Bombay Plaza Pvt. Ltd., Kolkata V. ACIT, CIR-5, KOLKATA, Kolkata

ITA 1641/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4574 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 08-08-2014
• Court: TRIBUNAL
• Department Lawyers: S M DAWS
• Assessee Lawyers: A K GUPTA
• Keywords: Business income
• Section: 143(3)

Judgement Text

ITA. NOS.1641&1203/KOL/2014-BOMBAY PLAZA PVT.LTD A. Y.2006-07 & 2007-08 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SHRI P.M.JAGTAP, AM & SRI N.V.VA SUDEVAN, JM ] I.T.A NOS. 1641 & 1203/KOL/2014 ASSESSMENT YEARS : 2006- 07 & 2007-08 BOMBAY PLAZA PVT. LTD. -VS.- A.C.I.T.- CIRCLE-5, KOLKATA KOLKATA [PAN : AABCB 0999 H] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI A.K.GUPTA, FCA FOR THE RESPONDENT : SHRI S.M.DAWS, JCIT , SR.DR DATE OF HEARING : 17.08.2016. DATE OF PRONOUNCEMENT : 02.09.2016. ORDER PER N.V.VASUDEVAN, JM ITA NO.1641/KOL/2014 IS AN APPEAL BY THE ASSESSEE A GAINST THE ORDER DATED 19.05.2014 OF C.I.T.(A)-VI, KOLKATA RELATING TO A.Y .2006-07. ITA NO.1203/KOL/2014 IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATE D 26.03.2014 OF C.I.T.(A)-VI, KOLKATA RELATING TO A.Y.2007-08. THE ISSUES INVOLVE D IN BOTH THESE APPEALS ARE IDENTICAL AND ARISE UNDER SAME FACTS CIRCUMSTANCES. THESE APPEALS WERE HEARD TOGETHER. WE DEEM IT CONVENIENT TO PASS A COMMON OR DER. 2. THE ASSESSEE, A PRIVATE LIMITED COMPANY, WAS INC ORPORATED ON 15.04.1990. THE MAIN OBJECTS FOR WHICH THE ASSESSEE WAS ESTABLISHED ARE GIVEN IN THE CLAUSES OF PARA III OF THE MEMORANDUM AND ARTICLES OF ASSOCIATION W HICH ARE AS UNDER: 1) TO ACQUIRE ON A LICENSE OR BY PURCHASE, LEASE, EXCHANGE, HIRE OR OTHERWISE LAND AND PROPERTY OF ANY TENURE, OR PREMISES IN ANY PART OF INDIA. 2) . ......... 3) TO LICENSE OR SUB LICENSE OR LEASE OR SUB LEASE OR LET SUCH LANDS OR PROPERTY OR PREMISES OR ANY PART THEREOF AND TO PROVIDE SUCH OT HER FACILITIES. 3. ON 16.04.1991 THE ASSESSEE ENTERED INTO AN AGRE EMENT WITH M/S EAST INDIA HOTELS LIMITED (NOW RENAMED AS EIH LIMITED) TO ACQUIRE UND ER A LICENSE AN AREA OF 9,000 ITA. NOS.1641&1203/KOL/2014-BOMBAY PLAZA PVT.LTD A. Y.2006-07 & 2007-08 2 SQUARE FEET IN HOTEL OBEROI TOWERS, BOMBAY (NOW REN AMED AS TRIDENT NARIMAN POINT) FOR THE PURPOSE OF USING THE SAME AS A SHOPP ING CENTRE. THE TENURE OF THE SAID LEAVE AND LICENSE WAS A PERIOD OF 50 YEARS AT A FIX ED MONTHLY LICENSE FEE AS AGREED BETWEEN THE PARTIES. AFTER ACQUIRING THE SAID SHOPP ING SPACE THE ASSESSEE UTILIZED IT IN GRANTING DIFFERENT PORTIONS OF THE SHOPPING SPACE T O VARIOUS PARTIES WHO WERE INTERESTED IN SETTING UP SHOPS THERE WITH THE CONDI TION THAT THE SHOPKEEPERS HAD TO SUBSCRIBE TO A SPECIFIC NUMBER OF SHARES OF THE ASS ESSEE APART FROM PAYMENT OF MONTHLY CHARGES (TERMED AS CONTRIBUTION FROM SHOPS) . THE ASSESSEE ALSO PROVIDED VARIOUS SERVICES TO THE LICENSEES LIKE AIR-CONDITIO NING, TELEPHONE SERVICES, MAINTENANCE, ELECTRICITY, WATER, SANITARY, SECURITY ETC. IN CONSIDERATION FOR THE SAME THE LICENSEES WERE REQUIRED TO PAY TO THE ASSESSEE MONTHLY CONSIDERATION ON THE BASIS OF THE BILL BY THE ASSESSEE AS DETERMINED BY THE BO ARD OF DIRECTORS FROM TIME TO TIME. ACCORDING TO THE ASSESSEE, SINCE THE ASSESSEE IS BA SICALLY INVOLVED IN THE BUSINESS OF PROVIDING THE SHOPPING SPACE ON LICENSE ALONG WITH VARIOUS SERVICES, THE CONSIDERATION RECEIVED FROM THE SAID SHOPPING SPACE WAS SHOWN AS BUSINESS INCOME IN THE COMPUTATION OF INCOME. ACCORDING TO THE ASSESSEE, S INCE THE ASSESSEE IS NOT THE OWNER OF THE BUILDING, THE AMOUNT OF LICENSE FEES PAID TO EIH LIMITED WAS CLAIMED AS A DEDUCTIBLE EXPENDITURE AGAINST THE SAID BUSINESS IN COME. 4. IN THE ASSESSMENT ORDER U/S 143(3) OF THE INCOM E TAX ACT, 1961 (ACT) DATED 15.12.2008 FOR AY 2007-08, THE ASSESSING OFFICER (A O) REJECTED THE CLAIM OF THE ASSESSEE AND TREATED THE ABOVE INCOME AS 'INCOME FR OM HOUSE PROPERTY' ON THE FOLLOWING GROUNDS: A) THAT THE ASSESSEE HAS AN IRREVOCABLE RIGHT OF 50 YEARS OVER THE SHOPPING SPACE. B) THE APEX COURT IN THE CASE OF CIT - VS. - PODDAR CEMENT LTD.226 ITR 625 HAS HELD IN CONTEXT OF SECTION 22 THAT THE OWNER IS A PERSON WHO IS ENTITLED .TO RECEIVE INCOME FROM THE PROPERTY IN HIS OWN RIGHT. C) IN VIEW OF THE PROVISIONS OF SECTION 27(IIIB) OF THE ACT AND FINDINGS OF THE APEX COURT THE ASSESSEE IS THE OWNER OF THE SHOPPING SPA CE. ITA. NOS.1641&1203/KOL/2014-BOMBAY PLAZA PVT.LTD A. Y.2006-07 & 2007-08 3 5. