ACIT, Jaipur V. RATAN MAHAL PROPERTIES PVT. LTD., Jaipur

ITA 239/JPR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99446 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 28-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: G G MUNDRA C A DHK
• Keywords: Business income; Question of law; Commercial expediency
• Section: 28

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 239/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 . THE ACIT, CIRCLE-6, JAIPUR. CUKE VS. M/S. RATAN MAHAL PROPERTIES PVT. LTD., D-34, SUBHASH MARG, C-SCHEME, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AACCR 2169 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI KAILASH MANGAL (JCIT) /KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI G.G. MUNDRA (C.A.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 20.10.2015. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 30/10/2015. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT (A)-II, JAIPUR DATED 17.1.2014 FOR THE A.Y. 2009-10. THE S OLE GROUND RAISED IN THE APPEAL IS AS UNDER :- WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE DIS ALLOWANCE U/S 24(A) OF THE I.T. ACT AND TREATING RENTAL INCOME AS INCOME FROM HOUSE PROPERTY INSTEAD OF INCOME FROM BUSINESS AN D PROFESSION, WITHOUT APPRECIATING THE FACT THAT RENTAL INCOME WA S EARNED FROM STOCK IN TRADE. 2 ITA NO. 239/JP/2014 M/S. RATAN MAHAL PROPERTIES LTD. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS CARRYING ON THE BUSINESS AS BUILDERS AND CONTRACTORS. AFTER ITS INCORPORATION, THE ASSESSEE HAS ACQUIRED PLOT NO. D- 34, SUBASH MARG, C-SCHEME, JAIPUR ADMEASURING 2400 SQ. YARDS THROUGH REGISTERED SALE DEED DATED 26.07.1988. THE PROJECT OF THE ASS ESSEE WAS APPROVED BY THE JAIPUR DEVELOPMENT AUTHORITY (JDA) ON 19.10.2006 AND THERE AFTER THE CONSTRUCTION OF THE COMPLEX WAS STARTED IN F.Y. 2006-07 AND WAS COMPLET ED ON 30.09.2008. IN THE CONSTRUCTED AREA, THE PROPERTY CONSISTS OF GROUND F LOOR, MEZZANINE FLOOR AND SEVEN STOREY BUILDING. AS PER THE ASSESSEE THE TOTAL SALE ABLE AREA WAS 45,577.50 SQ. FT. IN THE A.Y. 2009-10, THE ASSESSEE HAS LEASED OUT THE ENTIR E THIRD FLOOR TO M/S. INDUS TOWERS LTD. VIDE REGISTERED LEASE DEED FOR 9 YEARS. SIMIL ARLY THE ASSESSEE HAS ALSO LET OUT THE FOURTH FLOOR TO M/S. ERICSSON INDIA PVT. LTD., DHAKA HOUSE, 17/18 WEA PUSA ROAD , KAROL BAGH, NEW DELHI. THE MONTHLY RENT IN RESPECT OF M/ S. INDUS TOWERS LTD. WAS RS. 3,67,660/- (RS. 33,08,942/- FOR THE PERIOD MAY, 200 8 TO JANUARY, 2009 ) AND MONTHLY RENT OF RS. 3,62,423/- PER MONTH FOR THE 4 TH FLOOR LEASED OUT TO M/S. ERICSSON INDIA PVT. LTD. (RS. 32,61,808/- FOR THE PERIOD JULY, 2008 TO MARCH, 2009). 2.1. THE ASSESSEE HAS DECLARED THE TOTAL RECEIPT FR OM LEASE RENTALS OF RS. 65,70,750/- ON ACCOUNT OF LETTING OUT OF 3 RD AND 4 TH FLOOR AND HAS CLAIMED DEDUCTION UNDER SECTION 24(A) OF THE IT ACT TREATING THE LEASE RENT AS INCO ME FROM THE HOUSE PROPERTY. 2.2. THE ASSESSEE WAS CALLED UPON TO JUSTIFY THE CL AIM OF DEDUCTION UNDER SECTION 24(A). THE ASSESSEE HAS SUBMITTED REPLIES ON 13.10. 