Income for Letting out of Mall should be Taxed as Business Income of Builder: Karnataka HC

× HEADLINES No Proceedings If Tax is Paid along with Interest before Issuance of Show-Cause Notice: CESTAT [Read Order] ICAI Accounting Standards differentiating Lease Transactions has no relevance in allowing Deduction: ITAT [Read Order] Kerala HC declares Kerala Tax on Paper Lotteries Act, 2005 as Unconstitutional [Read Judgment] Effective use of Technology enables Goa Central GST Commissionerate to Administer Taxation Remotely Maharashtra Govt. issues SOP for Export of Sanitizers, Masks, Paracetamol, Hydrochloride etc. prohibited under DGFT notification [Read Order] Income for Letting out of Mall should be Taxed as Business Income of Builder: Karnataka HC [Read Judgment] Contravention of COVID-19 Advisory by any Judicial Officer / Staff will be treated as Misconduct: Karnataka HC [Read Circular] SEBI notifies Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 2020 [Read Notification] CBDT defers New Procedure for Registration, Approval of Registration of Charitable, Religious Trusts Lockdown Period will not Count to Determine Residency Status of NRIs: CBDT [Read Circular] FEATURED | HEADLINES | INCOME TAX | TOP STORIES Income for Letting out of Mall should be Taxed as Business Income of Builder: Karnataka HC [Read Judgment] May 9, 2020 6:02 pm| By : Mariya Paliwala The High Court of Karnataka upheld the decision of the tribunal and held that income received from Forum Mall should be considered as “Income from business” and not “Income from house property”, though an agreement between landlord and tenant contemplating the relationship of landlord and tenant and as such it would partake the character of rental income. Assessee, M/s Prestige Estate Project Private Limited is a company carrying on the business of the real estate. Return of income for the assessment year came to be filed, declaring total income. The return was processed under Section 142(1) of the Income Tax Act, 1961 and rectified under Section 154 of the Act. During the course of assessment proceedings, the Assessing Officer noticed that assessee has adopted the ‘Completed Contract Method’ of accounting for all its real estate projects. On the ground that as per the provisions of accounting standard AS – 7, the assessee was required to mandatorily follow the ‘Percentage Completion Method’ and as such, a sum was added to the income. Assessing Officer has also recorded a finding that rental income received from Forum Mall and rental income received from fit-outs were ‘income from business’ and ‘income from other sources’ and not as income from house property. Accordingly, the assessment order came to be passed Aggrieved by the order, assessee preferred an appeal before Commissioner of Income Tax (Appeals) dismissed said appeal filed by the assessee. Hence, the assessee filed an appeal before Income Tax Appellate Tribunal. Tribunal, by order dated partly allowed the appeal and held that assessing officer ought to have followed ‘Complete Contract Method’ as claimed by the assessee and rental income received from Forum Mall should be brought to tax under the head “profits and gains from business” and income from fit-outs should be brought to tax under the head ‘income from other sources’. The division bench of Justice Aravind Kumar and Justice Suraj Govindaraj upheld the decision of the tribunal and held that  “if the assessee is in the business of taking land, putting up commercial building thereon, letting out such building with all furniture as his profession or his business then notwithstanding the fact that he has constructed building and he has also provided other facilities and even if there are two separate rental deeds, it does not fall within the income from house property”. To Read the full text of the Judgment CLICK HERE Topics: ASSESSEE HIGH COURT OF KARNATAKA INCOME TAX APPELLATE TRIBUNAL JUSTICE ARAVIND KUMAR JUSTICE SURAJ GOVINDARAJ RELATED STORIES Contravention of COVID-19 Advisory by any Judicial Officer / Staff will be treated as Misconduct: Karnataka HC [Read Circular] Eligible CSR Payments should be Deducted while Computing Business Income: ITAT [Read Order] Disallowance of Deduction of Interest Income should be restricted to Net Interest and not Gross Interest: ITAT [Read Order] Karnataka HC seeks Union’s response over Toll Tax Exemption for Farmers during COVID-19 [Read Order] ITAT set aside Orders for Addition by Lower Authorities on Lack of Documentary Evidence [Read Order] Assessment without giving Notice is bad in Law: ITAT RECENT No Proceedings If Tax is Paid along with Interest before Issuance of Show-Cause Notice: CESTAT [Read Order] May 10, 2020 ICAI Accounting Standards differentiating Lease Transactions has no relevance in allowing Deduction: ITAT [Read Order] May 10, 2020 Kerala HC declares Kerala Tax on Paper Lotteries Act, 2005 as Unconstitutional [Read Judgment] May 10, 2020 SC seeks RBI’s response on Plea against Interest on Loans amid COVID-19 Lockdown [Read Petition] May 9, 2020 Effective use of Technology enables Goa Central GST Commissionerate to Administer Taxation Remotely May 9, 2020 Maharashtra Govt. issues SOP for Export of Sanitizers, Masks, Paracetamol, Hydrochloride etc. prohibited under DGFT notification [Read Order] May 9, 2020 VIDEOS CORNER VIEW MORE All you want to know about Fat Tax All you want to know about Goods and Service Tax (GST) Bill UPDATES VIEW MORE May 17, 2018 ICAI conducts Residential Programmes for Men and Women Chartered Accountants ICAI Appointed as Vice-Chair of Asian-Oceanic Standards-Setters Group September 22, 2017 Govt to set up National Financial Reporting Authority to Monitor Chartered Accountants July 24, 2017 Job Opening in Investment Advisory Company June 11, 2017 About Taxscan TaxScan Media is an online news portal for reporting all news, articles, judgments, Circulars, orders and notifications relating to Taxation Laws in India. 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