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A). BEFORE CIT(A), THE ASSESSEE CONTENDED THAT INCOME GENERATED FROM SHOPPING SPACE IS NOT 'INCOME FROM HOUSE PROPERTY AS THE ASSESSEE IS NEITHER AN OWNER NOT A DEEMED OWNER. THE ASSESSEE POINTED OUT THAT IT ACQUIRED TH E PROPERTY ONLY UNDER A LICENSE AGREEMENT AND NOT UNDER A LEASE. THE ASSESSEE POI NTED OUT THAT AS PER SECTION 22 OF THE ACT, ANY INCOME IS CHARGEABLE UNDER THE HEAD 'I NCOME FROM HOUSE PROPERTY' ONLY ON FULFILLING THE FOLLOWING CONDITIONS: A) INCOME SHOULD BE DERIVED FROM A PROPERTY CONSIST ING OF ANY BUILDING OR LANDS APPURTENANT THERETO B) THE ASSESSEE IS THE OWNER OF THE SAID PROPERTY C) THE PROPERTY SHOULD NOT BE USED FOR THE PURPOSE OF BUSINESS OR PROFESSION CARRIED ON BY HIM, THE PROFITS OF WHICH ARE CHARGEABLE TO I NCOME TAX. THE ASSESSEE CONTENDED THAT IT WAS NOT THE LEGAL OW NER OF THE PROPERTY. WITH REGARD TO APPLICABILITY OF THE PROVISIONS OF SEC.27(IIIB) OF THE ACT WHICH DEEMS UNDER CIRCUMSTANCES A PERSON TO BE DEEMED OWNER OF A PROP ERTY, THE ASSESSEE POINTED OUT THAT AS PER THE SAID PROVISION, A PERSON WHO ACQUIR ES ANY RIGHT IN OR WITH RESPECT TO ANY BUILDING OR PART THEREOF BY VIRTUE OF ANY TRANSACTI ONS WHICH IS REFERRED TO IN CLAUSE (F) OF SECTION 269UA, IS DEEMED TO BE THE OWNER OF THE BUILDING. THE ASSESSEE POINTED OUT THAT UNDER CLAUSE (F) OF SECTION 269UA OF THE A CT, TRANSFER IN RELATION TO ANY IMMOVABLE PROPERTY REFERRED TO IN SUB-CLAUSE (I) OF CLAUSE (D), MEANS TRANSFER OF SUCH PROPERTY BY WAY OF SALE OR EXCHANGE OR LEASE FOR A TERM OF NOT LESS THAN TWELVE YEARS, AND INCLUDES ALLOWING THE POSSESSION OF SUCH PROPE RTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERR ED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882). EXPLANATION TO T HE SAID CLAUSE PROVIDES AS FOLLOWS: FOR THE PURPOSES OF THIS SUB-CLAUSE, A LEASE WHICH PROVIDES FOR THE EXTENSION OF THE TERM THEREOF BY A FURTHER TERM OR TERMS SHAL L BE DEEMED TO .BE A LEASE FOR A TERM OF NOT LESS THAN TWELVE YEARS, IF THE AGGREG ATE OF THE TERM FOR WHICH SUCH LEASE IS TO BE GRANTED AND THE FURTHER TERM OR TERM S FOR WHICH IT CAN BE SO EXTENDED IS NOT LESS THAN TWELVE YEARS THE ASSSESSEE CONTENDED THAT SECTION 269UA(F) COVER S CASES OF TRANSFER OF PROPERTY ONLY UNDER SALE, EXCHANGE OR LEASE , WHEREAS IN THE INSTANT CASE THE SHOPPING ARCADE HAS BEEN ACQUIRED BY THE ASSESSEE UNDER A LICENSE AND NOT LE ASE . THE ASSESSEE ITA. NOS.1641&1203/KOL/2014-BOMBAY PLAZA PVT.LTD A. Y.2006-07 & 2007-08 4 CONTENDED THERE WAS A DIFFERENCE IN LAW BETWEEN A LICENSE AND A LEASE. THE ASSESSEE CONTENDED THAT BY ENTERING INTO THE LEASE AGREEMENT WITH EIH LIMITED WHAT THE ASSESSEE HAS RECEIVED IS ONLY A RIGHT TO USE TH E SAID SHOPPING SPACE. THE SAME WOULD BE EVIDENT FROM CLAUSE 7(I) OF THE AGREEMENT WHICH PROVIDES THAT THE AGREEMENT DOES NOT CREATE ANY INTEREST OR ANY OTHER RIGHT IN FAVOUR OF THE LICENSEE IN THE SAID SHOPPING CENTRE OR ANY PART THEREOF BUT IT IS A MERE LICENSE TO USE THE SAID SHOPPING CENTRE GIVEN TO THE LICENSEE'. SINCE BY ENTERING INTO THE LICENSE AGREEMENT A LICENSEE DOES NOT ACQUIRE ANY INTEREST IN THE IMM OVABLE PROPERTY OR RIGHT TO POSSESS IT, THE APPELLANT CANNOT BE CONSIDERED AS DEEMED OW NER IN TERMS OF SECTION 27(IIIB) OF THE ACT. THE ASSESSEE RELIED ON THE DECISION OF T HE HON'BLE COCHIN TRIBUNAL IN THE CASE OF M. DAMODARAN NAIR -VS.- ITO (2004) 90 ITD 7 58 (COCHIN) (SMC), IN WHICH THE FACTS WERE THAT THE ASSESSEE TOOK A BUILDING ON LEASE WHICH WAS SUB LEASED TO OTHERS. THE ASSESSEE DERIVED RENT FROM THE BUILDING LEASED OUT WHICH AFTER DEDUCTING CERTAIN EXPENSES WAS OFFERED UNDER THE HEAD BUSINES S INCOME. THE CONTENTION OF THE ASSESSEE WAS THAT SINCE HE WAS NOT THE OWNER OF THE BUILDING, THE LEASE RENT RECEIVED WAS ASSESSABLE AS BUSINESS INCOME. THE AO TREATED T HE ASSESSEE AS DEEMED OWNER AS PER THE PROVISIONS OF SECTION 27(III)(B) READ WITH EXPLANATION TO SECTION 269UA(F) AND COMPUTED INCOME UNDER THE HEAD 'INCOME FROM HOUSE P ROPERTY'. ON APPEAL THE HON'BLE TRIBUNAL OBSERVED THAT THE FINANCE ACT 1987 HAD EXTENDED THE MEANING OF THE EXPRESSION 'OWNERSHIP' FOR THE PURPOSE OF COMPUTING INCOME UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY'. THE TRIBUNAL OBSERVED THE RAT IONALE