Thaindian News

Gandhinagar, March 7 (IANS) A state-run house constructing corporation cannot be held liable to pay tax for “income from house property”, the Gujarat High Court has ruled.

A division bench of Justice Akil Kureshi and Justice Sonia Gokani said this while dismissing the Income Tax (IT) department’s appeal against an Income Tax Appellate Tribunal (ITAT) order in favour of the Gujarat State Police Housing Corporation.

The bench said, in an order made available Monday, that the tribunal was justified in upholding an order of the Commissioner of Income Tax (Appeals) deleting Rs.2.43 crore tax calculated by the assessing officer.

The housing corporation filed its income tax return in which the assessing officer made additions to total income on account of income from house property.

The corporation challenged this order, which was allowed by the Commissioner of Income Tax (Appeals).

The IT department went in appeal against this order before the ITAT, which dismissed it. The department then approached the high court.

The division bench noted that the corporation was not the owner of the land or the buildings.

“The assessee is a state-owned corporation constituted principally for undertaking housing project for the police department. It had undertaken such project as specified by the government.”

“Upon completion of the project, the assessee was required to handover the land with the superstructure to the government for residential use of rent-free accommodation to the staff,” the judges said.

The court observed that the tribunal rightly concluded that the corporation could not be considered as the owner of the land or the superstructure. The corporation would not be liable to pay tax under the head of income from house property.