2016 (11) TMI 208 - HC - Income Tax

Applicability of provision of Section 22 and 23 to the properties owned by the Assessee - Held that - As far as the decision in Chennai Properties & Investments Ltd v.CIT (2015 (5) TMI 46 - SUPREME COURT) wherein noted that the main object of the Appellant Assessee in that case was to purchase or otherwise acquire and hold the properties known as Chennai House and to let out such properties and to make advances upon the security of lands or buildings or other property or any interest therein . What was emphasized was that holding the aforesaid properties and earning income by letting out properties was the main object of the company . The above facts in Chennai Properties & Investments Ltd (supra) clearly distinguishes it in its applicability to the facts of the present case where a categorical stand was recorded in para 5 of the judgment of CIT v. Ansal Housing Finance & Leasing Co. Ltd. (2012 (11) TMI 323 - DELHI HIGH COURT) that letting out of properties was not part of business and object of the Assessee . Consequently this Court is not persuaded to accept the plea of the Assessee that in view of the decision in Chennai Properties & Investments Ltd (supra) the Court should reconsider the correctness of its ruling in CIT v. Ansal Housing Finance & Leasing Co. Ltd. (supra). - Decided against assessee.

Summary

Issues:
1. Whether the ITAT was justified in deleting the addition of ?80,49,504 by holding that Section 22 and 23 provisions were not applicable to the Assessee's properties?
2. Whether the ITAT was correct in allowing 100% depreciation on shuttering material and tabular scaffolding?

Analysis:
1. The High Court addressed the first issue by considering the applicability of Section 22 and 23 provisions to the Assessee's properties. The Court referred to previous judgments and noted that the levy of income tax on house property is based on ownership, not on whether the Assessee carries on business as a landlord. The Court emphasized that the notional basis for calculating income tax, such as Annual Letting Value (ALV), is a permissible method. It rejected the Assessee's argument that the properties should be taxed as business income, ruling in favor of the Revenue based on ownership principles and legal interpretations. The Court upheld its previous decision and declined to reconsider it based on a Supreme Court judgment in a different case.

2. Regarding the second issue of depreciation on shuttering material and tabular scaffolding, the Court noted that a previous decision had already ruled in favor of the Assessee. The Court referred to a specific judgment where the issue was addressed, and it was decided in favor of the Assessee. Therefore, the Court confirmed that this issue had already been settled in favor of the Assessee by a previous decision.

In conclusion, the High Court upheld the decision in favor of the Revenue regarding the first issue related to the applicability of Section 22 and 23 provisions to the Assessee's properties. The Court reiterated the principles of ownership for taxation purposes and rejected the Assessee's arguments. However, the Court acknowledged that the second issue of depreciation on shuttering material had already been decided in favor of the Assessee in a previous judgment. Therefore, the appeal was disposed of accordingly.