Keyaram Hotels Private Limited, CHENNAI V. DCIT, CHENNAI

ITA 1095/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9120 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-03-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 29-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Business income
• Section: 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.402/MDS/2013 ' (' / ASSESSMENT YEAR : 2003-04 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(4), CHENNAI - 600 034. V. M/S KEYARAM HOTEL PVT. LTD., 2, HARRINGTON ROAD, CHENNAI - 600 031. PAN : AABCK 8077 D (*+/ APPELLANT) (,-*+/ RESPONDENT) ./ ITA NO.1095/MDS/2014 ' (' / ASSESSMENT YEAR : 2010-11 & ./ ITA NOS.2215 & 2216/MDS/2015 ' (' / ASSESSMENT YEARS : 2006-07 & 2009-10 M/S KEYARAM DEVELOPERS & HOTELS PVT. LTD., (FORMERLY KNOWN AS M/S KEYARAM HOTELS PVT. LTD.), C/O SHRI S. SRIDHAR, ADVOCATE, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI - 600 020. V. THE DEPUTY COMMISSIONER OF INCOME TAX, THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(4), CHENNAI - 600 034. (*+/ APPELLANT) (,-*+/ RESPONDENT) . / 0 /REVENUE BY : SH. P. RADHAKRISHNAN, JCIT '12 / 0 /ASSESSEE BY : SHRI S. SRIDHAR, ADVOCATE 3 / 2$ / DATE OF HEARING : 30.03.2016 4!( / 2$ / DATE OF PRONOUNCEMENT : 01.06.2016 2 I.T.A. NO.402/MDS/13 I.T.A. NO.1095/MDS/14 I.T.A. NOS.2215 & 2216/MDS /15 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: I.T.A. NO.402/MDS/2013 IS FILED BY THE REVENUE FO R THE ASSESSMENT YEAR 2003-04 AND OTHER APPEALS, VIZ. I.T .A. NO.1095/MDS/2014, I.T.A. NOS.2215 & 2216/MDS/2015 A RE FILED BY THE ASSESSEE FOR ASSESSMENT YEARS 2010-11, 2006-07 AND 2009-10. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN ALL THESE APPEALS, WE HEARD THESE APPEALS TOGETHER AND DISPOSING OF TH E SAME BY THIS COMMON ORDER. 2. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THE ASSESSEE-COMPANY IS A JOINT OWNER OF A COM MERCIAL COMPLEX. ACCORDING TO THE LD. COUNSEL, THE ASSESSE E LET OUT THE COMMERCIAL COMPLEX ALONG WITH AMENITIES TO VARIOUS PERSONS AND RECEIVED RENTAL INCOME AND CHARGES FOR AMENITIES. IN THE EARLIER ASSESSMENT YEAR, THE ASSESSEE CLAIMED THE ENTIRE IN COME AS INCOME FROM BUSINESS. HOWEVER, THE ASSESSING OFFIC ER CLASSIFIED THE ENTIRE RENTAL INCOME AS INCOME FROM HOUSE PROPE RTY. ON FURTHER APPEAL, THE SAME WAS ALSO CONFIRMED BY THIS TRIBUNA L AND THE HIGH COURT. IN FACT, FOR THE ASSESSMENT YEAR 2001-02, T HE MADRAS HIGH 3 I.T.A. NO.402/MDS/13 I.T.A. NO.1095/MDS/14 I.T.A. NOS.2215 & 2216/MDS /15 COURT IN KEYARAM HOTELS P. LTD. V. ACIT (2008) 300 ITR 118 CONFIRMED THE ORDER OF THIS TRIBUNAL BY HOLDING THA T THE ENTIRE RENTAL INCOME IS INCOME FROM HOUSE PROPERTY. THE MADRAS H IGH COURT PLACED ITS RELIANCE ON THE EARLIER DIVISION BENCH J UDGMENT IN CIT V. CHENNAI PROPERTIES AND INVESTMENTS LTD. (2004) 266 ITR 685. FOR THE ASSESSMENT YEARS 2004-05, 2005-06, 2007-08 AND 2008-09, THE MATTER AGAIN CAME BEFORE THE HIGH COURT IN KEYARAM HOTELS PVT. LTD. V. DCIT (2015) 373 ITR 494 AND BY PLACING RELI ANCE ON CHENNAI PROPERTIES AND INVESTMENTS LTD. (SUPRA) AND ON THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2001-02 (SUPRA), THE HIGH COURT CONFIRMED THE ORDER OF THIS TRIBUNAL BY HOLDING THA T THE ENTIRE RENTAL INCOME HAS TO BE ASSESSED AS INCOME FROM HOUSE PROP ERTY. ACCORDING TO THE LD. COUNSEL, THE BASIS FOR THE HIG H COURTS JUDGMENT FOR EARLIER ASSESSMENT YEAR IN THE ASSESSE E'S OWN CASE IS THE JUDGMENT OF DIVISION BENCH OF MADRAS HIGH COURT IN CHENNAI PROPERTIES AND INVESTMENTS LTD. (SUPRA). NOW, THE APEX COURT IN CHENNAI PROPERTIES AND INVESTMENTS LTD. V. CIT (201 5) 373 ITR 673 REVERSED THE JUDGMENT OF MADRAS HIGH COURT IN CHENN AI PROPERTIES AND INVESTMENTS LTD. (SUPRA). THEREFORE, THE JUDGM ENT OF MADRAS HIGH COURT IS NOT APPLICABLE TO THE FACTS OF THE CA SE. FOR THE 4 I.T.A. NO.402/MDS/13 I.T.A. NO.1095/MDS/14 I.T.A. NOS.2215 & 2216/MDS /15 ASSESSMENT YEAR 2003-04, WHEN THE MATTER CAME BEFOR E THIS TRIBUNAL, IT WAS REMITTED BACK TO THE FILE OF THE A SSESSING OFFICER FOR CONSIDERATION OF ACTIVITY OF THE ASSESSEE WITH REGA RD TO OTHER SERVICES, NAMELY, MAINTENANCE OF THE BUILDING, DAY- TO-DAY REQUIREMENTS, MAINTENANCE OF LIFT, COMMON FACILITIE S, SECURITY, ETC. THIS TRIBUNAL PLACED ITS RELIANCE ON THE JUDGMENT O F KERALA HIGH COURT IN ATTUKAL SHOPPING COMPLEX P. LTD. V. CIT (2 003) 259 ITR 567. THE ASSESSING OFFICER, AFTER CONSIDERING THE ACTIVITY OF THE ASSESSEE, AGAIN FOUND THAT THE INCOME HAS TO BE ASS ESSED AS INCOME FROM HOUSE PROPERTY. ON APPEAL BEFORE THE C IT(APPEALS), THE CIT(APPEALS) FOUND THAT THE ASSESSEE HAS NOT JU ST LET OUT THE PROPERTY, BUT UNDERTAKEN TO MAINTAIN THE SAME BY PR OVIDING INDISPENSABLE AMENITIES. THEREFORE, THE ASSESSEE H AS TO MAKE COMPULSORY EXPENDITURE IN DAY-TO-DAY MAINTENANCE OF AMENITIES PROVIDED AND SECURITY SYSTEM, ETC. THE CIT(APPEALS ) FURTHER FOUND THAT THE ASSESSEE ITSELF ACCEPTED 75% OF THE TOTAL RENTAL INCOME AS INCOME FROM HOUSE PROPERTY AND THE BALANCE 25% WAS CLAIMED AS INCOME FROM BUSINESS. ACCORDINGLY, THE CIT(APPEALS ) FOR THE ASSESSMENT YEAR 2003-04 FOUND THAT 75% OF THE RENTA L RECEIPT AS INCOME FROM HOUSE PROPERTY AND THE BALANCE 25% WAS CLAIMED AS 5 I.T.A. NO.402/MDS/13 I.T.A. NO.1095/MDS/14 I.T.A. NOS.2215 & 2216/MDS /15 INCOME FROM BUSINESS. AGAINST THIS ORDER OF THE CI T(APPEALS), FOR THE ASSESSMENT YEAR 2003-04, THE REVENUE HAS FILED THE APPEAL. 