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TMI Blog2020 (8) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ench of this Court to which one of us (VKJ) was a member, in M/s. PSTS Heavy Lift and Shift Ltd. [ 2020 (2) TMI 213 - MADRAS HIGH COURT ] had clearly held that where the main business of the company is to earn rental income as its business income, the income would be taxable under the head Income entitling the petitioner Assessee to have the deductions of notional expenses like depreciation and special deductions like Section 80IA etc. Just to take a contrary view in favour of the Revenue, the authorities unneccesarily create a forum for litigation for the assessee by taking different and divergent views, despite there being binding precedents from the jurisdictional high Court. This tendency of the revenue authorities not to follow the judgments of superior Constitutional Courts deserves to be strongly deprecated by imposition of suitable costs on them. - Decided against revenue. - Dr. Justice Vineet Kothari And Mr. Justice Krishnan Ramasamy For the Appellant : Mr.Karthik Ranganathan For the Respondent : Mr.N.V.Balaji COMMON JUDGMENT DR.VINEET KOTHARI, J. The Court was held by Video Conference, as per the Resolution of the Full Court dated 3 July 2020, by Judges at their respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be assessed as income from house property and not as business income and further whether non-appreciation/ ignorance of the ratio of decision of Hon'ble Apex Court, while deciding the issue, had made the order of ITAT perverse, both in law and facts ? 4. The finding of the learned Tribunal in this regard are quoted below from its order. 10. We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the assessee disclosed dividend income of ₹ 6,77,302/- and claimed as exempted. As rightly submitted by the Ld. O.R., when the assessee earned exempted income or income which does not form part of total income and claimed expenditure, the Assessing Officer may compute the disallowance if he is not satisfied about the claim made by the assessee. In the case before us, the Assessing Officer computed the disallowance under Rule 80. A perusal of the assessment order, more particularly at page 5, clearly shows that the Assessing Officer has adopted the method prescribed under the Rule 80(2). The only contention of the assessee now before this Tribunal is that the investment in deep discount bonds does not result in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, then, in our opinion, the more appropriate Head of Income applicable in such cases would be Income from Business . 18. A bare perusal of the Scheme of the Income Tax Act, 1961, would reveal that while computing the taxable income under the Head Income from business or profession , the various deductions, including the actual expenditure incurred and notional deductions like depreciation etc. are allowed vis-a-vis incentives in the form of deductions under Chapter VIA. But, the deductions under the Head Income from House Property ; are restricted to those specified in Section 24 of the Act, like 1/6th of the annual income towards repairs and maintenance to be undertaken by landlords, interest on capital employed to construct the property etc. Therefore, in all cases, such income from property cannot be taxed only under the head Income from House Property . It will depend upon the facts of each case and where such income is earned by the Assessee by way of utilisation of its business assets in the form of property in question or as an idle property which could yield rental income by its user, by the lessees. In the earlier provisions of Income from House Properties, even the notio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y way of lease money or rentals by letting out of the property cannot be taxed under the Head Income from house property , but can only be taxed under the Head Income from business income . 22. In view of the aforesaid, where the facts of the cases are undisputed that both the Assessees in the present case carry on the business of earning the rental income, as per the Memorandum of Associations only and the fact is that they were not carrying on any other business, compels us to come to the conclusion that the present appeals of the Assessees are required to be allowed. The same are accordingly allowed and the question of law framed above is answered in favour of the Assessee and against the Revenue. No costs. 6. Though the learned counsel for the Revenue Mr.Karthik Ranganathan, sought to urge before us that the development of I.T. Park was not the main business activity of the Assessee company, he failed to establish his contention with the help of any relevant evidence, including the memorandum of association of the company or any other relevant documents. 7. On the contrary, we found from the discussion in the order of the Commissioner of Income Tax (Appeals) as well as the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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