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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI D.S. SUNDER SINGH
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -4, Chennai, dated 23.08.2016 and pertains to assessment year 2012-13.
The first issue arises for consideration is with regard to assessment of rental income.
Shri V.S. Jayakumar, the Ld.counsel for the assessee, submitted that the assessee claimed the rental income under the head “income from business”. However, the Assessing Officer assessed the same as income from house property. The Ld.counsel very fairly conceded that for the assessment years 2006-07 and 2007-08, the very same issue travelled upto High Court and the High Court by placing reliance on the judgment of Madras High Court in CIT v. Ideal Garden Complex Pvt. Ltd. (2012)
340 ITR 609, found that the income has to be assessed as income from house property and not from business income. Subsequent to this judgment of Madras High Court, the Apex Court in the case of Chennai Properties & Investments Ltd. v. CIT (2015) 373 ITR 673, found that on identical circumstances, the income has to be assessed as income from business. The Ld.counsel further submitted that the assessee has also filed a review petition before the High Court for the assessment years 2006-07 and 2007-08 and the same is pending.
On the contrary, Smt. Sumathy Venkatraman, the Ld. Departmental Representative, submitted that in the assessee's own case, on the same set of facts, the Madras High Court for assessment years 2006-07 and 2007-08, found that the income has to be assessed only as income from house property and not from income from business. The Tribunal has also found that the interest paid has to be allowed as deduction either under the head “income from house property” or under the head “income from business” or “income from other sources”. In view of this decision of the Madras High Court, which is binding on this Tribunal, according to the Ld. D.R., the CIT(Appeals) has rightly followed the order of this Tribunal and the judgment of the Madras High Court.
We have considered the rival submissions on either side and perused the relevant material available on record. This Tribunal for assessment years 2006-07 and 2007-08, after examining the rental agreement and other material documents, found that the income has to be assessed as income from house property and the interest paid by the assessee has to be allowed irrespective of the head of income, the rental income was assessed. The assessee now claims that the Apex Court in Chennai Properties & Investments Ltd. (supra) found that the income from rent has to be assessed as income from business. This Tribunal is of the considered opinion that for classifying the income of the assessee either under the head “income from business” or “income from house property”, the rental agreement needs to be examined. After examining the rental agreement, this Tribunal found that it is only a case of letting out the property and not exploitation of business asset. The High Court has also confirmed the order of this Tribunal for assessment years 2006-07 and 2007-08. Of course, by placing its reliance on the earlier judgment in Ideal Garden Complex Pvt. Ltd. (supra), when the High Court confirmed the order of this Tribunal on the facts of the case, this Tribunal has no reason to take a different view.
Moreover, the order of this Tribunal for assessment years 2006-07 and 2007-08 merged with the order of the High Court. Therefore, mere pending of review petition cannot be a reason to take a different view. As rightly submitted by the Ld. Departmental Representative, the judgment of Madras High Court in the assessee's own case for assessment years 2006-07 and 2007-08 is binding on this Tribunal. Therefore, the CIT(Appeals) has rightly confirmed the order of the Assessing Officer. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced on 31st January, 2017 at Chennai.