3. COMING TO THE ASSESSMENT YEARS 2010-11, 2006-07 AND 2009-10, THE CIT(APPEALS) CONFIRMED THE ORDER OF TH E ASSESSING OFFICER HOLDING THAT THE RENTAL INCOME FROM LETTING OUT THE COMMERCIAL COMPLEX, INCLUDING THE AMENITIES, IS ASS ESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND NOT UNDER THE HEAD BUSINESS INCOME. AGAINST THESE ORDERS OF THE CIT (APPEALS), THE ASSESSEE HAS ALSO FILED APPEALS. 4. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THE ASSESSEE LET OUT A LUXURIOUS COMMERCIAL CO MPLEX ALONG WITH SEVERAL AMENITIES. REFERRING TO THE COPIES OF THE LEASE DEED, THE LD.COUNSEL SUBMITTED THAT THE ASSESSEE HAS NOT ONLY PROVIDED LIFT TO THE BUILDING BUT IT ALSO HAS TO MAINTAIN THE LIFT. THE ASSESSEE IS PROVIDING INTERNAL SECURITY TO THE BUILDING, REGULA TING THE CAR PARKING AND ALSO TAKING CARE OF DAY-TO-DAY MAINTENANCE. TH EREFORE, APART FROM LETTING OUT THE BUILDING, THE ASSESSEE HAS TO BE SYSTEMATICALLY ENGAGED IN MANAGING THE AMENITIES SUCH AS SECURITY SERVICES, COMMON AREA MAINTENANCE, LIFT OPERATION, MAINTENANC E OF MEETING 6 I.T.A. NO.402/MDS/13 I.T.A. NO.1095/MDS/14 I.T.A. NOS.2215 & 2216/MDS /15 ROOM, READING ROOM AND WAITING ROOM, ETC. THESE FA CILITIES ARE TO BE UNDERTAKEN IN A SYSTEMATIC MANNER, THEREFORE, ACCOR DING TO THE LD. COUNSEL, PART OF THE RENTAL INCOME HAS TO BE CONSI DERED AS INCOME FROM BUSINESS. WITHOUT PROVIDING THESE SERVICES IN A SYSTEMATIC AND ROUTINE MANNER, THE TENANTS WOULD NOT HAVE TAKE N THE BUILDING ON LEASE. THE EXPENDITURE CLAIMED BY THE ASSESSEE ON DAY-TO-DAY MAINTENANCE IN A SYSTEMATIC MANNER CANNOT BE CONSID ERED AS PART OF THE RENTAL INCOME. THEREFORE, THE CIT(APPEALS) FOR THE ASSESSMENT YEAR 2003-04, RIGHTLY ACCEPTED THE CASE OF THE ASSESSEE THAT 75% OF THE RENTAL INCOME IS FROM HOUS E PROPERTY AND THE BALANCE 25% OF THE RENTAL INCOME AS INCOME FRO M BUSINESS. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE CIT(AP PEALS), FOR THE ASSESSMENT YEAR 2010-11, 2006-07 AND 2009-10, IS NO T CORRECT IN HOLDING THAT THE ENTIRE RENTAL INCOME IS INCOME FRO M HOUSE PROPERTY. 