TDS of the assessee is deducted u/s 194-I for providing accommodation on daily basis. However assessee's memorandum of association indicates that main object of the company is to carry on the business of hotels, resorts, boarding, lodges, guest houses, etc. However no property was let out and assessee received only rentals for occupation of the premises on a daily basis. Assessing Officer's contention that income has to be assessed under 'house property' because TDS is deducted u/s 194-I is not correct because Even if machinery was leased, the consequent rent comes under the definition of rent u/s 194-I. But machinery lease cannot be considered under 'income from house property'. That indicates that just because TDS was made under section 194-I, it cannot be treated as 'house property income' as the rent definition includes lease of equipment, lease of furniture, fittings which cannot be considered as 'house property Moreover, even if assessee has let out property but when the memorandum of association permits the business of letting out of properties as such, the income cannot be brought to tax as 'income from house property' as held in the case of Chennai Properties & Investments Ltd. 373 ITR 673. It was held by Supreme Court that where in terms of Memorandum of Association, main object of the assessee-company was to acquire properties and earn income by letting out the same, the said income is to be brought to tax as 'income' from business and not as 'income from house property' ITAT Hyderabad in Heritage Hospitality Limited [2016] 68 taxmann.com 150 (Hyderabad - Trib.) JANUARY 22, 2016

Issue of deduction of Housing Loan Interest in case of co-owners decided by Punjab and Haryana High Court in Priya Mahajan [ITA 384/2015 dtd 26-11-2015] Facts: Plot purchased in the name of four cowners. Also they were co-borrowers of housing loan for construction of house. The assessee solely repaid entire interest and principal since the date of borrowing. While assessee claimed 100% deduction on housing loan interest, the AO restricted it to 25% having regard to assessee’s share of ownership Section 45 of Transfer of Property Act 1882 on Joint transfer for consideration.— Where immoveable property is transferred for consideration to two or more persons and such consideration is paid out of a fund belonging to them in common, they are, in the absence of a contract to the contrary, respectively entitled to interests in such property identical, as nearly as may be, with the interests to which they were respectively entitled in the fund; and, where such consideration is paid out of separate funds belonging to them respectively, they are, in the absence of a contract to the contrary, respectively entitled to interests in such property in proportion to the shares of the consideration which they respectively advanced. In the absence of evidence as to the interests in the fund to which they were respectively entitled, or as to the shares which they respectively advanced, such persons shall be presumed to be equally interested in the property. Held that : In present case though assessee has claimed to have paid entire consideration for purchase of plot/construction, no evidence has been produced. In the sale deed since shares of individuals are not specified. Section 45 of Transfer of Property Act shall apply. In the case of Saiyed Abdullah v. Ahmad AIR 1929 All. 817, the Hon'ble Allahabad High Court held that 'in the absence of specification of the shares purchased by two persons in the sale deed, it must be held that both purchased equal shares. In present case, since the individual shares were not specified in the sale deed, the logical conclusion is that everyone had equal share in the property. Hence allowance of 25% of Housing Loan to assessee borrower is correct even if the assessee solely repaid entire interest and principal since the date of borrowing.

The Court held that since the object in the Memorandum permitted the assessee to carry on the business of letting out property and since 85 percent of the assessee’s income was derived from rent and lease rentals, the income constituted business income of the appellant and therefore compensation paid by the assessee to obtain possession from the tenant for the purpose of earning a higher rental income was to be allowed as a deduction as it was a business necessity. Shyam Burlap Company Ltd v CIT – (2015) 61 taxmann.com 121 (Calcutta

P&H High Court held that where loan taken subsequent to the purchase of the property cannot be said that the same was utilized for acquiring the property. In such circumstances, the Assessing Officer, the CIT(A) and the Tribunal were justified in declining the benefit of Section 24(b) of the Act. Equally, once it is held that the assessee had not borrowed any capital for the purchase of the property, the assessee was not entitled to any deduction under Section 80C(1) read with 80C(2)(xviii) of the Act.- Vijay Aggarwal 27-08-2015[P&H] [2016] 65 taxmann.com 16 (Punjab & Haryana)[Para 9]

Held by Calcutta High Court in Smt. Mina Deogun "We can imagine a situation where a person can be the owner of the land and another can be the owner of the structure. This is permissible in law because in joint ownership unity of title is not required. In the case before us the land admittedly belonged to the husband. He has raised the building with the joint funds belonging to himself and his wife. Therefore, one inference which can be drawn is that the land belonging to the husband has been thrown into the common stock of joint property between the husband and the wife. Both of them thus became the joint owners by operation of the doctrine of blending. They admittedly have borne the cost of construction in the ratio of 1/3rd and 2/3rd. Therefore, the income arising out of the property is in fact an income arising out of house property which has to be taxed under Section 22 rather than as an income arising out of other sources under Section 56. [2015] 60 taxmann.com 430 (Calcutta)

Sum received for permitting installation of Telecom Tower on terrace is taxable as income from house property-Niagara Hotels & Builders (P.) Ltd.[2015] 60 taxmann.com 83 (Delhi)MARCH 25, 2015

Income/loss from letting out of multiplex/shopping mall and cinema theatre along with amenities was to be assessed under head ‘business income’ of the assessee and not ‘Income from house property’ as main intention was found to be exploitation of property by way of commercial activities. As held by Apex Court in Chennai Properties & Investment Ltd that where the letting of the properties was in fact the business of the assessee, the income arising therefrom was to be treated under the head “Income from Business” and that it cannot be treated as income from House Property. Thus, assessee was also entitled to the claim of deductions in respect of expenditure incurred and depreciation on assets etc. in relation to such income SHREEJI EXHIBITORS vs.ASSISTANT COMMISSIONER OF INCOME TAX BOMBAY TRIBUNAL Aug 14, 2015 (2015) 44 CCH 0492 MumTrib

Where renting of properties is main business as per MOA it should be assesses as business income and not income from house property

Chennai Properties and Investment -Supreme Court- 09-04-2015