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2021 (12) TMI 1281 - AT - Income TaxCorrect head of income - rental income from letting out building space along with inbuilt infrastructure and other amenities - income from other sources or income from house property - HELD THAT - On careful analysis of the facts and circumstances, we find that the issue is squarely covered in favour of the assessee by the decision of the coordinate bench in assessee s own case for Assessment Year 2011-12, 2021 (6) TMI 538 - ITAT DELHI wherein, on identical facts and circumstances, issue has been decided by coordinate bench and it held that income earned by the assessee form letting out of the building space and other amenities is chargeable to tax under the head income from other sources . Thus we decide ground in favour of the assessee holding that such composite rental income is chargeable to tax in the hands of the assessee under the head Income from other sources . - Decided against revenue.
Issues Involved:
1. Transfer Pricing Adjustments 2. Classification of Rental Income 3. Depreciation on Unrealized Foreign Exchange Loss 4. Dividend Distribution Tax (DDT) 5. Credit of Tax Deducted at Source (TDS) 6. Interest under Section 234A 7. Penalty under Section 271(1)(c) Issue-Wise Detailed Analysis: 1. Transfer Pricing Adjustments: The appeals for the assessment years 2014-15 and 2015-16 included grounds related to transfer pricing adjustments. The assessee contested the adjustments made to the international transactions concerning contract software development services and IT-enabled services. The grounds included arguments against the validity of the reference made by the AO, the functional profile assessment, the use of single-year data, and the rejection of certain comparables. However, these grounds were not pressed as the assessee had reached an Advance Pricing Agreement (APA) concerning these transactions. Consequently, the grounds related to transfer pricing adjustments were dismissed. 2. Classification of Rental Income: The primary dispute was whether the rental income from letting out building space along with amenities should be taxed under "Income from House Property" or "Income from Other Sources." The assessee argued that it should be classified under "Income from Other Sources," while the AO treated it as "Income from House Property." The ITAT referred to its earlier decision in the assessee's case for AY 2011-12, where it was held that such income should be taxed under "Income from Other Sources" due to the composite nature of the lease, which included inbuilt infrastructure and amenities. The ITAT followed this precedent and ruled in favor of the assessee for both assessment years 2014-15 and 2015-16. 3. Depreciation on Unrealized Foreign Exchange Loss: The assessee contended that unrealized foreign exchange loss on capital creditors should not be adjusted from the WDV of the assets and that depreciation should be allowed on such loss. The ITAT did not provide a detailed analysis on this issue as it was not separately pressed by the assessee, and thus, the ground was dismissed. 4. Dividend Distribution Tax (DDT): The assessee argued against the addition of DDT to the total tax payable, stating that the liability pertained to AY 2015-16 and had been discharged in that year. The ITAT did not delve into this issue as it was not pressed by the assessee, leading to its dismissal. 5. Credit of Tax Deducted at Source (TDS): The assessee claimed that the AO erred in not granting credit for TDS amounting to ?3,86,54,414. This ground was not pressed during the proceedings and was dismissed accordingly. 6. Interest under Section 234A: The assessee contested the levy of interest under Section 234A, arguing that the return of income was filed within the due date specified under Section 139(1). This issue was not actively pursued in the appeal and was dismissed. 7. Penalty under Section 271(1)(c): The assessee challenged the initiation of penalty proceedings under Section 271(1)(c). This ground was not pressed and was dismissed by the ITAT. Conclusion: The appeals for AY 2014-15 and 2015-16 were partly allowed. The ITAT ruled in favor of the assessee regarding the classification of rental income, holding it taxable under "Income from Other Sources." Other grounds, including those related to transfer pricing, depreciation on unrealized foreign exchange loss, DDT, TDS credit, interest under Section 234A, and penalty under Section 271(1)(c), were dismissed as they were not pressed by the assessee.
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