By TIOL News Service

MUMBAI, NOV 23, 2018: THE issue is - Whether renting of a part of house for installation of mobile tower is akin to letting out house property itself. YES is the answer.

Facts of the case

The assessee a Co-operative Society filed its return. During the assessment proceedings, observed that assessee had not let-out any house premises, thus called upon the assessee to justify the rental income claim from mobile tower under the head income from house property. The assessee submitted that the society is the owner of the property which has allowed the residents to install mobile towers or antennas. Thus, the assessee further submitted that the rental income received from letting out the space for installation of mobile towers is assessable as income from house property and the assessee is eligible to claim deduction. The AO observed that the terrace cannot be termed as house property as it is the common amenity for members. Further, AO observed that the assessee cannot be considered to be owner of the premises since as per the tax audit report, conveyance is still not executed in favour of the society. Also observed that the annual letting value of the terrace is not ascertainable. Accordingly, AO concluded that the income received by the assessee from the mobile companies towards installation of mobile towers/antenna is to be treated as income from other sources and disallowed assessee's claim of rental income. The assessee appealed before the CIT(A) which sided with the AO.

On appeal the Tribunal held that,

++ the terrace of the building cannot be considered as distinct and separate but certainly is a part of the house property. Therefore, letting-out space on the terrace of the house property for installation and operation of mobile tower/antenna certainly amounts to letting-out a part of the house property itself. Thus, the AO's oberrvation that the terrace cannot be considered as house property is unacceptable. Further, the observation of the CIT(A) that the rental income received by the assessee is in the nature of compensation for providing services and facility to cellular operators, it is relevant to observe, that the Departmental Authorities have failed to bring on record any material to demonstrate that the assessee has provided any other service or facilities to the cellular operators. Thus, the rental income received by the assessee from such letting-out has to be treated as income from house property. Therefore, applying rule of consistency, assessee's claim is allowed. Accordingly, the AO is directed to treat the rental income received by the assessee from cellular operator as income from house property and allow deduction under section 24(a).

(See 2018-TIOL-2215-ITAT-MUM)