OF EXTENDING THE SAID DEFINITION OF OWNERSHIP WHICH WAS EXPLAINED IN THE BOARD CIRCULAR NO. 495 DATED 22.9.1987. THE SAID CIRCULAR PROVIDED THAT THE EXPR ESSION OWNERSHIP MEANING LEGAL OWNERSHIP' HAD THE EFFECT OF EXCLUDING CASES WHERE AN ASSESSEE POSSESSED ALL RIGHTS TO AN IMMOVABLE PROPERTY EXCEPT THE TITLE. HAVING OBSE RVED THAT THE HON'BLE TRIBUNAL HELD AS FOLLOWS: THAT THE WHOLE THRUST OF CHAPTER XX-C CONSISTING O F SECTIONS 269UA TO 269UD IS TO PREVENT EVASION OF TAX. CLAUSE (F) OF S ECTION 269UA GIVES THE EXTENDED MEANING OF TRANSFER WHICH MAKES IT VERY CL EAR THAT THE LEASE FOR A TERM OF NOT LESS THAN 12 YEARS INCLUDES ALLOWING THE POS SESSION OF SUCH PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTR ACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT 1882 . THEREFORE MERE OCCUPATION ITA. NOS.1641&1203/KOL/2014-BOMBAY PLAZA PVT.LTD A. Y.2006-07 & 2007-08 5 OF THE PROPERTY FOR A TERM OF NOT LESS THAN 12 YEAR S DOES NOT MAKE AN ASSESSEE OWNER OF THE PROPERTY. ACCORDING TO SECTION 27(IIIB) THE TRANSACTION SHOUL D BE THE ONE REFERRED TO IN SECTION 269UA(F). THEN ONLY THE PERSON CONCERNED WI LL BE THE OWNER OF THE BUILDING OR PART THEREOF ON THE BASIS OF EXTENDED M EANING OF TRANSFER IN SECTION 269UA. THE BUILDING OR PART OF THE BUILDING AS REF ERRED TO IN SECTION 27(IIIB) SHOULD BE A BUILDING OR PART OF THE BUILDING AS REF ERRED TO IN SECTION 269UA(F). TAKING OF THE BUILDING BY THE ASSESSEE ON LEAVE AND LICENCE HAD NO RELEVANCE IN THE INSTANT CASE. THERE WAS NO AGREEMENT FOR TRANSF ER, EXCEPT GIVING THE IMMOVABLE PROPERTY ON RENT BY THE REAL OWNER TO THE ASSESSEE, WHO IN TURN SUB LET IT. WITH THE EXTENDED DEFINITION OF THE EXPRESSION OWNE RSHIP TRANSACTIONS COVERED BY SECTION 269UA SHALL BE CONSIDERED AS HAVING THE EFFECT OF TRANSFER OF TITLE. IN THE INSTANT CASE IT WAS NOT A TRANSFER OR TRANSACTI ON AS AFORESAID AND AS SUCH THE EXTENDED MEANING OF OWNERSHIP COULD NOT BE APPLIED. THE ASSESSEE CONTENDED THAT IN THE INSTANT CASE, TH E ASSESSEE HAS TAKEN THE PROPERTY ON LICENSE WITH A CONDITION AND OBJECTIVE TO SUB LICEN SE THE SAME. THERE WAS NO INTENTION OF TRANSFERRING THE PROPERTY TO THE ASSESSEE BY THE SAID COMPANY AND HENCE THE QUESTION OF APPLICABILITY OF SECTION 27(IIIB) OF TH E ACT DOES NOT ARISE AT ALL. 6. WITHOUT PREJUDICE TO OUR ABOVE CLAIM THAT THE A SSESSEE IS NOT ASSESSABLE TO 'INCOME FROM HOUSE PROPERTY' AS IT IS NEITHER AN OWNER NOR A DEEMED OWNER, THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE WAS FORMED WITH THE MAIN OBJECTIVES OF CARRYING ON THE BUSINESS OF AN INVESTMENT COMPANY AND THE BU SINESS OF ACQUIRING ON LICENSE OR BY PURCHASE, LEASE EXCHANGE OF LAND AND PROPERTY AN D TO SUBLEASE OR SUB LICENSE THE SAID LAND AND PROPERTY BUILDING. IT IS THE BUSINESS OF THE ASSESSEE TO ACQUIRE PREMISES ON LICENSE AND TO SUB LICENSE THE SAME IN ORDER TO EARN REVENUE. THE ASSESSEE RELIED ON THE MEMORANDUM OF ASSOCIATION WHICH ACCORDING TO TH E ASSESSEE, CLEARLY PROVIDED THE OBJECTS FOR WHICH THE COMPANY HAS BEEN FORMED V IZ., TO ACQUIRE ON A LICENSE, PREMISES SUITABLE FOR HOUSING AND ACCOMMODATING SHO PS, BOUTIQUES, STORES OFFICES, SHOW ROOMS FOR THE PURPOSE OF MAKING THE SAME AVAIL ABLE ON THE BASIS OF LEASE AND LICENSE OR SUB LICENSE (AND NOT FOR LEASING OR RENT ING THE SAME OUT) TO ANY PERSON, FIRM OR COMPANY. THE ASSESSEE POINTED OUT TO THE VARIOU S CLAUSES IN THE SUB-LICENSE ITA. NOS.1641&1203/KOL/2014-BOMBAY PLAZA PVT.LTD A. Y.2006-07 & 2007-08 6 AGREEMENT AND CONTENDED THAT DOING ALL THOSE ACTIVI TIES BY THE ASSESSEE WAS NOTHING BUT A BUSINESS ACTIVITY IN A SYSTEMATIC AND ORGANIZ ED MANNER. THUS, INCOME DERIVED FROM IT IS NOTHING BUT BUSINESS INCOME. IN THIS REG ARD THE ASSESSEE POINTED OUT THAT THE ASSESSEE ALONG WITH THE STIPULATED SPACE ALSO MADE PROVISION FOR VARIOUS SERVICES LIKE A) CENTRAL AIR CONDITIONING FACILITIES, B) CENTRAL TELEPHONE OPERATING SERVICE, C) CENTRAL PIPED MUSIC IN THE PASSAGES, D) CLEANING AND- KEEPING OF LOBBIES, ENTRANCE, COMM ON PASSAGES E) MAINTENANCE OF ELECTRICITY, WATER, SANITARY FITT INGS AND PLUMBING F) WATCH AND WARD SERVICES, G) PROVIDING ADVERTISING AND SALES PROMOTIONAL FACI LITIES BY VARIOUS MEANS ~D MEDIA FOR GOODS AVAILABLE IN THE SHOPPING AREA. THUS, IN ORDER TO CARRY ON THE BUSINESS OF PROVIDIN G PREMISES ON LICENSE THE ASSESSEE HAS MADE AVAILABLE THE WHOLE INFRASTRUCTURE OF VARI OUS FACILITIES/SERVICES AND FOR WHICH THE ASSESSEE CHARGES CERTAIN AMOUNT. THUS, INCOME E ARNED FROM THE ABOVE IS NOTHING BUT BUSINESS INCOME. 