Change of Nature of income

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 October 2010 Started business of Let out of Property to Govt. Agency and Income Tax return filed for A.Y. 2006-07, showing income as business income. The case was selected u/s 143(2) and nature of income was not disturbed by the then I. T. O.
Now after 2 years the case again selected u/s 143(2) for the A.y. 2008-09. The I.T.O. is not satisfied with the nature of income and wants to disallow the business expenditure to treat the income as rental in the Income from House Property.
Kindly enlighten me with any case law, highly obliged.

CA. Chikkerur C R

CA. Chikkerur C R (Expert)
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19 October 2010 I feel any income from property should be Income from house property whether its used for residential or commercial. However exception is only when property is held as stock in trade

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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19 October 2010 If the ITO had wrongly trated the income as B& F in the A. year 2006-07, It is not necessary that other ITO will also take it wrongly. Every assesment is a fresh one. The ITo for the A. year 2008-09 has right to issue the notice u/s 143(2), if he is not satisfied with the return.

CA Shiv

CA Shiv (Expert)
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19 October 2010 If you are not doing any other business and the property is held as stock and main business is for letting than only you can consider itbusiness income... Or else its IHP.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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19 October 2010 The principle of res judicata is not applicable for income tax cases and therefore each years assessment has to be viewed separately. If the assessee satisfies the provisions of section 22 of the Income tax Act,1961, no doubt the view of the ITO will sustain.

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