Section 56(2)(iii) of the Income Tax Act
Income-tax Act, 2025: s.92
Section 56(2)(iii) falls under section 56 of the Income-tax Act, 1961, which corresponds to section 92 (Income from other sources) of the Income-tax Act, 2025.
Read section 92 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 56(2)(iii) is CIT v. Shambhu Investment Pvt. Ltd. (249 ITR 47), cited in 57 of the 32 judgments on BharatTax that turn on this section.
Leading authorities on Section 56(2)(iii)
Income from letting out immovable property, even with ancillary services, is taxable as 'Income from House Property' if the dominant intention is to exploit the property itself, not to run a complex business providing integrated services. The classification depends on the assessee's primary object in exploiting the property.
The decision in Godrej & Boyce Manufacturing Company Ltd. [2017] 7 SCC 421 is referred to in the context of the rule of consistency, particularly concerning the application of provisions related to income calculation and disallowances.
The consistent treatment of a matter across different assessment years should not be changed without new facts justifying the change.
The principle of consistency in tax matters should be followed, meaning the revenue should not take a contrary view if there is no material change in circumstances justifying it.
An assessee's intention regarding a temporary vs. final parting with a factory is a factual determination. This determination is not subject to res judicata, allowing authorities to reach different conclusions in subsequent years based on new evidence.