7. THE ASSESSEE RELIED ON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF UNIVERSAL PLAST LTD. -VS.- CIT (1999) 237 ITR 454 T HAT THE QUESTION AS TO WHETHER THE RENTAL INCOME RECEIVED BY THE ASSESSEE WOULD FALL U NDER THE HEAD PROFIT AND GAINS OF BUSINESS HAS TO BE DETERMINED FROM THE POINT OF VIE W OF A BUSINESSMAN AFTER CONSIDERING FACTS AND CIRCUMSTANCES OF EACH CASE. R ELIANCE WAS PLACED ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CI T VS NEW INDIA INDUSTRIES LTD. (1993) 201 ITR 208(GUJ.) WHEREIN IT WAS HELD THAT W HETHER AN INCOME FALLS UNDER ONE HEAD OR ANOTHER HAS TO BE DECIDED ACCORDING TO THE COMMON NOTIONS OF A PRACTICAL AND REASONABLE MAN AFTER CONSIDERING FACTS AND CIRCUMST ANCES INVOLVED IN EACH CASE. IT WAS CONTENDED THAT IN THE PRESENT CASE, THE ASSESSI NG OFFICER DID NOT GIVE ANY COGNIZANCE TO THE FACT THAT THE INTENTION OF THE AS SESSEE BEHIND GIVING THE PROPERTY ON SUBLICENSE WAS TO EXPLOIT THE PROPERTY COMMERCIALLY IN THE ORDINARY COURSE OF BUSINESS BY PROVIDING VARIOUS FACILITIES AND SERVICES AND NO T MERELY TO EARN RENTAL INCOME. THE ITA. NOS.1641&1203/KOL/2014-BOMBAY PLAZA PVT.LTD A. Y.2006-07 & 2007-08 7 ASSESSEE ALSO RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF S.G. MERCANTILE CORPORATION P. LTD. -VS.- CIT ( 1972) 83 ITR 700(SC) WHEREIN THE FACTS WERE THAT THE ASSESSEE WAS A PRIVATE LIMITED COMPAN Y. ONE OF THE OBJECTS SPECIFIED IN ITS MEMORANDUM OF ASSOCIATION WAS TO TAKE ON LEASE OR OTHERWISE ACQUIRE AND TO HOLD IMPROVE, LEASE OR OTHERWISE DISPOSE OF LAND, HOUSES AND OTHER REAL AND PERSONAL PROPERTY AND TO DEAL WITH THE SAME COMMERCIALLY. WI THIN LESS THAN TWO WEEKS OF ITS INCORPORATION THE COMPANY TOOK ON LEASE A MARKET PL ACE FOR A INITIAL TERM OF 50 YEARS, UNDERTAKING TO SPEND RS.5 LAKHS FOR THE PURPOSE OF REMODELING AND REPAIRING THE STRUCTURE ON THE SITE. IT WAS ALSO GIVEN THE RIGHT TO SUB LET THE DIFFERENT PORTIONS. THE ASSESSEE DEVELOPED THE PROPERTY AND LET OUT PORTION S THEREOF AS SHOPS, STALL AND GROUND SPACES TO SHOPKEEPERS ETC. THE QUESTION WAS WHETHER THE ASSESSEES INCOME FROM SUBLETTING WAS ASSESSABLE AS BUSINESS INCOME OR AS 'INCOME FROM OTHER SOURCES'. IT WAS HELD THAT, ON THE FACTS, THE TAKING OF PROPERTY ON LEASE AND SUBLETTING PORTIONS THEREOF WAS PART OF THE BUSINESS AND TRADING ACTIVITY OF TH E APPELLANT AND THE INCOME OF THE APPELLANT FELL UNDER THE HEAD BUSINESS INCOME. REFE RENCE WAS ALSO MADE TO THE FOLLOWING JUDICIAL PRONOUNCEMENTS, WHEREIN PRINCIPL ES TO BE APPLIED FOR TREATING INCOME FOR LETTING OUT AS TO WHETHER TO BE TREATED AS INCOME FROM HOUSE PROPERTY OR NOT HAVE BEEN LAID DOWN. KARNANI PROPERTIES LTD. -VS;- CIT (1971) 82 ITR 5 47 (SC)(PARA 4.1) CIT -VS.- NATIONAL STORAGE (P.) LTD. (1963) 48 IT R 577 (BORN.) EVEREST HOTELS LIMITED -VS.- CIT (1978) 114 ITR 7 79 (CAL.) 8. THE ASSESSEE ALSO SUBMITTED THAT AN IDENTICAL I SSUE CAME UP BEFORE THE HON'BLE ITAT KOLKATA IN THE CASE OF ASSESSEE'S GROUP CONCER N, NAMELY OBEROI BUILDING & INVESTMENT PVT LTD FOR A.Y.2005-06 WHEREIN THE HON' BLE ITAT DECIDED THE ISSUE IN FAVOUR OF THE REVENUE BY TREATING THE CONTRIBUTION RECEIVED FROM SHOP AS INCOME FROM HOUSE PROPERTY. THE ASSESSEE POINTED OUT THAT THE SAID ORDER DOES NOT HAVE BINDING EFFECT ON THE ASSESSEE INASMUCH AS THE OPERATION OF THE SAID ORDER HAS BEEN STAYED BY THE HON'BLE KOLKATA HIGH COURT ON APPEAL FILED BY T HE ASSESSEE. ITA. NOS.1641&1203/KOL/2014-BOMBAY PLAZA PVT.LTD A. Y.2006-07 & 2007-08 8 9. WITHOUT PREJUDICE TO THE ABOVE CONTENTIONS, THE ASSESSEE SUBMITTED THAT THE ASSESSEE SINCE ITS INCEPTION HAS BEEN OFFERING THE ABOVE INCOME AS BUSINESS INCOME AND THE SAME HAS NEVER BEEN CHALLENGED BY THE REVEN UE. IT WAS ARGUED THAT THOUGH THE PRINCIPLE OF RES-JUDICATA DOES NOT APPLY TO INCOME TAX MATTERS IT HAS BEEN HELD IN A NUMBER OF CASES INCLUDING THE APEX COURT THAT THE P RINCIPLE OF CONSISTENCY CANNOT BE IGNORED. RELIANCE IN THIS REGARD WAS PLACED ON THE FOLLOWING JUDGEMENTS: RADHASOAMI SATSANG VS. CIT (1992) 193 ITR 321(SC) CIT VS. A. K. J. SECURITY PRINTERS (2003) 264 ITR 2 76 H. A. SHAH & CO. VS. CIT (1956) 30 ITR 618, 625 THE ASSESSEE PRAYED THAT THE INCOME IN QUESTION BE TREATED AS BUSINESS INCOME. 