CA in Practice
1447 Points
Posted on 03 February 2016
Recently in the case of Chennai Properties & Investments Ltd vs. CIT (Supreme Court), Civil Appeal No. 4494 of 2004, Dated April 09, 2015 Honorable SC held as follows -
Brief Facts:
Appellant assessee Company, incorporated with main objective as stated in MOA is to acquire the properties in the city of Chennai (Earlier named as Madras) and to let out those properties. The company had returned it income, as income from Business, where as the view of Department was that the rental income should have been taxed under the head “Income from House Property” instead of treating it as Business Income.
Question of Fact/Law (mixed question)
Whether the income so received from renting properties, should be treated as business income U/s 28 considering the main object clause of MOA and other facts or should it be taxed U/s 22 treating income from House Properly.
Decision of SC
Honorable SC held that the letting of the properties is the main business of assessee and hence income therefrom is rightly stated as income from Business and not as income from House property.
If we apply above judgement then such Rental income is to be taxed as PGBP and standard deduction would not be available. However normal business expenditure would be allowable as per the provisions of PGBP.