Leasing of Trailers and Exhibition Space Generates Business Income, Not House Property Income: ITAT

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In a significant and taxpayer-friendly ruling, the Income Tax Appellate Tribunal (ITAT) has clarified that income earned from leasing trailers and exhibition space is taxable as business income and not as income from house property. The Tribunal accordingly deleted the addition made by the tax authorities who had attempted to reclassify such receipts under the head “house property.”

This decision offers major relief to businesses involved in logistics, exhibitions, events, advertising, and commercial leasing, where assets are actively deployed as part of day-to-day operations.

 Background of the Dispute

The tax authorities had treated the receipts from leasing trailers and exhibition space as rental income from house property, thereby restricting the deductions available to the assessee. The assessee, however, contended that:

• The trailers and exhibition spaces were commercial assets

• Leasing them was part of its core business activity

• The income arose from systematic and organized commercial operations, not from passive ownership

The matter eventually reached the ITAT for adjudication.

Key Findings of the ITAT

The Tribunal examined the real nature of the activity and held in favour of the assessee based on the following reasoning:

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