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Issues: Whether lease rent received for terrace floor is assessable as income from house property or income from other sources.
Summary: The assessee appealed against the order of the AAC regarding the assessment year 1983-84, questioning the tax treatment of lease rent received for the terrace floor of a property in New Delhi. The main contention was whether the income derived from the terrace floor should be considered as income from house property or income from other sources. The assessee argued that the terrace was part of the building and thus should be taxed as income from house property. On the other hand, the departmental representative claimed that the terrace was akin to open land and should be taxed as income from other sources. After careful consideration, the tribunal found that the terrace floor was an integral part of the building and not merely open land. The lease agreement allowed for the lessee to erect temporary structures on the terrace, indicating its use as part of the building. Therefore, the income from the terrace floor was deemed to fall under the category of income from house property. The tribunal highlighted that the concept of "building" for taxation purposes is broader than just a dwelling house, encompassing lands appurtenant to the property. As such, the income from the terrace floor was to be taxed under the head of "Income from house property" as per the provisions of the Income-tax Act, 1961. The tribunal set aside the orders of the lower authorities and directed the Income Tax Officer to compute the taxable income from the lease of the terrace floor as if it were income from house property. It was emphasized that a previous judgment cited by the revenue was not applicable to the current case due to differing circumstances. In conclusion, the tribunal allowed the appeal, ruling in favor of the assessee and determining that the income from the terrace floor should be taxed as income from house property.
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