The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has recently held that the income received by the assessee, a Co-operative credit society, from holiday homes owned by it is not taxable under the head “income from house property” as the same is taxable under the head “income from other sources” for the purpose of levying an income tax.
Facts of the case:
In the instant case, the Principal Commissioner of Income Tax has proposed to revise the original assessment concluded by the Assessing Officer wherein he admitted the claim of the assessee that the above income comes under the head “other income.” According to him, the assessee’s income derived from holiday homes under its owner has to be assessed as income from house property and that from the other holiday homes is to be treated as income from “other” sources followed by the corresponding consequential computation.
Interpretation of law:
Overruling the findings of the Pr. Commissioner, the Tribunal observed that the Assessing Officer had very examined the very issue and assessed the assessee’s income from the said holiday homes under the business head than that claimed as income from other sources.
“The assessment of assessee’s income derived from holiday homes claimed as income from other sources in the computation but held as income from the business during assessment in subsequent AY 2015-16; stands decided in its favour in the CIT(A)’s an order dated 28.02.2018 (page 18 in records) i.e. much prior to the PCIT’s issuing Section 263 show cause notice dated 11.04.2018. This tribunal’s decision in the Kolkata Reserve Bank Employees Co-operative Credit Society Ltd. ITA 2253/Kol/2016 holds that such an income from holiday homes is not eligible for Section 80P(2)(i) deduction being not business income. It is crystal clear therefore that the head of assessee’s income derived from its holiday homes i.e. whether it is income from house property as per the PCIT, business income going by the Assessing Officer in assessment and the CIT(A) and the residuary head of “other” sources in its computation; respectively, is purely a debatable issue. It thus could not be held that that the Assessing Officer’s action sought to be revised as erroneous and causing prejudice to the interest of the Revenue,” the Tribunal said.