2023 (8) TMI 334 - AT - Income Tax

Correct head of income - income from rent - business income or House property - assessee company was allotted land by Noida Authority on 90 years lease of the development of amusement park. The permissible use is on area of 85% under theme amusement and entertainment park and area of 15% under commercial facilities supportive of park - Application of principle of res judicata - It is the case of assessee that for A.Y. 2014-15 and 2015-16 also with rental income under head income from house property has been accepted HELD THAT - Appreciating the matter on record it can be observed that Ld. DR could not dispute the fact that in the preceding and subsequent years the assessee s claim of income from rent has been accepted and same has been foundation of relief given by Ld. CIT(A). Thus, the Bench is of considered opinion that though the principle of res judicata does not apply to the income tax proceedings still when the revenue has accepted the head of income in the preceding and subsequent year s assessment, then attributing income on a different head in a stray manner cannot be made. The reliance of ld. CIT(A) on the judgment of Hon ble Supreme Court in the case of Raj Dadarkar Associates Vs. ACIT 2017 (5) TMI 586 - SUPREME COURT cannot be interfered. Consequently, the grounds raised by the Revenue have no substance. The appeal of Revenue is dismissed.

Summary

Issues involved:
The appeal by the Revenue against the order of CIT(A)-22, New Delhi regarding the assessment of income from tenancy rights as income from house property or business income under the Income Tax Act, 1961.

Issue 1 - Nature of Income:
The assessee claimed income from tenancy rights as income from house property, while the Revenue argued it should be considered as business income due to revenue generation from letting out commercial complex and maintenance charges.

The Ld. CIT(A) examined the factual matrix, noting the consistent acceptance of taxability of leased rental as income from house property in previous assessments. Referring to relevant legal decisions, the Ld. CIT(A) concluded that income from sub-license of property should be taxed as income from house property, not business income. The Revenue raised grounds challenging this decision.

Issue 2 - Principle of Consistency:
The Revenue contended that each year is a separate event and the principle of res judicata does not apply. However, the appellant argued for consistency based on past assessments where income from rent was accepted as income from house property.

The Bench observed that the Revenue's reliance on a Supreme Court judgment regarding property letting for business purposes was not applicable to the current case. Considering the past acceptance of income as house property, the Bench upheld the Ld. CIT(A)'s decision based on the principle of consistency and legal precedents.

Conclusion:
The appeal by the Revenue was dismissed, affirming the Ld. CIT(A)'s decision to treat the income from tenancy rights as income from house property based on past acceptance and legal interpretations. The principle of consistency in tax assessments was upheld, emphasizing the importance of treating similar income sources consistently over different assessment years.