10. THE CIT(A) IN THE APPEAL FOR A.Y.2007-08, HOWE VER, CONFIRMED THE ORDER OF AO BY OBSERVING AS FOLLOWS :- 3.2 IT IS SEEN THAT AN IDENTICAL ISSUE WAS INVOLVED IN THE APPELLANT'S GROUP CONCERN OBEROI BUILDING AND INVESTMENTS PVT. LTD. IN AY. 20 05-06. IN THAT CASE, UNDER SIMILAR FACTS AND CIRCUMSTANCES, MY PREDECESSOR HAD ALLOWED RELIEF. REVENUE FILED APPEAL AGAINST THE SAID ORDER. VIDE ITS ORDER DATED 23.07. 2010 IN ITA NO. 330/KO1/2008. HON'BLE TRIBUNAL REVERSED THE ORDER OF MY PREDECESS OR AND UPHELD THE ACTION OF THE ASSESSING OFFICER IN TREATING INCOME FROM SHOPPING SPACE AS 'INCOME FROM HOUSE PROPERTY'. AT THE TIME OF HEARING IT WAS INFORMED B Y THE APPELLANT THAT THE AFORESAID ORDER OF ITAT HAS BEEN DISPUTED BY THE APPELLANT BE FORE HON'BLE CALCUTTA HIGH COURT WHICH HAVE VIDE ITS ORDER DATED 4.10.10 STAYED OBJE CTION OF ORDER OF HON'BLE TRIBUNAL. ACCORDING TO THE APPELLANT IN VIEW OF THE HIGH COUR T'S ORDER, THE TRIBUNAL ORDER IS NO LONGER REQUIRED TO BE FOLLOWED. HOWEVER, IT IS SETT LED POSITION OF LAW THAT MERELY BECAUSE AN APPEAL HAS BEEN FILED BEFORE A HIGHER CO URT, WHICH HAS GRANTED STAY, THE ORDER OF LOWER COURT DOES NOT BECOME INVALID. AS LONG AS THE HIGHER COURT DOES NOT OVERRULE AND REVERSES THE ORDER OF THE LOWER COURT, THE LATT ER REMAINS VERY MUCH VALID. ADMITTEDLY, THE RELEVANT FACTS IN THE APPELLANT'S C ASE ARE PRACTICALLY IDENTICAL TO THAT IN THE CASE OF OBEROI BUILDING AND INVESTMENT PVT. LTD . FOR AY.2005-06. THEREFORE, I AM RESPECTFULLY FOLLOWING THE RATIO GIVEN BY HON'BLE T RIBUNAL IN THE CASE OF OBEROI BUILDING AND INVESTMENT PVT. LTD. IN AY.2005-06. THE ACTION OF THE ASSESSING OFFICER IS THEREFORE CONFIRMED AND GROUNDS NO. 1 TO 5 ARE REJECTED. 11. THE FACTS AND CIRCUMSTANCES ARE IDENTICAL IN A Y 2006-07. IN A.Y.2006-07 THE CIT(A) FOLLOWING THE ORDER PASSED IN A.Y.2007-08 UP HELD THE ORDER OF AO. WE MAY ALSO MENTION THAT THE FACTS ARE IDENTICAL IN A.Y.20 06-07 & 2007-08. THE REASONS GIVEN BY THE AO FOR TREATING THE INCOME FROM GIVING ON LI CENSE SHOPS BY THE ASSESSEE AS ITA. NOS.1641&1203/KOL/2014-BOMBAY PLAZA PVT.LTD A. Y.2006-07 & 2007-08 9 INCOME FROM HOUSE PROPERTY ARE ALSO IDENTICAL. AGG RIEVED BY THE AFORESAID ORDERS OF CIT(A) THE ASSESSEE HAS PREFERRED THE PRESENT APPEA LS BEFORE THE TRIBUNAL. 12. THE LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OU R NOTICE THAT THE ORDER OF THE HONBLE ITAT IN THE CASE OF M/S. OBEROI BUILDING AN D INVESTMENTS PVT. LTD., BASED ON WHICH THE CIT(A) CONFIRMED THE ACTION OF THE AO, WAS THE SUBJECT MATTER OF APPEAL BY THE ASSESSEE BEFORE THE HONBLE CALCUTTA HIGH CO URT AND THE HONBLE CALCUTTA HIGH COURT HAS ADMITTED THE APPEAL OF THE ASSESSEE BY AN ORDER DATED 06.12.2010 GRANTED UNCONDITIONAL STAY OF OPERATION OF THE ORDE R OF TRIBUNAL. IT WAS NEXT SUBMITTED BY HIM THAT THE ISSUE AS TO WHETHER INCOME FROM GIV ING ON LICENSE SHOPS, WHERE THE MAIN OBJECTS OF A COMPANY GIVING SHOPS ON LICENSE W AS TO ACQUIRE ON A LICENCE AND GRANT SPACE SO ACQUIRED ON SUB-LICENSE, WAS TO BE A SSESSED AS INCOME FROM HOUSE PROPERTY OR INCOME FROM BUSINESS HAS BEEN CONSID ERED BY THE HONBLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES AND INVESTM ENTS LTD. VS CIT 373 ITR 673(SC). IT WAS FURTHER POINTED OUT THAT THE HONBL E SUPREME COURT IN A VERY RECENT DECISION IN CIVIL APPEAL NO.6437 OF 2016 DATED 11.0 8.2016 IN THE CASE OF M/S. RAYALA CORPORATION PVT. LTD. VS ACIT AGAIN DEALT WITH THE QUESTION WHETHER INCOME DERIVED BY A PRIVATE LIMITED COMPANY FROM GIVING THE PROPER TY ON RENT WHERE THE MAIN OBJECTS OF THE ASSESSEE WAS THE BUSINESS OF GIVING ON RENT ITS PROPERTIES AS TO WHETHER THE SAME HAS TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSI NESS OR INCOME FROM HOUSE PROPERTY. THE HONBLE SUPREME COURT REFERRED TO I TS EARLIER DECISION IN THE CASE OF CHENNAI PROPERTIES AND INVESTMENTS LTD. (SUPRA) HEL D AS FOLLOWS :- 9 . UPON HEARING THE LEARNED COUNSEL AND GOING THR OUGH THE JUDGMENTS CITED BY THE LEARNED COUNSEL, WE ARE OF THE VIEW THAT THE LAW LA ID DOWN BY THIS COURT IN THE CASE OF CHENNAI PROPERTIES (SUPRA) SHOWS THE CORRECT POSITI ON OF LAW AND LOOKING AT THE FACTS OF THE CASE IN QUESTION, THE CASE ON HAND IS SQUARELY COVERED BY THE SAID JUDGMENT. 