PR.COMMISSONER OF INCOME TAX-3 vs. FOREMOST ESTATE PVT. LTD.

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ITA/375/2018HC DelhiDLHC01005672201804 April 2018Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE A. K. CHAWLA1 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose for consideration in the appeal filed under Section 260A of the Income Tax Act, 1961. The Tribunal's finding, which confirmed the assessee's contention that the income derived from house property was correctly reported as such, was based on the factual observation that this treatment had been consistently accepted by the Revenue for over 10 years and had been assessed accordingly. The Court found no basis to interfere with the ITAT's order, which had upheld the relief granted by the CIT(A). Therefore, the appeal was dismissed. No specific issue was left undecided.

What were the facts?

The Revenue, through the Pr. Commissioner of Income Tax-3, has appealed an order of the Income Tax Appellate Tribunal (ITAT) dated 04.04.2018. The ITAT had confirmed the assessee's (Foremost Estate Pvt. Ltd.) position that income reported as 'income from house property' was correct. The Assessing Officer (AO) had sought to tax this income as business income, arguing that it should be characterized as stock-in-trade despite being reported as rent. The AO's assessment was based on a factual analysis, noting that rental income had been consistently reported and accepted as such for over 10 years and had been assessed accordingly. The CIT(A) had granted relief, which the ITAT subsequently confirmed.

What were the issues?

1. Whether a substantial question of law arises for consideration regarding the characterization of income as 'income from house property' versus 'business income' (stock-in-trade), as per Section 260A of the Income Tax Act, 1961. Assessee's contentions: The assessee contended that the income was correctly reported as 'income from house property' and that this had been consistently accepted by the Revenue for over 10 years. The ITAT confirmed this position. Revenue's contentions: The Revenue, through the AO, argued that the income, although reported as rent, should have been characterized as business income, specifically stock-in-trade. The AO's assessment was based on a factual analysis.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

$~37 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 375/2018

PR.COMMISSIONER OF INCOME TAX-3 ..... Appellant Through : Sh. Rahul Chaudhary, Sr. Standing Counsel.

versus

FOREMOST ESTATE PVT. LTD.

..... Respondent

Through : None.

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE A. K. CHAWLA

O R D E R %

04.04.2018

The Income Tax Appellate Tribunal’s (ITAT) confirming findings with respect to the assessee’s contentions that the income reported by it as pertaining to ‘income from house property’ was correct, is under challenge in this appeal under Section 260A of the Income Tax Act, 1961 by the Revenue. The Assessing Officer (AO) brought to tax the amounts on the ground that the income was derived from business; nevertheless, even though the income was reported as rent, it ought to have been characterized as stock-in-trade. The AO, based upon a factual analysis, concluded that rental income was consistently reported and accepted for over 10 years and had been also assessed as such. The CIT(A), therefore, granted the relief which was merely confirmed by the ITAT. No question of law arises. The appeal is accordingly dismissed.

S. RAVINDRA BHAT, J

A. K. CHAWLA, J APRIL 04, 2018/ajk

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