THE PR. COMMISSIONER OF INCOME TAX -6 vs. NILE TECH LTD.

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ITA/1001/2019HC DelhiDLHC01048988201907 February 2024Bench: HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV,HON'BLE MR. JUSTICE YASHWANT VARMA2 pages

AI SummaryDismissed

What did the High Court hold?

The Delhi High Court dismissed the appeal, finding no substantial question of law meriting consideration. The Court upheld the ITAT's decision, which was based on two primary grounds. Firstly, the ITAT observed that the revenue had consistently accepted the rental income as 'income from house property' for the past 15 years and continued to do so in subsequent years, establishing a rule of consistency that the revenue should not depart from. Secondly, the ITAT noted that the assessee is the owner of the property and has leased it out based on rental agreements. The High Court found no justification to entertain the appeal, concluding that it failed to raise any substantial question of law. The operative direction was that the appeal stands dismissed.

What were the facts?

The appeal concerns the assessment years not explicitly stated in the provided text. The appellant is the Principal Commissioner of Income Tax-6, and the respondent is Nile Tech Ltd. The challenge is to the Income Tax Appellate Tribunal's (ITAT) order dated May 28, 2019. The dispute revolves around the classification of rental income amounting to Rs. 57,49,98,489/-. The ITAT noted that the assessee has been leasing out the property and collecting rent since 2010-2011. The revenue had consistently accepted this rental income as 'income from house property' for the past 15 years and in subsequent years.

What were the issues?

1. Whether the Income Tax Appellate Tribunal (ITAT) erred in treating rental income as ‘income from house property’ instead of ‘income from the business of leasing out properties for rental income’? (Question of law) 2. Whether the ITAT erred by not considering that the company's business was to lease its property and earn rent, thus the income should be treated as ‘business income’? (Question of law) Assessee's contentions: The assessee argued that the income earned from leasing its property should be treated as business income because leasing is the company's core business activity. The assessee relied on the principle of consistency, noting that the revenue had accepted the rental income as 'income from house property' for the last 15 years and continued to do so in subsequent years, implying a consistent treatment by the revenue. The assessee also highlighted that it is the owner of the property and has leased it out based on rental agreements. Revenue's contentions: The revenue's arguments are not explicitly detailed in the provided text, but their appeal suggests they contended that the rental income should not be treated as business income and instead should be classified as income from house property.

AI-generated summary — verify with the full judgment below

$~11 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 1001/2019

THE PR. COMMISSIONER OF INCOME TAX -6 ..... Appellant

Through: Mr.Aseem Chawla, Sr.SC with

Ms.Pratishtha Chaudhary,

Mr.Aditya Gupta and

Ms.Nivedita, Advs.

versus

NILE TECH LTD.

..... Respondent

Through: Mr.Rohit Jain and Mr.Aniket

D.Agrawal, Advs.

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA

HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR

KAURAV

O R D E R %

07.02.2024

Having heard Mr. Chawla, learned counsel appearing in support of the appeal, we find that the issues which are raised are primarily concerned with the following proposed questions of law:-

(a) Whether the Income Tax Appellate Tribunal ['ITAT'] has erred by admitting that rental income should be treated as ‘income from house property’ and not ‘income from the business of leasing out properties for rental income’?

(b) Whether the ITAT has erred by not considering the fact on record that the business of the company was to lease its property and to earn rent and therefore, the income so earned should be treated as its ‘business This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/12/2024 at 14:31:46

income’? 2. We note from the order of the ITAT dated 28 May 2019, impugned before us that the question itself arises out of the total revenue operations undertaken by the company and which included rental income of Rs.57,49,98,489/-. The ITAT has found that the assessee has been leasing the property in question and collecting rent therefrom right from 2010-2011. It was in the aforesaid backdrop that it ultimately observed as follows:- "10. First of all, when the revenue has been accepting the rental income of the assessee qua the property in question for the last 15 years as 'income from house property' and in the subsequent years also, the same is treated as 'income from house property' and there is no reason with the Revenue to depart from the rule of consistency. Secondly, assessee is owner of the property in question who has leased out the property on the basis of rental agreement."

Bearing in mind the aforesaid, we find no justification to entertain the instant appeal. The appeal in any case fails to raise any substantial question of law which would merit consideration. 4. It shall consequently stand dismissed.

YASHWANT VARMA, J.

PURUSHAINDRA KUMAR KAURAV, J. FEBRUARY 07, 2024/MJ

This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/12/2024 at 14:31:46

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