10. SUBMISSIONS MADE BY THE LEARNED COUNSEL APPEA RING OR THE REVENUE IS TO THE EFFECT THAT THE RENT SHOULD BE THE MAIN SOURCE OF INCOME O R THE PURPOSE FOR WHICH THE COMPANY IS INCORPORATED SHOULD BE TO EARN INCOME FROM RENT, SO AS TO MAKE THE RENTAL INCOME TO BE THE INCOME TAXABLE UNDER THE HEAD 'PROFITS AND G AINS OF BUSINESS OR PROFESSION'. IT IS AN ADMITTED FACT IN THE INSTANT CASE THAT THE AS SESSEE COMPANY HAS ONLY ONE BUSINESS AND THAT IS OF LEASING ITS PROPERTY AND EARNING REN T THEREFROM. THUS, EVEN ON THE FACTUAL ASPECT, WE DO NOT FIND ANY SUBSTANCE IN WHAT HAS BE EN SUBMITTED BY THE LEARNED COUNSEL APPEARING FOR THE REVENUE. ITA. NOS.1641&1203/KOL/2014-BOMBAY PLAZA PVT.LTD A. Y.2006-07 & 2007-08 10 11. THE JUDGMENT RELIED UPON BY THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE SQUARELY COVERS THE FACTS OF THE CASE INVOLVED IN T HE APPEALS. THE BUSINESS OF THE COMPANY IS TO LEASE ITS PROPERTY AND TO EARN RENT A ND THEREFORE, THE INCOME SO EARNED SHOULD BE TREATED AS ITS BUSINESS INCOME. 12. IN VIEW OF THE LAW LAID DOWN BY THIS COURT IN T HE CASE OF CHENNAI PROPERTIES (SUPRA) AND LOOKING AT THE FACTS OF THESE APPEALS, IN OUR O PINION, THE HIGH COURT WAS NOT CORRECT WHILE DECIDING THAT THE INCOME OF THE ASSESSEE SHOU LD BE TREATED AS INCOME FROM HOUSE PROPERTY. 13. WE, THEREFORE, SET ASIDE THE IMPUGNED JUDGMENTS AND ALLOW THESE APPEALS WITH NO ORDER AS TO COSTS. WE DIRECT THAT THE INCOME OF THE ASSESSEE SHALL BE SUBJECT TO TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSI ON. 13. OUR ATTENTION WAS ALSO DRAWN TO THE DECISION O F THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF SHAM BURLAP CO. LTD VS CIT 380 ITR 1 51 (CAL) WHEREIN IDENTICAL PROPOSITION WAS LAID DOWN. OUR ATTENTION WAS ALSO D RAWN TO THE VARIOUS CLAUSES IN THE LEAVE AND LICENCE AGREEMENTS AND IT WAS SUBMITTED T HAT IN THE PRESENT CASE THE AMOUNTS RECEIVED BY THE ASSESSEE WAS FOR GRANTING OF SUB-LI CENSE AND THEREFORE COUPLED WITH THE FACT THAT THE ASSESSEES MAIN OBJECT WAS ACQUIR ING ON LICENSE PROPERTIES AND GIVING THEM ON SUB-LICENCE AND DERIVING INCOME THEREFROM, SUCH INCOME FROM SUB-LICENSING HAS TO BE REGARDED AS INCOME UNDER THE HEAD INCOME FROM BUSINESS. THE LD. DR RELIED ON THE ORDER OF CIT(A)/AO. 14. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. A PERUSAL OF THE RECORD SHOWS THAT THE ASSESSE HAD ENTERED INTO AN AGREEMENT DATED 16.04.1991 UNDER WHICH IT GOT ON A LEAVE AND LICENCE BASIS 900 0 SQ.FT. OF SHOPPING AREA FROM M/S.THE EAST INDIA HOTELS LTD., IN OUT OF THIS SQ.F T IN HOTEL OBEROI TOWERS, BOMBAY RECLAMATION ESTATE, MUMBAI, IN AN AREA EAR MARKED A S SHOPPING AREA ON PAYMENT OF MONTHLY LICENCE FEE COMPUTED AT RS.1.50 PER MONTH. THE LICENCE WAS NOT ONLY FOR USE OF THE SHOP AREA BUT ALSO FOR USE OF FACILITIES LIK E AIR CONDITIONERS, USE OF ELEVATORS ETC., SECURITY SERVICE CHARGES, SANITARY SERVICES ETC. TH E OPERATIVE PORTION OF THE LEASE DEED IS AS FOLLOWS :- (THE HOTEL COMPANY MEANS THE EAST INDIA HOTELS LTD. AND THE SUBSIDIARY MEANS THE ASSESSEE) THE HOTEL COMPANY AND LICENSEE IN CONCURRENCE HAV E AGREED TO GIVE LICENCE TO THE SUBSIDIARY AND THE & SUBSIDIARY HAS AGREED TO TAKE OVER THE SAID AREA IN THE SHOPPING ITA. NOS.1641&1203/KOL/2014-BOMBAY PLAZA PVT.LTD A. Y.2006-07 & 2007-08 11 CENTRE FROM THE HOTEL COMPANY AND LICENSEE ON LICE NCE COMMENCING ON AND FROM 15 TH APRIL, 1991 AND ENDING 'ON 31ST DECEMBER, 2033. (2) THE SUBSIDIARY SHALL OBSERVE AND PERFORM THE FO LLOWING TERMS AND CONDITIONS AND STIPULATIONS, NAMELY :- (I) (A) TO PAY TO THE HOTEL COMPANY COMPENSATION FO R THE SAID LICENCE AT THE RATE OF RS.1.50 PER MONTH DURING THE PERIOD OF THE LICENCE AND PRO-RATA COMPENSATION FOR ANY BROKEN PERIOD; TO PAY COMPENSATION FOR EACH MONTH O N OR BEFORE THE 10TH DAY OF THE MONTH FOLLOWING THE MONTH FOR WHICH IT IS DUE AND F OR ANY BROKEN PERIOD AT THE END OF SUCH PERIOD. (B) TO PAY TO THE HOTEL COMPANY FOR MAKING AVAILABL E AIR- CONDITIONING FACILITIES, AN AMOUNT CALCULATED AT THE RATE OF RS.8.50 PER MONTH DURING THE PERIOD OF THE LICENCE AND PRO-RATA FOR ANY BROKEN PERIOD, SUCH PAYMENT TO BE MADE ALONG WITH COMPENSATION UNDER THE PRECEDING SUB-CLAUSE (A). (C) TO PAY TO THE HOTEL COMPANY RS. 10/- PER SQ. FT . PER MONTH FOR SERVICE CHARGES WHICH INCLUDE USE OF ELEVATORS, SECURITY SERVICES, SANITARY SERVICES, COMMON LIGHTING AND MUSIC AND OTHER RELATED