2011 AND 20.11.2013. THE AO HAS EXAMINED THE REPLIES OF THE ASSESSEE. HOWEVER, HE W AS NOT SATISFIED WITH THE REPLY AND HE HAS HELD THAT THE ASSETS LEASED OUT BY THE ASSES SEE WERE THE BUSINESS ASSETS AND 3 ITA NO. 239/JP/2014 M/S. RATAN MAHAL PROPERTIES LTD. INCOME FROM THE LEASED PROPERTY IS BUSINESS INCOME. THEREFORE, THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION UNDER SECTION 24(A) OF THE IT ACT. THE REASONING GIVEN BY THE AO IS REPRODUCED HEREIN BELOW :- THE REPLY OF THE ASSESSEE WAS EXAMINED ON THE FAC TS AND CIRCUMSTANCES OF THE CASE, IN THE LIGHT OF DECISION OF THE HONBL E SUPREME COURT AND PROVISIONS OF INCOME TAX ACT, 1961 AS UNDER :- A. AS PER MEMORANDUM OF ASSOCIATION OF THE COMPANY THE MAIN OBJECT OF THE COMPANY WAS TO I. MANAGE AND DEED IN LAND BUILDINGS AND OTHER PROPERT IES. II. TO CARRY ON THE BUSINESS OF BUILDERS OR CONTRACTORS AND SO ON BUT MAIN OBJECT OF THE COMPANY WAS NOT TO LET OUT T HE PROPERTY AND EARN RENTAL INCOME. B. SECTION 22 OF THE I.T. ACT SPECIALLY PROVIDES FOR C HARGE OF RENT RECEIVED OR RECEIVABLE UNDER THE HEAD INCOME FROM HOUSE PROP ERTY AND SPECIAL PROVISIONS FOR COMPUTATION ARE ALSO PROVIDED, INCOM E FROM LETTING OUT OF IMMOVEABLE PROPERTY IS GENERALLY ASSESSABLE UNDE R THE HEAD INCOME FROM HOUSE PROPERTY EXCEPT IS CERTAIN CIRCUMSTANCES . EXCEPTION TO GENERAL RULE THAT INCOME FROM LETTING OUT OF PROPER TY IS ASSESSABLE UNDER SECTION 22 IS PROVIDED BY SECTION 22, ITSELF IN WARDS. .. OTHER THAN SUCH PORTIONS OF SUCH PROPERTY AS HE MAY OCCUPY FOR THE PURPOSES OF ANY BUSINESS OR PROFESSI ON CARRIED ON BY HIM, THE PROFITS OF WHICH ARE CHARGEABLE TO INCOME- TAX, .. WHERE PROPERTY IS OCCUPIED FOR THE PURPOSE OF BUSIN ESS AND LETTING IS INCIDENTAL TO MAIN BUSINESS INCOME FROM SUCH ACT IVITY WOULD NOT BE ASSESSABLE U/S 22 OF THE I.T. ACT, BUT AS BUSINESS INCOME. C. FROM THE CHART MENTION SUPRA REVEALING YEAR WISE SA LE OF AREA OF DIFFERENT FLOOR CLEARLY REVEALS THAT FACT THAT THE G BUSINESS PARK BUILDING WAS STOCK IN TRADE OF THE ASSESSEE. IT WAS LET OUT TO ATTRACT POTENTIAL BUYER IN ORDER TO ENSURE THE INTENDED BUY ER THAT HIS INVESTMENT/IN PURCHASE OF THE PROPERTY WOULD BRING HIM FRUITFUL RETURN. IT IS A PART OF THE BUSINESS ACTIVITY TO PROMPT THE SALE OF THE STOCK. THUS THE ENTIRE PROPERTY HELD BY THE ASSESSEE COMPA NY WAS HIS BUSINESS ASSET AND ITS EXPLOITATION COULD BE IN THE NATURE OF BUSINESS ACTIVITY AND ASSESSABLE AS BUSINESS INCOME. 4 ITA NO. 239/JP/2014 M/S. RATAN MAHAL PROPERTIES LTD. D. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF DEVELOPING PROPERTY AND OFFICE PREMISES CONSTRUCTED ARE ITS ST OCK IN TRADE OF BUSINESS AS DEPICTED IN BOOKS OF ACCOUNTS. THOUGH T HE PROPERTY IS INTENDED TO BE SOLD BUT DUE TO VARIOUS COMMERCIAL R EASONS AS THE PROPERTY DOES NOT HAVE IMMEDIATE BUYERS IT WAS LEAS ED OUT TO SHOW ITS UTILITY AND CAPACITY TO FETCH RETURN. THE FACT THAT WHOLE OF THE AREA CONSTRUCTED WAS NOT LEASED OUT BUT ONLY A PART THEREOF AND THAT TOO, TO ATTRACT POTENT IAL CUSTOMERS, SUPPORT THE CONTENTION THAT THOUGH LEASED THE PROPE RTY IS STILL BEING USED FOR THE PURPOSE OF BUSINESS. AS A PRUDENT BUSI