| Case ID |
1aa542be-571d-4a4b-8f02-cf23b36e09e3 |
| Body |
View case body. Login to View |
| Case Number |
D-2741 of 2016 |
| Decision Date |
Jan 01, 1986 |
| Hearing Date |
Jan 01, 1986 |
| Decision |
The Karnataka High Court ruled that the income derived by the petitioner company from the rent of a building constructed on a leased site should be assessed under the head 'Income from house property' rather than as business income. This decision was based on the premise that the title and ownership of the building remained with the lessee (the petitioner) during the lease period. The court referenced several precedents to support its conclusion, emphasizing that the nature of the income should be determined based on ownership rather than the purpose for which the property was acquired. The Tribunal's order was upheld, affirming that as long as ownership rested with the lessee, the income should be classified accordingly. |
| Summary |
In this landmark case decided by the Karnataka High Court, the issue at hand was whether the income derived by D.R. Puttanna Sons (P.) Ltd. from renting out a building constructed on leased land should be classified as 'Income from house property' or as business income. The court ruled that since the ownership of the building remained with the lessee during the lease period, the income should be assessed as income from property. The decision was supported by references to significant precedents in income tax law, including cases like S.G. Mercantile Corporation P. Ltd. v. CIT and Y.V. Srinivasamurthy v. CIT, which established that ownership is a key factor in determining the nature of income. This ruling underscores the importance of legal definitions of property ownership in tax assessments, especially for companies engaged in real estate activities. The case highlights critical aspects of the Income-tax Act, 1961, particularly section 22, which deals with income from house property. Legal practitioners and tax professionals should take note of this decision as it sets a precedent for similar cases involving leased properties and the classification of rental income. |
| Court |
Karnataka High Court
|
| Entities Involved |
Commissioner of Income Tax,
D.R. Puttanna Sons (P.) Ltd.
|
| Judges |
K. Jagannatha Shetty, Actg. C.J.
|
| Lawyers |
G.R. Ramanujam,
K. Srinivasan,
H. Raghavendra Rao
|
| Petitioners |
D.R. Puttanna Sons (P.) Ltd.
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1986 SLD 2525,
(1986) 162 ITR 468
|
| Other Citations |
S.G. Mercantile Corpn. (P.) Ltd. v. CIT [1972] 83 ITR 700 (SC),
Y.V. Srinivasamurthy v. CIT [1967] 64 ITR 292 (Mys.),
Tinsukia Development Corpn. Ltd. v. CIT [1979] 120 ITR 466 (Cal.),
CIT v. Admiralty Flats Motel [1982] 133 ITR 895 (Mad.)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
22
|