5. REFERRING TO THE JUDGMENTS OF MADRAS HIGH COURT IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2001-02 AND FOR ASSESSMENT YEARS 2004-05, 2005-06, 2007-08 AND 2008 -09, THE LD.COUNSEL SUBMITTED THAT THE BASIS FOR THE JUDGMEN TS OF MADRAS HIGH COURT IS THE JUDGMENT OF DIVISION BENCH IN CHE NNAI PROPERTIES 7 I.T.A. NO.402/MDS/13 I.T.A. NO.1095/MDS/14 I.T.A. NOS.2215 & 2216/MDS /15 AND INVESTMENTS LTD. (SUPRA). THE APEX COURT EXAMI NED THE CORRECTNESS OF THE JUDGMENT OF MADRAS HIGH COURT IN CHENNAI PROPERTIES AND INVESTMENTS LTD. V. CIT (2015) 373 I TR 673 AND FOUND THAT THE DECIDING FACTOR IS NOT THE OWNERSHIP OF THE LAND OR LEASES BUT THE NATURE OF THE ACTIVITY OF THE ASSESS EE AND THE NATURE OF THE OPERATIONS IN RELATION TO THEM. AFTER REFER RING TO THE JUDGMENTS OF PRIVY COUNCIL AND THE JUDGMENT OF APEX COURT IN KARANPURA DEVELOPMENT CO. LTD. V. CIT (1962) 44 ITR 362, THE APEX COURT FOUND THAT INCOME FROM LETTING OUT THE C OMMERCIAL COMPLEX WAS THE BUSINESS OF THE ASSESSEE. THEREFOR E, THE RENTAL INCOME HAS TO BE ASSESSED AS INCOME FROM BUSINESS. IN VIEW OF THIS JUDGMENT OF APEX COURT, ACCORDING TO THE LD. C OUNSEL, THE EARLIER JUDGMENTS OF MADRAS HIGH COURT IN THE ASSES SEE'S OWN CASE FOR ASSESSMENT YEAR 2001-02 AND 2004-05, 2005-06, 2 007-08 AND 2008-09 ARE NOT APPLICABLE TO THE FACTS OF THIS CAS E. 6. ON THE CONTRARY, SH. P. RADHAKRISHNAN, THE LD. D EPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE LET OUT THE COMMERCIAL COMPLEX TO VARIOUS PERSONS AND RECEIVING RENTAL INC OME. THE ASSESSEE CLAIMED IN THE EARLIER ASSESSMENT YEAR THE ENTIRE RENTAL 8 I.T.A. NO.402/MDS/13 I.T.A. NO.1095/MDS/14 I.T.A. NOS.2215 & 2216/MDS /15 INCOME AS INCOME FROM BUSINESS. THE ASSESSING OFFI CER, HOWEVER, REJECTED THE CLAIM OF THE ASSESSEE AND FOUND THAT T HE ENTIRE RENTAL INCOME HAS TO BE ASSESSED AS INCOME FROM HOUSE PROP ERTY. THE DECISION OF THE ASSESSING OFFICER WAS CONFIRMED BY THE TRIBUNAL AND THE HIGH COURT FOR THE ASSESSMENT YEAR 2001-02. TH E ORDER OF THIS TRIBUNAL FOR ASSESSMENT YEAR 2001-02 WAS ALSO FURTH ER CONFIRMED BY THE MADRAS HIGH COURT. SIMILARLY, FOR ASSESSMENT Y EARS 2004-05, 2005-06, 2007-08 AND 2008-09, THE MADRAS HIGH COURT CONFIRMED THE DECISION OF THIS TRIBUNAL, HOLDING THAT THE ENT IRE RENTAL INCOME HAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY. FOR THE ASSESSMENT YEAR 2003-04, THIS TRIBUNAL, HOWEVER, FO UND THAT THE ASSESSEE, APART FROM LETTING OUT THE PROPERTY AND C OLLECTING RENT, PROVIDES SERVICES SUCH AS GENERAL PUBLIC REFRESHMEN TS, MAINTENANCE OF WAITING ROOM, READING ROOM, MEETING ROOM AND