Accepting house property income as business income was fit case for revision u/s 263

Accepting rental income from commercial complex as business income instead of house property was erroneous and prejudicial to the interest of Revenue- ITAT

ABCAUS Neutral Case Law Citation:
ABCAUS 3684 (2023) (03) ITAT

In the instant case, the assessee had challenged the revisionary order passed by the PCIT u/s 263 of the Income Tax Act, 1961 (the Act).

The records of the assessment u/s 143(3) of the act came to  be examined by the PCIT. It was observed that the assessee had declared rental income from commercial complex and  tower as  business income and various expenses was deducted from the above  said rental income . However, the rent should have been treated as House property income and as per section 24 of the Act, only 30% standard deduction was allowable from the said rental income.

In view of the above, the PCIT was of the view that the assessment order passed by the Assessing Officer (AO) was prejudicial to the interest of revenue.

The PCIT accordingly issued a notice u/s 263 of the Act and finally held that the order passed by the assessing officer

was prejudicial to the interest of revenue.

The Tribunal observed that the assessee in the immediately preceding assessment year had shown the said rental income under the head of income from house property. Even in the assessment order, there was nothing on record to show that  any enquiry whatsoever was made by the assessing officer so as to ascertained whether rental income was business income or house property income.

The Tribunal further noted that there was nothing brought on  record on behalf of the assessee to rebut or controvert the finding recorded by the PCIT during the course of proceeding  u/s 263 of the Act.

Accordingly, the Tribunal upheld the impugned order of the PCIT passed u/s 263 of the Act and dismissed the appeal.   

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