatment of rental income from commercial properties as 'income from house property' in a specific judgment dated 18.02.203. The Tribunal observed that the learned CIT(A) had correctly followed this binding precedent in the current case, leading to the dismissal of the appeal.

Issue 3: Non-Representation During Hearing
Despite being informed of the hearing date, no representation was made on behalf of the appellant during the proceedings. The Tribunal proceeded with an ex-parte hearing in the absence of any adjournment application. The case was heard solely based on the submissions of the learned DR, and the Tribunal subsequently delivered the order dismissing the appeal due to the absence of the appellant.

In conclusion, the Tribunal upheld the decision of the learned CIT(A) to treat the rental income under the head 'House Property' based on the binding precedent set by the Hon'ble Delhi High Court in a previous judgment. The dismissal of the appeal was primarily due to the non-representation of the appellant during the hearing, leading to a decision based on the arguments presented by the respondent only.

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