OTHER CONVENIENCES, INTERNAL SECURITY, MAINTENANCE OF COMMON AREA AND LIFT OPERATION. THEREFORE, BY PLACING RELIANCE ON THE JUDGMENT OF KERALA HIGH COURT IN ATTUKAL SHOPPING COMPLEX P. LT D. (SUPRA), THE TRIBUNAL REMANDED BACK THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO EXAMINATION OF THE ACTUAL OPERATIONS CARRIED ON BY THE ASSESSEE. THE ASSESSING OFFICER, AFTER EXAM INING THE ENTIRE 9 I.T.A. NO.402/MDS/13 I.T.A. NO.1095/MDS/14 I.T.A. NOS.2215 & 2216/MDS /15 ACTIVITIES OF THE ASSESSEE, FOUND THAT THE RENTAL I NCOME HAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY AND NOT AS I NCOME FROM BUSINESS. WHEN THE MATTER CAME BEFORE THE CIT(APPE ALS) FOR THE ASSESSMENT YEAR 2003-04, THE ASSESSEE CLAIMED THAT 25% OF THE RENTAL INCOME WAS ATTRIBUTABLE TO THE SERVICES REND ERED FOR MAINTAINING THE COMMON AREA, WAITING ROOM, READING ROOM, SUNDRY SERVICES AND LIFT ROOM, THEREFORE, THE 25% OF RENTA L INCOME HAS TO BE ASSESSED AS INCOME FROM BUSINESS. THE ASSESSEE HAD APPEALED BEFORE THE CIT(APPEALS) THAT THE BALANCE 75% OF REN TAL INCOME HAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY. THIS CLAIM OF THE ASSESSEE WAS ACCEPTED BY THE CIT(APPEALS) FOR ASSES SMENT YEAR 2003-04. SINCE THE JUDGMENTS OF MADRAS HIGH COURT FOR ASSESSMENT YEAR 2001-02 AND FOR THE ASSESSMENT YEAR S 2004-05, 2005-06, 2007-08 AND 2008-09, WERE AGAINST THE ASSE SSEE BY HOLDING THAT THE ENTIRE RENTAL INCOME WAS TO BE TRE ATED AS INCOME FROM HOUSE PROPERTY, THE REVENUE FILED THE APPEAL B EFORE THIS TRIBUNAL FOR ASSESSMENT YEAR 2003-04 CONTENDING THA T THE ENTIRE RENTAL INCOME HAS TO BE ASSESSED AS INCOME FROM HOU SE PROPERTY. THEREFORE, THE BIFURCATION MADE BY THE CIT(APPEALS) THAT 75% OF THE RENTAL INCOME HAS TO BE ASSESSED AS INCOME FROM HOU SE PROPERTY 10 I.T.A. NO.402/MDS/13 I.T.A. NO.1095/MDS/14 I.T.A. NOS.2215 & 2216/MDS /15 AND THE BALANCE 25% OF THE RENTAL INCOME HAS TO BE TREATED AS INCOME FROM BUSINESS, IS NOT JUSTIFIED. 7. REFERRING TO THE ASSESSEES APPEALS FOR ASSESSME NT YEARS 2010-11, 2006-07 AND 2009-10, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ORDERS OF THE ASSESSING OFFICER BY HO LDING THAT THE RENTAL INCOME HAS TO BE ASSESSED AS INCOME FROM HOU SE PROPERTY BY PLACING RELIANCE ON THE JUDGMENT OF MADRAS HIGH COURT IN CHENNAI PROPERTIES AND INVESTMENTS LTD. (SUPRA). T HE CIT(APPEALS) HAS ALSO PLACED RELIANCE ON THE JUDGME NT OF MADRAS HIGH COURT IN THE ASSESSEE'S OWN CASE FOR THE ASSES SMENT YEARS 2004-05, 2005-06, 2007-08 AND 2008-09. THEREFORE, NO INTERFERENCE IS CALLED FOR. