By TIOL News Service

VISAKHAPATTNAM, MAY 16, 2017: THE ISSUE BEFORE THE TRIBUNAL IS - Whether rent receipts from letting out of commercial properties is assessable under the head 'income from business or profession' only. YES is the answer.

Facts of the case:

The assessee has been a partnership firm engaged in the business of tobacco trade and also let out commercial properties on rental basis. The assessee filed its return of relevant year. During the course of assessment proceedings, the AO noticed that the assessee has considered income from rental receipts under the head "income from business". After considering the details furnished by the assessee and analyzing the provisions, AO held that income from lease rentals received by the assessee was assessable under the head income from house property. On appeal, CIT(A) confirmed additions made by the AO.

On appeal, Tribunal held that,

++ the issue involved in this appeal i.e. rent receipts from letting out commercial properties is assessable under the head income from business or profession or under the head "income from house property" has been considered by this Tribunal, in assessee’s own case for the assessment year 2008-09, wherein the coordinate bench, held that rental income received by the assessee from letting out commercial properties is assessable under the head "income from profits and gains of business or profession". Hence we are also of the view that the rental receipt from letting out commercial properties is assessable under the head ‘income from profit & gains of business or profession’ and not as ‘income from house property’.

(See 2017-TIOL-662-ITAT-VIZAG)