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DATE: February 19, 2019 (Date of pronouncement)
DATE: February 23, 2019 (Date of publication)
AY: 2015-16
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CITATION:
S. 22/ 23(4): The annual letting value (ALV) of unsold units of properties lying as stock in trade is not assessable as income under the head "Income from house property". The deeming provision of s. 23 cannot be extended beyond its ambit so as to cover the heads of income to which it does not operate. Taxing hypothetical income, which is otherwise not sanctioned by any provision under Chapter IV-D, cannot be permitted

it is apparent that the view point bolstered by the authorities that Annual Letting Value in respect of unsold properties lying with the assessee as a stock in trade, should be determined u/s. 23 of the Act, cannot be countenanced in the hue of the later judgments of the Hon’ble Summit Court.

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DATE: July 31, 2018 (Date of pronouncement)
DATE: December 29, 2018 (Date of publication)
AY: 2008-09
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CITATION:
S. 22 ALV: If the assessee is a builder but is not engaged in the business of letting of property, the lease rent from unsold flats is assessable to tax under the head 'income from house property' (Sambhu Investment 263 ITR 143 (SC), Chennai Properties 373 ITR 673(SC), Rayala Corp 386 ITR 500 (SC) referred/ distinguished)

In the present facts it is undisputed that the respondent assessee is in the business of development of real estate projects and letting of property is not the business of the respondent assessee. In both the decisions relied upon by Mr. Pinto i.e. Chennai Properties (supra) and Rayala Corporation (supra), the Supreme Court on facts found that the appellant was in the business of letting out its property on lease and earning rent therefrom. Clearly it is not so in this case.

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DATE: August 10, 2018 (Date of pronouncement)
DATE: August 23, 2018 (Date of publication)
AY: 2012-13
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CITATION:
S. 23(1)(c) vacancy allowance: The words 'property is let' does not mean 'property actually let out'. If property is held with an intention to let out in the relevant year coupled with efforts made for letting it out, it could be said that such a property is a let out property and the same would fall within the purview of s. 23 (1)(c) and be eligible for vacancy allowance. A reasonable approach should be taken on the assesse's attempts to let out and infallible proof should not be demanded

Therefore, it is not at all relevant as to whether the property was let out in past or not. These words do not talk of actual let out also but talk about the intention to let out. If the property is held by the owner for letting out and efforts are made to let it out, that property is covered by clause (c) and this requirement has to be satisfied in each year that the property was being held to let out but remained vacant for whole or part of the year. Above discussion shows that meaning and interpretation of the words ‘property is let’ cannot be ‘property actually let out’. Thus, if a property is held with an intention to let out in the relevant year coupled with efforts made for letting it out, it could be said that such a property is a let out property and the same would fall within the purview of clause (c) of section 23(1)

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DATE: June 27, 2018 (Date of pronouncement)
DATE: July 9, 2018 (Date of publication)
AY: 2012-13
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CITATION:
S. 23 ALV: Unsold flats which are held by a builder as stock in trade cannot be brought to tax under the head 'income from house property'. They are only assessable as business profits when sold (All judgements considered)

In the case on hand before us it is an undisputed fact that both assessees have treated the unsold flats as stock in trade in the books of account and the flats sold by them were assessed under the head ‘income from business’. Thus, respectfully following the above said decisions we hold that the unsold flats which are stock in trade when they were sold they are assessable under the head ‘income from business’ when they are sold and therefore the AO is not correct in bringing to tax notional annual letting value in respect of those unsold flats under the head ‘income from house property’. Thus, we direct the AO to delete the addition made under Section 23 of the Act as income from house property.”

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DATE: November 1, 2017 (Date of pronouncement)
DATE: December 29, 2017 (Date of publication)
AY: 2010-11
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CITATION:
S. 23 House Property Income: Common Area Maintenance Charges and non-occupancy charges paid by the assessee to the Society are deductible from the rent while computing the 'Annual Letting Value' u/s 22

What s. 22 attempts to assess is the annual value of the property consisting of any building or land appurtenant thereto, of which the appellant is the owner,, and which has not been put to use for the purposes of its business or profession by it. The rent being charged by the appellant, if so, is only a surrogate measure of the said annual value. The expenditure on the aforesaid items, i.e., the salary (including bonus) to the maintenance staff of the facilities as electric motors, lift, caning, etc., as well as that on the electricity consumed in respect of any common area and the electric motors, is not attributable directly to the house property as such, but to its enjoyment by the tenants/users thereof

