SRPL INFRASTRUCTURE PVT. LTD,AHMEDABAD vs. THE ITO, WARD-4(1)(2), AHMEDABAD

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ITA 576/AHD/2019Status: DisposedITAT Ahmedabad16 March 2022AY 2013-143 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that if rental income is treated as business income, the assessee should also be entitled to claim depreciation. Since this benefit was not extended, the income should be treated as income from house property.

What were the facts?

The assessee treated rental income from a property as business income, arguing it was stock-in-trade. The Assessing Officer (AO) and Commissioner (Appeals) treated it as income from house property.

What were the issues?

Whether rental income from a property, which is also considered stock-in-trade, should be treated as business income or income from house property, and the consequential benefits.

Which sections of the Income-tax Act were involved?

Section 22

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: SHRI WASEEM AHMED&

For Appellant: Ms. Nupur Shah, AR
For Respondent: Shri R. R. Makwana, Sr. DR
Hearing: 10.03.2022Pronounced: 16.03.2022

The instant appeal filed by the assessee is directed against the order dated 01.02.2019 passed by the Commissioner of Income Tax (Appeals)-8, Ahmedabad arising out of the order dated 09.03.2016 passed by the ITO, Ward-4(1)(2), Ahmedabad under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for A.Y. 2013-14.

2.

Addition on account of the rent income treating the same earned as income from business against the income from house property of Rs. 5,15,900/- is the subject matter before us.

3.

The contention of the assessee is this that the Ld. CIT(A) has erred in law and on facts in failing to consider the fact that the scheme developed by the appellant company is not the property / fixed assets of the appellant

SRPL Infrastructure Pvt. Ltd. vs. ITO Asst.Year –2013-14 - 2 - company, but the same is in the nature of stock in trade and the same has been rightly disclosed by the appellant company in the tax audit report furnished by the Statutory Auditor for the year ended on 31.03.2013. It was further contended that the provisions of section 22 of the I.T. Act, 1961 specifically excludes property which is occupied for the purpose of business or profession.

4.

At the very threshold of the matter the Ld. Counsel appearing for the assessee submitted before us that the issue is squarely covered by the judgment passed in the matter of Vyapti Infrabuild Pvt. Ltd. vs. DCIT in & 2505/Ahd/2017 for A.Ys. 2013-14 and 2014-15 a copy whereof has also been submitted before us.

5.

The Ld. DR relied upon the order passed by the authorities below.

6.

We have heard the respective parties and also perused the relevant materials available on record.

7.

The judgment relied upon by the Ld. AR is to certain extent not found to be relevant in the present facts and circumstances of the case in view of the particular fact that in those cases the assessee has not actually earned any rental income rather the AO has considered notional rental income in respect of unsold units of the scheme whereas the case in hand before us that the assessee has already received rental income from the property being Shop No. 301, first floor and shop no. 2 GF of Sigma Esquire, Maninagar to the tune of Rs. 12,03,767/-. Since the fact is different from that of the fact available in the judgment cited by the Ld. AR it would not be fit to be applied in its entirety as covered in favour of the assessee’s case.

SRPL Infrastructure Pvt. Ltd. vs. ITO Asst.Year –2013-14 - 3 -

8.

However, the unsold flat has been shown in the stock in trade of the assessee. In the event such rental is allowed as the business income; then the assessee is also entitled to claim depreciation of the property. No such finding and/or benefit to the assessee has been extended by the Revenue is appearing in the order impugned before us. In the absent of such finding in our considered opinion the assessee’s income should have been held as “income from house property” and “not the business income”.

With that observation we are deciding the appeal in favour of the assessee.

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