SERVICES. (II) TO REIMBURSE TO THE HOTEL COMPANY ACTUAL OUT OF POCKET COSTS AND EXPENSES ON A BILL BEING SUBMITTED FOR TELEPHONE, AND OTHER SERVI CES, AND FOR MAINTENANCE, REPAIRS AND OTHER OUTGOINGS. (III) TO PAY OR CAUSE TO BE PAID TO THE HOTEL COMPA NY ELECTRICITY CHARGES AND METER HIRE IN RESPECT OF ELECTRICITY CONSUMED IN THE SHOPS COM PRISED IN THE SHOPPING AREA ON PRESENTATION OF THE BILLS THEREOF. IN CLAUSE-(XIV) IT HAS BEEN AGREED BETWEEN THE PART IES AS FOLLOWS :- (XIV) IT IS CLEARLY AGREED AND UNDERSTOOD THAT TH E LEAVE AND LICENCE HEREBY, GRANTED SHALL BE IRREVOCABLE FOR THE PERIOD MENTIONED IN CL AUSE 1 ABOVE, AND EVEN IF THE SUBSIDIARY COMMITS DEFAULT IN OBSERVANCE AND PERFO RMANCE OF ANY OF THE TERMS AND CONDITIONS HEREIN CONTAINED THE HOTEL COMPANY SHAL L NOT BE ENTITLED TO REVOKE THE LICENCE, BUT ITS REMEDY FOR ANY SUCH BREACH ON THE PART OF THE SUBSIDIARY SHALL ONLY BE IN DAMAGES. CLAUSE-7 OF THE AGREEMENT PROVIDES AS FOLLOWS :- (7) IT IS HERE BY AAGREED BY AND BETWEEN THE PART IES HERETO AS FOLLOWS : (I) THIS AGREEMENT DOES NOT C R E A T E ANY INTERES T OR ANY OTHER RIGHT IN FAVOUR OF THE SUBSIDIARY IN THE SAID SHOPPING CENTRE OR ANY PART THEREOF BUT IT IS MERE LICENCE TO USE THE SAID SHOPPING CENTRE GIVEN TO THE SUBSIDIARY. (II) THE HOTEL COMPANY SHALL THROUGHOUT THE PERIOD OF THE LICENCE HAVE FULL CONTROL OVER THE SAID SHOPPING CENTRE A ND THE SUBSIDIARY SHALL HAVE ONLY ITA. NOS.1641&1203/KOL/2014-BOMBAY PLAZA PVT.LTD A. Y.2006-07 & 2007-08 12 THE LICENCE TO USE IT FOR THE PERIO D AND ON THE TERMS AND CONDITIONS HERE IN SET OUT. (III) THE HOTEL COMPANY SHALL RETAIN WITH ITSELF TH E KEY/S OF THE MAIN ENTRANCE/S' OF THE SAID SHOPPING CENTRE AND DELIVER TO THE SUBSIDIARY ONLY THE DUPLICATE/S THEREOF. (V) THE SUBSIDIARY SHALL BEAR AND PAY ALL THE COSTS , CHARGES AND EXPENSES OF AND INCIDENTAL TO THE PREPARATION AND EXECUTION OF THE LICENCE IN TRIPLICATE. 15. IN THE LIGHT OF THE AFORESAID CLAUSES OF THE A GREEMENT BETWEEN THE PARTIES THE QUESTION TO BE DECIDED IS AS TO WHETHER THE RELATIO NSHIP BETWEEN THE PARTIES COULD BE SAID TO BE LICENSOR OR LICENSEE OR LESSOR OR LESSEE . EXCEPT FOR CLAUSE (XIV) ALL OTHER TERMS OF THE AGREEMENTS BETWEEN THE PARTIES CLEARLY INDICATES THAT THE RELATIONSHIP BETWEEN THE PARTIES WAS THAT OF THE LICENSOR OR LIC ENCEE. THE TEST FOR DETERMINING WHETHER A TRANSACTION IS IN THE NATURE OF LICENSE OR LEASE HAS BEEN LAID DOWN IN JUDICIAL PRONOUNCEMENTS. BEFORE DISTINGUISHING THE CONCEPT OF LEASE AND LICENCE, FI RST OF ALL, LET US SEE THE DEFINITION OF BOTH THESE TER MS. SEC.105 OF THE TRANSFER OF PROPERTY ACT, 1882 DEFINES A LEASE AS TRANSFER OF A RIGHT TO ENJOY AN IMMOVABLE PROPERTY FOR A CERTAIN PERIOD, IN CONSIDERATION OF PRICE PAID OR P ROMISED TO BE PAID IN CASH OR KIND. SEC.52 OF THE INDIAN EASEMENTS ACT, 1882 DEFINES LI CENCE AS A RIGHT TO DO OR CONTINUE TO DO, IN OR UPON THE IMMOVABLE PROPERTY OF THE GRA NTOR, SOMETHING WHICH WOULD IN THE ABSENCE OF SUCH RIGHT DOES NOT AMOUNT TO AN EAS EMENT OR AN INTEREST IN THE PROPERTY. KEEPING IN MIND THESE DEFINITIONS LET US NOW GO THR OUGH THE VERY IMPORTANT POINTS WHICH DISTINGUISH A LEASE FROM A LICENCE: LEASE IS A TRANSFER OF INTEREST, BUT LICENCE IS NOT. GENERALLY LEASE CAN BE ASSIGNED, BUT A LICENCE GENERALLY CANNOT BE ASSIGNED. A LEASE BEING A PROPRIETARY RIGHT IS A TRANSFERABLE INTEREST. LICENCE THE OTHER HAND CANNOT BE TRANSFERRED BY VIRTUE OF IT BE ING A PERSONAL RIGHT. HOWEVER, THERE EXIST CERTAIN EXCEPTIONS SUCH AS MOVIE TICKETS. A LESSEE IS REQUIRED TO HAVE EXCLUSIVE POSSESSION OF THE PROPERTY FOR ITS PROPER ENJOYMENT. BUT, A LI CENCE IS CREATED WITHOUT TRANSFER OF POSSESSION. A LICENSEE IS REQUIRED TO SHARE THE POSSESSION WITH THE GRANTOR (WHO IS STILL THE OWNER) AND HAS N OT PARTED WITH THE INTEREST. IN LEASE EXCLUSIVE POSSESSION IS OBTAINED AND H ENCE LESSEE HAS EXCLUSIVE CONTROL OVER THE PROPERTY. NORMALLY IN LICENCE POSSESSION R EMAINS WITH THE GRANTOR. IN ASSOCIATED HOTELS OF INDIA LTD. V. R. N. KAPOOR, AI R 1959 SC , THE FOLLOWING ITA. NOS.1641&1203/KOL/2014-BOMBAY PLAZA PVT.LTD A. Y.2006-07 & 2007-08 13 GUIDELINES WERE LAID DOWN BY THE SUPREME COURT OF I NDIA FOR THE PURPOSE OF DISTINGUISHING BETWEEN LEASE AND LICENCE. THEY ARE AS FOLLOWING: 1. WHETHER A DOCUMENT CREATES A LEASE OR A LICENCE, TH E SUBSTANCE OF INSTRUMENT MUST BE REFERRED RATHER THAN THE FORM. 2. THE REAL TEST IS THE INTENTION OF THE PARTIES. 