MANIAM PROPERTIES PVT. LTD.,KOLKATA vs. D.C.I.T., CC - 3(2), KOLKATA

ITSSA 47/KOL/2026Status: DisposedITAT Kolkata16 September 2026AY 2016-201718 pages
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What were the facts?

The assessee, Maniam Properties Private Limited, is in appeal before the Income Tax Appellate Tribunal (ITAT) against orders of the CIT(A) for Assessment Years (AY) 2015-16, 2016-17, and 2017-18. The appeals arise from assessment orders passed by the Assessing Officer (AO). A search operation on June 22, 2016, led to the issuance of notices under Section 153A of the Income Tax Act. The assessee, engaged in real estate development, including a shopping mall in Jaipur, declared Nil income in its original return for AY 2015-16. The AO reclassified rental income from the mall as income from house property, disallowing depreciation and allowing a standard deduction under Section 24. The CIT(A) confirmed this reclassification. The dispute centers on whether rental income from the mall is business income or income from house property.

What did the Tribunal hold?

The Tribunal held that the income arising from the rental of shops in Pink Square Mall, Jaipur, should be treated as business income and not income from house property. The Tribunal analyzed the facts in light of the Supreme Court's decision in Karnani Properties Ltd. vs. CIT, which outlines three conditions for rental income to be treated as business income: (1) services rendered should be the result of continuous, organized activities; (2) services should be with a set purpose; and (3) services should be rendered with a view to earn profits. The Tribunal found that the assessee's MoA clearly stated its main object was to establish malls and lease them out, providing a host of services and facilities. The Tribunal noted that the department had accepted rental income as business income in earlier assessment years. The Tribunal also addressed a separate issue concerning the computation of long-term capital gains, accepting the assessee's recomputed indexed cost of acquisition and directing the deletion of the consequent addition of Rs. 10,89,668/-. The appeals were allowed.

What were the issues?

1. Whether the income arising from rentals derived from Pink Square Mall, Jaipur, is assessable as business income or income from house property, considering the assessee's activities and Memorandum of Association (MoA). Assessee's contentions: The assessee argued that its primary business is real estate development, which includes leasing out shops and providing services in the mall. It relied on its MoA, which outlines objectives including establishing malls and providing services. It also pointed to the fact that for AY 2011-12 and 2012-13, the department accepted rental income as business income. The assessee contended that the services rendered by it in the mall are continuous, organized, and aimed at profit, fulfilling the criteria for business income as laid down in Karnani Properties Ltd. vs. CIT. Revenue's contentions: The revenue, through the AO and CIT(A), argued that the assessee's business activities had significantly changed, with rental income constituting a major portion of its revenue. They relied on the Supreme Court's decision in Raj Dadarkar & Associates (S) vs. ACIT-Central Circle-46(S) to hold that the object clause alone is not determinative and that the assessee was merely letting out shops without providing significant services, thus classifying the income as house property income.

Which sections of the Income-tax Act were involved?

Section 132(1),Section 153A,Section 143(2),Section 142(1),Section 24,Section 28

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, KOLKATA

Before: SHRI RAJESH KUMAR & SHRI PRADIP KUMAR CHOUBEY

For Appellant: Shri S. K. Tulsiyan, Advocate
For Respondent: Shri Ajit Pal Singh, CIT-DR
Hearing: 27.08.2026Pronounced: 16.09.2026

PER RAJESH KUMAR, ACCOUNTANT MEMBER:

These are appeals preferred by the assessee against the separate orders of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre(hereinafter referred to as the “ld.CIT(A)”]arising out of separate assessment orders passed by the Assessing Officer (In short, ‘AO’) for the different Assessment Years (A.Y.).In all these appeals, the issues are common and grounds of appeals raised by the assessee are also similar. With consent of both parties, all appeals are heard together and are decided by a consolidated order for t

The order continues below.

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