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO CLASSIFI CATION OF RENTAL INCOME RECEIVED BY THE ASSESSEE FROM THE COMMERCIAL COMPLEX. FOR THE ASSESSMENT YEARS 2001-02, 2004-05, 2005-06, 2007-08 AND 2008-09, THE ISSUE TRAVELLED UPTO MADRAS HIGH COURT AND THE 11 I.T.A. NO.402/MDS/13 I.T.A. NO.1095/MDS/14 I.T.A. NOS.2215 & 2216/MDS /15 MADRAS HIGH COURT FOUND THAT THE ENTIRE RENTAL INCO ME HAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY. FOR THE AS SESSMENT YEAR 2003-04, THIS TRIBUNAL FOUND THAT THE ACTIVITIES CA RRIED ON BY THE ASSESSEE WERE NOT CONSIDERED BY THE AUTHORITIES BEL OW, THEREFORE, THE MATTER WAS REMITTED BACK TO THE FILE OF THE ASS ESSING OFFICER. THE ASSESSING OFFICER, AFTER EXAMINING THE ACTIVITI ES OF THE ASSESSEE, FOUND THAT THE RENTAL INCOME RECEIVED BY THE ASSESSEE HAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY. WHEN THE MATTER WAS APPEALED BEFORE THE CIT(APPEALS) BY THE ASSESSEE, THE CIT(APPEALS) FOUND THAT THE ACTIVITIES CARRIED ON B Y THE ASSESSEE FOR MAINTENANCE OF LIFT OPERATION, PROVIDING SECURITY, MAINTENANCE OF WAITING HALL, READING HALL, ETC. AMOUNT TO SERVICE, THEREFORE, PART OF THE RENT HAS TO BE CLASSIFIED AS INCOME FROM BUSINE SS. ACCORDINGLY, THE CIT(APPEALS) FOUND THAT 25% OF THE RENTAL INCOM E HAS TO BE TREATED AS INCOME FROM BUSINESS AND 75% HAS TO BE A SSESSED AS INCOME FROM HOUSE PROPERTY. THEREFORE, THE REVENUE FILED APPEAL BEFORE THIS TRIBUNAL FOR ASSESSMENT YEAR 2003-04. FOR OTHER ASSESSMENT YEARS, NAMELY, 2010-11, 2006-07 AND 2009 -10, THE CIT(APPEALS) CONFIRMED THE ORDERS OF THE ASSESSING OFFICER HOLDING 12 I.T.A. NO.402/MDS/13 I.T.A. NO.1095/MDS/14 I.T.A. NOS.2215 & 2216/MDS /15 THAT THE RENTAL INCOME HAS TO BE TREATED AS INCOME FROM HOUSE PROPERTY. 9. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENTS OF MADRAS HIGH COURT IN THE ASSESSEE'S OWN CASE FOR ASSESSMEN T YEAR 2001- 02 AND FOR ASSESSMENT YEARS 2004-05, 2005-06, 2007- 08 AND 2008- 09. THE MADRAS HIGH COURT, AS RIGHTLY SUBMITTED BY THE LD.COUNSEL FOR THE ASSESSEE, PLACED RELIANCE MAINLY ON ITS JUD GMENT IN CHENNAI PROPERTIES AND INVESTMENTS LTD. (SUPRA). THE MADRA S HIGH COURT HAS ALSO PLACED ITS RELIANCE ON THE JUDGMENT OF APE X COURT IN EAST INDIA HOUSING AND LAND DEVELOPMENT TRUST LTD. V. CI T (1961) 42 ITR 49. AS RIGHTLY SUBMITTED BY THE LD.COUNSEL FOR THE ASSESSEE, THE APEX COURT CONSIDERED THE CORRECTNESS OF THE JU DGMENT OF THE MADRAS HIGH COURT IN CHENNAI PROPERTIES AND INVESTM ENTS LTD. (SUPRA). THE