2021 (8) TMI 150 - AT - Income Tax

Correct head of income - income received from renting of terrace - 'Income from Other Sources' or 'Income from House Property' - AO disallowing claim for deduction under Section 24(a) of the Act, and bringing the same to tax under the head 'Income from Other Sources' - HELD THAT - After hearing both the parties, we find that this issue is now settled by the decisions of the Co ordinate Bench of the Tribunal in Mahalaxmi Sheela Premises CHS Ltd. v/s ITO 2011 (8) TMI 1229 - ITAT MUMBAI wherein it has been held that the income on account of hoarding and display from terrace is liable to be taxed as income from house property. Assessee s appeal is allowed.

Summary

Issues Involved:
Computation of income from renting of terrace under the head "Income from Other Sources" instead of "Income from House Property" and denial of deduction under Section 24(a) of the Income Tax Act.

Issue 1: Computation of Income from Renting of Terrace

Detailed Analysis:
The appeal was against the order passed by the Commissioner of Income Tax (Appeals) for the assessment year 2015-16. The assessee declared income from renting the terrace under "Income from House Property" and claimed a deduction under Section 24(a) of the Act. However, the Assessing Officer treated the income as "Income from Other Sources" and denied the deduction. The assessee contended that the income should be taxed as "Income from House Property" based on relevant case laws. The learned CIT(A) upheld the Assessing Officer's order. The Tribunal considered the issue and referred to the decision in Mahalaxmi Sheela Premises CHS Ltd. case, where it was held that income from hoarding and display from the terrace should be taxed as income from house property. Citing precedents and consistent decisions, the Tribunal set aside the CIT(A)'s order and allowed the appeal, directing the Assessing Officer to assess the income under "Income from House Property."

Issue 2: Denial of Deduction under Section 24(a)

Detailed Analysis:
The Assessing Officer disallowed the claim for deduction under Section 24(a) and added the amount to the assessee's income. The assessee argued that the deduction should be granted under Section 24(a) as the income was from renting the terrace of the building. The Tribunal, following the decision in Mahalaxmi Sheela Premises CHS Ltd. case and other relevant judgments, allowed the deduction under Section 24(a) and directed the Assessing Officer to compute the income from renting the terrace under the head "Income from House Property." This decision was based on the binding judgment of the Hon'ble Jurisdictional High Court and consistent interpretations of the law regarding income from house property. As a result, the Tribunal allowed the appeal and set aside the order of the CIT(A), granting the deduction under Section 24(a) and assessing the income under "Income from House Property."

In conclusion, the Tribunal ruled in favor of the assessee, directing the Assessing Officer to compute the income from renting the terrace under "Income from House Property" and allowing the deduction under Section 24(a) based on relevant case laws and legal interpretations.