In a recent ruling, ITAT Mumbai bench held that the rent earned from the letting out of the terrace is taxable under the head “Income from house property”.
This ruling came to be pronounce in the case of Citi Centre Premises Co-Op. Society Ltd. v. The Income Tax Officer, ITA Nos. 3029/Mum/18 & 3030/Mum/18 dated 01.02.2019.
In this case, Assessee earned rental income by letting out the terrace & permitting Errection & installing of cell phone towers thereon in the building. The assessee assessed this income under the head ‘income from house property’ & claimed deduction u/s 24(a) of the income tax act, 1961. CIT (A) confirmed the disallowance of deduction on the ground that the above income earned by the assessee is taxable under the head income from other sources.
The issue in dispute in that case is regarding the rent received from Reliance Telecom and in that case also, the assessee claimed a deduction u/s. 24 (a) of Rs. 1.65 Lakhs being 30% of such rental amount of Rs. 5.50 Lakhs. AO disallowed the same by holding that if income is liable to be taxed as income from other sources and not under the head Income from House Property.
The tribunal decided the issue in favour of the assessee and held that the income from letting out of the terrace has to be assessed under the head ‘income from house property’ subject to deduction u/s. 24 of the Act as against income from other sources. (Relied on Sharda Chambers Premises Co. Op. Society Ltd., Vs. ITO in ITA No. 1234/Mum/2008, dt. 01-09-2009 and Matru Ashish Co-operative Housing Society Ltd., Vs. ITO [27 taxmann.com 169] (Mumbai-Trib).
The relevant extract is as follows:
“7. In the absence of any distinguishing feature brought on record by the revenue we, respectfully following the order of the Tribunal (supra), and keeping in view the consistency while admitting the additional ground taken by the assessee hold that the letting out of terrace has to be assessed under the head ‘income from house property’ as against ‘income from other sources’ assessed by the Assessing Officer and also allow deduction provided u/s.24 of the Act and accordingly the additional ground taken by the assessee is allowed.”