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DATE: May 9, 2017 (Date of pronouncement)
DATE: May 13, 2017 (Date of publication)
AY: 2000-01
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CITATION:
Law on tests to be applied to determine whether income from property is chargeable as “Income from house property” or as “Profits and gains of business” explained. The objects clause is not determinative. Income earned from a shopping center is required to be taxed under the head “Income from House Property” (Chennai Properties 373 ITR 673 (SC) and Rayala Corporation distinguished)

Wherever there is an income from leasing out of premises and collecting rent, normally such an income is to be treated as income from house property, in case provisions of Section 22 of the Act are satisfied with primary ingredient that the assessee is the owner of the said building or lands appurtenant thereto. Section 22 of the Act makes ‘annual value’ of such a property as income chargeable to tax under this head. How annual value is to be determined is provided in Section 23 of the Act. ‘Owner of the house property’ is defined in Section 27 of the Act which includes certain situations where a person not actually the owner shall be treated as deemed owner of a building or part thereof. In the present case, the appellant is held to be “deemed owner” of the property in question by virtue of Section 27(iiib) of the Act. On the other hand, under certain circumstances, where the income may have been derived from letting out of the premises, it can still be treated as business income if letting out of the premises itself is the business of the assessee

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DATE: August 11, 2016 (Date of pronouncement)
DATE: August 17, 2016 (Date of publication)
AY: -
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CITATION:
S. 28: Income from letting of property on rent by an assessee engaged in the business of letting is assessable as "business profits" u/s 28 and not as "Income from house property" u/s 22

The issue involved in these appeals is no more res integra as this Court has decided in the case of Chennai Properties and Investments Ltd. v. Commissioner of Income Tax [2015] 373 ITR 673 (SC) that if an assessee is having his house property and by way of business he is giving the property on rent and if he is receiving rent from the said property as his business income, the said income, even if in the nature of rent, should be treated as “Business Income” because the assessee is having a business of renting his property and the rent which he receives is in the nature of his business income

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DATE: June 5, 2015 (Date of pronouncement)
DATE: February 8, 2016 (Date of publication)
AY: 2010-11
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CITATION:
S. 23(1)(b): Brokerage paid to give out premises on rent and to earn lease rent is not deductible in computing the Income from house property

The word ‘rent’ connotes a return given by the tenant or occupant of the land or corporeal hereditaments to the owner for the possession and use thereof. It is a sum agreed between the tenant and the owner to be paid at fixed intervals for the usage of such property. The phrase rent received and receivable contemplates the amount received for the enjoyment of the property and certain rights in the said property by the tenant. If there is charge directly related to the rental income or for the property without which the rights in the property cannot be enjoyed by the tenant then it can be construed as part and parcel of enjoyment of the property from where rent is received then such charges can be held to be allowable from the rent received or receivable. However, the brokerage paid to the third party has nothing to do with the rental income paid by the tenant for enjoying the property to the owner. Brokerage cannot be said to be a charge that has been created in the property for enjoying the rights and at best it is only an application of income received/receivable from rent

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DATE: April 9, 2015 (Date of pronouncement)
DATE: May 6, 2015 (Date of publication)
AY: -
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CITATION:
S.22/28: Law on whether income from letting of properties is assessable as "business profits" or as "Income from house property" explained

Where there is a letting out of premises and collection of rents the assessment on property basis may be correct but not so, where the letting or sub-letting is part of a trading operation. The diving line is difficult to find; but in the case of a company with its professed objects and the manner of its activities and the nature of its dealings with its property, it is possible to say on which side the operations fall and to what head the income is to be assigned

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DATE: January 6, 2015 (Date of pronouncement)
DATE: January 12, 2015 (Date of publication)
AY: 2009-10
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CITATION:
S. 22: Rent received from mobile phone company for use of terrace to install antenna is taxable as "Income from house property" and not as "Other sources"

The true test is whether the space rented out is part of the building or land appurtenant thereto. The rent is not for the antenna but for the space for installation of antenna. It is not the case of the Assessing Officer that the rent is for the antenna, and, therefore, it is wholly irrelevant whether antenna is part of the building or land appurtenant thereto. What is relevant is the space which has been rented out and, therefore, as long as the space, which has been rented out, is part of the building, the rent is required to be treated as “income from house property”.

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