APEX COURT FOUND THAT THE OWNERSHIP O F LAND OR LEASES CANNOT BE A DECIDING FACTOR BUT THE NATURE OF ACTIV ITIES OF THE ASSESSEE AND NATURE OF OPERATION IN RELATION TO THE M WOULD BE THE DECIDING FACTOR. AFTER REFERRING TO THE JUDGMENT O F PRIVY COUNCIL AND HOUSE OF LORDS IN ENGLAND AND THE JUDGMENT OF APEX COURT IN KARANPURA DEVELOPMENT CO. LTD. (SUPRA), THE APEX CO URT FOUND THAT 13 I.T.A. NO.402/MDS/13 I.T.A. NO.1095/MDS/14 I.T.A. NOS.2215 & 2216/MDS /15 THE FACTS OF THE CASE IN CHENNAI PROPERTIES AND INV ESTMENTS LTD. (SUPRA) SQUARELY FALLS WITHIN THE JUDGMENT IN KARAN PURA DEVELOPMENT CO. LTD. (SUPRA). ACCORDINGLY, THE JUD GMENT OF MADRAS HIGH COURT IN CHENNAI PROPERTIES AND INVESTMENTS LT D. (SUPRA) WAS SET ASIDE AND THE DECISION OF THIS TRIBUNAL WAS RES TORED HOLDING THAT THE RENTAL INCOME HAS TO BE ASSESSED AS INCOME FROM BUSINESS. IN VIEW OF THIS JUDGMENT OF APEX COURT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE EXAM INED IN THE LIGHT OF THE ACTIVITIES AND OPERATION CARRIED ON BY THE A SSESSEE. SINCE, IN THE EARLIER JUDGMENT IN ASSESSEE'S OWN CASE, THE MA DRAS HIGH COURT DECIDED BASED UPON ITS JUDGMENT IN CHENNAI PROPERTI ES AND INVESTMENTS LTD. (SUPRA) AND THE SAME WAS REVERSED BY THE APEX COURT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION T HAT THE JUDGMENT OF MADRAS HIGH COURT IN THE ASSESSEE'S OWN CASE FOR EA RLIER ASSESSMENT YEARS MAY NOT BE APPLICABLE TO THE FACTS OF THE CASE. THE LAW LAID DOWN BY THE APEX COURT IS BINDING ON A LL THE AUTHORITIES INCLUDING THE TRIBUNAL UNDER ARTICLE 141 OF THE CON STITUTION OF INDIA. THEREFORE, THIS TRIBUNAL IS EXPECTED TO FOLLOW THE JUDGMENT OF APEX COURT IN CHENNAI PROPERTIES AND INVESTMENTS LTD. (S UPRA) RATHER THAN THE JUDGMENT OF MADRAS HIGH COURT IN THE ASSES SEE'S OWN CASE 14 I.T.A. NO.402/MDS/13 I.T.A. NO.1095/MDS/14 I.T.A. NOS.2215 & 2216/MDS /15 FOR THE ASSESSMENT YEARS 2001-02, 2004-05, 2005-06, 2007-08 AND 2008-09. 10. WE HAVE CONSIDERED THE FACTS OF THE CASE IN THE LIGHT OF THE JUDGMENT OF APEX COURT IN CHENNAI PROPERTIES AND IN VESTMENTS LTD. (SUPRA). IT IS NOT IN DISPUTE THAT APART FROM LETT ING OUT THE PROPERTY, THE ASSESSEE IS MAINTAINING COMMON AREA, LIFT OPERA TION, PROVIDING SECURITY, MAINTENANCE OF WAITING HALL, MEETING HALL , ETC. THESE ACTIVITIES ARE CARRIED ON IN A SYSTEMATIC AND REGUL AR MANNER. THEREFORE, THE SERVICE PROVIDED BY THE ASSESSEE IN A SYSTEMATIC AND REGULAR MANNER WOULD AMOUNT TO BUSINESS ACTIVITY. THE RENTAL AGREEMENT ENTERED INTO BY THE ASSESSEE