In Brief
Raj Dadarkar & Associates operated a municipal market (Saibaba Shopping Centre) in Mumbai on behalf of the Corporation. The firm sub-licensed shops and stalls to retailers and collected rent and service charges. The Income Tax authorities classified this income as house property income, while the firm claimed it was business income. The Supreme Court held that although the firm was a deemed owner under the Income Tax Act, the character of the income must be determined by examining the real nature of the activity. Since the firm's principal activity was simply letting out shops—not providing an organized business service—and the ITAT found the service charges inseparable from basic rent, the income was properly classified as house property income, not business income. The appeals were dismissed.
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