Treatment of income from house property of director

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
The brief facts about the case are that assessee is an individual and she filed her return of income for the Assessment Year 2007-08 declaring total income of Rs.1,66,425/-. The income consisted of salary income from Shashi International Pvt. Ltd. in which assessee along with her husband are directors. During assessment proceedings, the Assessing Officer noted that assessee had not declared income from house property from her flat at Mumbai and when questioned, the assessee replied that the said premises is being kept vacant and is used while going abroad for business purposes. Therefore, the question of rental income does not arise. The Assessing Officer further noted from the statement of immovable properties that assessee had one more property at SF-31, North Avenue, Punjabi Bagh, New Delhi and the assessee had also not declared any income from this house property. The assessee explained that house was being used by M/s. Shashi International (P) Ltd. in which she and her husband were Directors and the same was being used for business purposes. The Assessing Officer did not agree with the contention of assessee and income from the same was estimated at Rs.60,000/- after considering municipal taxes and 30% repair expenses and hence, an amount of Rs.30,000/- was added to the income of the assessee based upon her 50% share in the property. Similarly, in respect of the house property at Mumbai, a sum of Rs.1,20,000/- was added back considering the annual rental value at Rs.1,20,000/- after considering municipal taxes and 30% repair expenses. The contention of the assessee that the same was being used during the course of going abroad for business purposes was not accepted. Dissatisfied with the order, the assessee filed appeal before CIT (A) and submitted that the house property income from property at Delhi cannot be taxed since it was being utilized for business purpose by his husband and by M/s. Shashi International Pvt. Ltd. in which she and her husband were directors. She further stated that Mumbai property was being used by employees & Directors as residence who were concerned with the promotion of business and thus, there was no income from house property.

Citation :
Smt. Shashi Singh, B – 8, Magnum House 1, Commercial Complex, Karampura, New Delhi – 110 015. (PAN: ABAPS1382G)(Appellant) Vs. ACIT, Circle 8 (1),New Delhi. (Respondent)