3. IF A DOCUMENT CREATES AN INTEREST IN THE PROPERTY, IT IS A LEASE. BUT IF IT ONLY PERMITS ANOTHER TO MAKE USE OF THE PROPERTY ON WHIC H LEGAL POSSESSION CONTINUES WITH OWNER, IT IS A LICENCE. 4. IF UNDER THE DOCUMENT, TRANSFEREE GETS EXCLUSIVE PO SSESSION OF THE PROPERTY HE IS PRIMA FACIE A LESSEE. BUT CIRCUMSTANCES MAY B E ESTABLISHED WHICH NEGATIVE THE INTENTION OF PARTIES TO CREATE A LEASE . THEREFORE, DIFFERENCE BETWEEN EXCLUSIVE POSSESSION AND EXCLUSIVE OCCUPATI ON CANNOT BE DISREGARDED. 16. APPLYING THE ABOVE TESTS TO THE FACTS OF THE P RESENT CASE, ESPECIALLY IN THE LIGHT OF CLAUSE-2 AND 7 OF THE LEAVE AND LICENSE AGREEMENT, WE HAVE NO HESITATION IN COMING TO THE CONCLUSION THAT ON THE FACTS OF THE PRESENT CAS E THE ASSESSEE WAS ONLY LICENCEE OF THE PREMISES OWNED BY M/S. EAST INDIA HOTELS LTD., AND THE PARTIES INTENDED IT TO BE LICENSE AND THE AGREEMENT DID NOT CREATE AN INTERES T IN THE PROPERTY OWNED BY THE LICENSOR AND THAT THE LICENSEE DID NOT HAVE EXCLUSI VE POSSESSION OF THE PROPERTY. AS A LICENSEE IT HAD GRANTED SUB-LICENCE TO VARIOUS PART IES AND DERIVED INCOME THERE FROM. ONCE WE COME TO THE CONCLUSION THAT THE ASSESSEE IS ONLY A LICENCEE, THEN IT CAN SAFELY BE SAID THAT THE PROVISIONS OF SEC.22 READ WITH SEC .27(IIIB) OF THE ACT ARE NOT ATTRACTED AND HENCE THE INCOME IN QUESTION CANNOT BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 17. THE ASSESSEE WAS NOT ONLY DERIVING LICENCE FEE BUT ALSO DERIVING SERVICE FEE AND OTHER FEES WHICH WERE AS FOLLOWS :- COMPENSATION PAID TO THE EIH LIMI TED DURING 2005-2006 MONTH LICENCE FEES(RS) SERVICE FEES(RS.) AIR-COND FEES(RS) TOTAL APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER 12,657.00 12,657.00 12,657.00 12,657.00 12,657.00 12,657.00 12,657.00 12,657.00 12,657.00 42,190.00 42,190.00 42,190.00 42,190.00 42,190.00 42,190.00 42,190.00 42,190.00 42,190.00 71,723.00 71,723.00 71,723.00 71,723.00 71,723.00 71,723.00 71,723.00 71,723.00 71,723.00 126,570.00 126,570.00 126,570.00 126,570.00 126,570.00 126,570.00 126,570.00 126,570.00 126,570.00 ITA. NOS.1641&1203/KOL/2014-BOMBAY PLAZA PVT.LTD A. Y.2006-07 & 2007-08 14 JANUARY FEBRUARY MARCH 12,657.00 12,657.00 12,657.00 42,190.00 42,190.00 42,190.00 71,723.00 71,723.00 71,723.00 126,570.00 126,570.00 126,570.00 TOTAL 151,884.00 506,280.00 860.280.00 1,518,840.00 SIMILARLY EVEN FOR A.Y.2007-08, THE CONSIDERATION R ECEIVED BY THE ASSESSEE AS LICENSOR FROM THE SUB-LICENSEE, COMPRISED OF LICENC E FEES AND SERVICE FEE AND AIR CONDITION FEES. KEEPING IN MIND THE OBJECTS OF THE ASSESSEE AND KEEPING IN MIND THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, IT CAN BE SAFELY CONCLUDED THAT THE ASSESSEE CARRIED ON A SYSTEMATIC AND REGULAR ACTIVI TY IN THE NATURE OF BUSINESS AND THEREFORE THE INCOME FROM GRANTING THE PREMISES ON SUB-LICENSE WAS TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS. THE LATEST JUD ICIAL PRONOUNCEMENT IN THE CASE OF CHENNAI PROPERTIES AND INVESTMENTS LTD. VS CIT (SUP RA) WAS NOT AVAILABLE FOR CONSIDERATION BEFORE THE TRIBUNAL WHEN THE TRIBUNAL PASSED ITS ORDER IN THE CASE OF ANOTHER GROUP COMPANY BASED ON WHICH THE CIT(A) CON FIRMED THE ACTION OF AO. WITH THE CHANGE UNDER LAW LAID DOWN BY THE HONBLE SUPRE ME COURT, WE ARE OF THE VIEW THAT THE INCOME IN QUESTION HAS TO BE ASSESSED UNDE R THE HEAD INCOME FROM HOUSE PROPERTY. IN VIEW OF THE DECISION OF THE HONBLE S UPREME COURT IN THE CASE OF CHENNAI PROPERTIES AND INVESTMENTS LTD. (SUPRA), WE ARE OF THE VIEW THAT THE QUESTION WHETHER THE ASSESSEE IS A DEEMED OWNER U/S.22 READ WITH SEC.27(IIIB) OF THE ACT, NO LONGER ASSUMES IMPORTANCE. FOR THE REASONS GIVEN A BOVE WE ALLOW THE APPEALS OF THE ASSESSEE. 18. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 02.09. 2016. SD/- SD/- [P.M.JAGTAP] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL ME MBER DATED : 02.09.2016. [RG PS] ITA. NOS.1641&1203/KOL/2014-BOMBAY PLAZA PVT.LTD A. Y.2006-07 & 2007-08 15 COPY OF THE ORDER FORWARDED TO: 1.BOMBAY PLAZA PVT. LTD., 4, MANGOE LANE, 6 TH FLOOR, KOLKATA-700001. 2. A.C.I.T.- CIRCLE-5, KOLKATA. 3. CIT(A)-VI, KOLKATA 4. C.I.T.-II, KOLKATA . 5.CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER AS STT.REGISTRAR, ITAT, KOLKATA BENCHES