2018 (9) TMI 73 - HC - Income Tax

Rental income - business income OR Income from house property - principal object of the assessee company is not letting out of properties - Held that - As decided in assessee s own case when this matter came up for hearing on 08.12.2017, we posed a question to the learned Senior Standing Counsel for the Revenue as to whether the Department accepted the earlier decision of the Tribunal in the assessee s own case for the assessment year 2008-09. The learned Senior Standing Counsel sought for an adjournment to verify the facts. Today, when the case is taken up for hearing, it is reported that the Department accepted the earlier order of the Tribunal in the assessee s own case for the assessment year 2008-09 and that no appeal has been filed against that order. Thus, we find that the substantial questions of law have to be answered in favour of the assessee and against the Revenue.

Summary

Issues involved:
1. Classification of rental income as business income or income from house property
2. Applicability of Apex Court judgment in a similar case

Issue 1: Classification of rental income
The tax case appeal concerned the classification of rental income as either business income or income from house property for the assessment year 2010-11. The Revenue challenged the order of the Income Tax Appellate Tribunal, which allowed the rental income as business income despite the principal object of the assessee company not being the letting out of properties. The Tribunal's decision was based on a previous order in the assessee's own case for the assessment year 2008-09. The High Court noted that the Department had accepted the earlier Tribunal decision for the 2008-09 assessment year, and no appeal was filed against it. Consequently, the High Court upheld the Tribunal's decision, dismissing the Revenue's appeal in favor of the assessee.

Issue 2: Applicability of Apex Court judgment
The second substantial question of law raised in the appeal was whether the Appellate Tribunal was correct in allowing the rental income as business income, ignoring the Apex Court judgment in the case of Keyaram Hotels. The High Court referred to a judgment in a similar case involving M/s.Sakthi Sugars Ltd., where the Tribunal dismissed the Revenue's appeal based on the earlier order in the assessee's own case for the assessment year 2008-09. The High Court observed that the Department had accepted the previous Tribunal decision for the 2008-09 assessment year, leading to the dismissal of the appeal in favor of the assessee. Consequently, the High Court confirmed the Tribunal's order allowing the rental income as business income, in line with the Apex Court's judgment.

In conclusion, the High Court, in the judgment delivered by T. S. Sivagnanam, J., upheld the Tribunal's decision to classify the rental income as business income instead of income from house property for the assessment year 2010-11. The judgment highlighted the importance of consistency in applying legal principles based on previous decisions, ultimately leading to the dismissal of the Revenue's appeal.