DOES NOT BIF URCATE THE RENT FOR THE SERVICES PROVIDED AND LETTING OUT THE PROPE RTY. HOWEVER, FOR THE ASSESSMENT YEAR 2003-04, THE ASSESSEE APPEARS T O HAVE CLAIMED BEFORE THE ASSESSING OFFICER THAT 75% OF TH E RENTAL INCOME HAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY AN D 25% IS ALLOTTED TO PROVIDING SERVICES, WHICH HAS TO BE TRE ATED AS INCOME FROM BUSINESS. THIS CLAIM OF THE ASSESSEE WAS ACCE PTED BY THE CIT(APPEALS) FOR ASSESSMENT YEAR 2003-04. THIS TRI BUNAL IS OF THE CONSIDERED OPINION THAT IN VIEW OF THE LAW LAID DOW N BY THE APEX 15 I.T.A. NO.402/MDS/13 I.T.A. NO.1095/MDS/14 I.T.A. NOS.2215 & 2216/MDS /15 COURT IN CHENNAI PROPERTIES AND INVESTMENTS LTD. (S UPRA), PART OF THE RENTAL INCOME RECEIVED BY THE ASSESSEE FOR PROV IDING SERVICES HAS TO BE CLASSIFIED AS INCOME FROM BUSINESS. SINC E THE ASSESSEE ITSELF CLAIMS 75% OF RENTAL INCOME HAS TO BE CLASSI FIED AS INCOME FROM HOUSE PROPERTY, THE CIT(APPEALS) HAS RIGHTLY F OUND THAT 75% OF THE RENTAL INCOME FOR ASSESSMENT YEAR 2003-04 AS IN COME FROM HOUSE PROPERTY. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) HAS RIGHTLY FOUND THA T 75% OF THE RENTAL INCOME HAS TO BE ASSESSED AS INCOME FROM HOU SE PROPERTY AND THE BALANCE 25% AS INCOME FROM BUSINESS. BY RE SPECTFULLY FOLLOWING THE LAW LAID DOWN BY THE APEX COURT IN CH ENNAI PROPERTIES AND INVESTMENTS LTD. (SUPRA), WE HOLD THAT THE RENT AL INCOME HAS TO BE BIFURCATED AND 75% OF THE SAME HAS TO BE CLASSIF IED AS INCOME FROM HOUSE PROPERTY AND 25% HAS TO BE CLASSIFIED AS INCOME FROM BUSINESS. 11. WHILE CONFIRMING THE ORDER OF THE CIT(APPEALS) FOR ASSESSMENT YEAR 2003-04, THE ORDERS OF THE LOWER AU THORITIES FOR ASSESSMENT YEARS 2010-11, 2006-07 AND 2009-10 ARE S ET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ASSESS 75% OF THE RENTAL INCOME 16 I.T.A. NO.402/MDS/13 I.T.A. NO.1095/MDS/14 I.T.A. NOS.2215 & 2216/MDS /15 RECEIVED BY THE ASSESSEE AS INCOME FROM HOUSE PROPE RTY AND 25% AS INCOME FROM BUSINESS AFTER ALLOWING ALL APPLICAB LE EXPENDITURE AS PER THE PROVISIONS OF LAW. 12. IN THE RESULT, I.T.A. NO.402/MDS/2013 IS DISMIS SED. HOWEVER, I.T.A. NO.1095/MDS/2014 AND I.T.A. NOS.221 5 & 2216/MDS/2016 ARE ALLOWED. ORDER PRONOUNCED ON 1 ST JUNE, 2016 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 1 ST JUNE, 2016. KRI. / ,278 98(2 /COPY TO: 1. '12 /ASSESSEE 2. ASSESSING OFFICER 3. 3 :2 () /CIT(A)-II, COIMBATORE 4. 3 :2 () /CIT(A)-II, CHENNAI 5. PRINCIPAL CIT, CHENNAI-4, CHENNAI 6. 3 :2 /CIT-II, CHENNAI 7. 8; ,2 /DR 8. <' = /GF.