NESS PERSONS, THE ASSESSEE IS NOT LETTING ITS COMMERCIAL PROPERTY REM AIN IDLE AND EARNING LEASE RENT FOR ITS USED, TILL IT FINDS POTENTIAL BU YER AT THE RIGHT PRICE IT CAN BE CONCLUDED THAT CHARACTER OF THE ASSETS IN TH E HANDS OF THE ASSESSEE REMAINS COMMERCIAL ASSET, STOCK IN TRADE O F BUSINESS, DESPITE IT BEING LEASED OUT. NOW IT CAN BE INFERRED THAT LE ASED INCOME IS NOT FALLING WITHIN THE PROVISIONS OF SECTION 22 AND THE SAME IS BUSINESS INCOME. SUCH A TRANSACTION OF LEASING IS IN THE NAT URE OF TRADE IN BUSINESS AND INCOME WOULD BE ASSESSABLE UNDER THE H EAD PROFIT AND GAINS OF BUSINESS UNDER SECTION 28 OF THE I.T. ACT, 1961. E. 5531 SQ. FT AREA OF THE THIRD FLOOR WAS SOLD DURING THE RELEVANT PREVIOUS YEAR (20.01.2009) TO SHRI NEELAM JI MODI FOR RS. 2, 11,00,000/-. IT IS THE VERY PREMISES LEASED OUT TO INDUS TOWERS LTD. F OR THE PERIOD OF NINE YEARS. FROM THE LANGUAGE OF THE SALE DEED SOME IMPORTANT FACTS MAY BE INFERRED AS UNDER :- **PWAFD **FOSRK** ,D FUEKZ.K DEIUH GS RFKK FOSRK DK DK;Z D`F'K HKWFE IJ CGQEAFTYK FUEKZ.K DK;Z DJOKDJ MLDKS FO; DJUS DK GS RFKK IZFKEI{K US MDR I YKV IJ FUEKZ.K BLH MN~NS'; LS FD;K GS IZFKEI{K DKS VIUS MN~NS';KSA DH IWFRZ GSRW :IK;KSA DH VKO';DRK GKSUS DS DKJ.K------------------- --(PARA-12, PAGE-6 OF THE SALE DEED) ;G FD **SRK** **F}RH;I{K** DKS BL FO; I= DS }KJK CSPH X;H LEIFRR **FO;** US IWOZ ESA GH ESLLZ B.ML VKOLZ FYFEVSM DK S 9 LKY DH VOF/K DS FY;S YHT IJ NS J[KH GS FTLDK YHT MHM FOSRK ,OAE ES LLZ B.ML VKOLZ FYFEVSM DS E/; FNUKAD 28 VIZSY LU 2008 BZLOH DKS FU'IKFNR F D;K-----------------BL FO; DH LWPUK F}RH;I{K DKS ,YKFU;K DJK FN;K GS VKSJ BL F O; DH LWPUK ESLLZ B.ML 5 ITA NO. 239/JP/2014 M/S. RATAN MAHAL PROPERTIES LTD. VKOLZ FYFEVSM DKS NS NH GS A VC **SRK** F}RH;I{K D KS ;G IW.KZ VF/KDKJ GKSXK FD OG MDR CSPH X;H LEIFRR DH YHT JKFK ESLLZ B.ML VKOLZ FYFEVSM YSLH LS VIU UKE LS IZKIR DJS RFKK **SRK** BL YHT DKS VI USN UKE LS GLRKURFJR DJOK LDSAXS VKSJ YHT 'KQNK LEIFRR [KKYH GKSUS IJ MLDK DC TK HKH **SRK** **F}RH;I{K** DKS IZKIR DJUS DK IW.KZ VF/KDKJ GKSXKA MDR YHT MHM ESA TKS HKH VF/KDKJ IZFKEI{K US ESLLZ B.ML VKOLZ FY- DKS IZNKU DJ J[KKS GSA OS LHKH VF/KDKJ F}RH;I{K DKS YHT DH VOF/K ESA YHT DH VOF/K ESA YHT 'KQN LEIFRR [KKYH GKSUS IJ HKH ;FKKOR IZKIR JGSAXS BLESA IZFKEI{K DKS FDLH IZDKJ DH DKSBZ VKIFRR DJUS DKS VF/KDKJ UGHA GKSXKA** (PARA-4,PAGE-7 OF SALE DEED) FROM THE ABOVE EXCERPTS IT IS OBVIOUS THAT THE MAIN OBJECT OF THE ASSESSEE COMPANY WAS TO CONSTRUCT AND SALE THE COMMERCIAL BU ILDINGS. A PORTION OF THE PROPERTY WAS LET OUT WITH THE INTENTION TO EARN SOME INCOME FROM THE IDLE COMMERCIAL ASSET AND WAIT FOR THE BETTER PROSP ECTIVE CUSTOMERS. THIS FACT IS FURTHER EVIDENT FROM THE FACTS THAT THE PUR CHASER OF THIRD FLOOR SHRI NEELAM MODI AGREED TO THE TERMS OF LEASE BETWEEN TH E ASSESSEE AND M/S. INDUS TOWERS LTD. ENTERED INTO PRIOR TO THE SALE OF THE PROPERTY TO HIM AND ALLOWED POSSESSION TO THE M/S. INDUS TOWERS LTD . IN ACCORDANCE WITH THE TERMS OF THE LEASE. F. UPTO THE F.Y. 2010-11 EXCEPT GROUND AND SEVENTH FLO OR THE TOTAL COMMERCIAL PROPERTY G BUSINESS PARK HAS BEEN SOLD . IT INDICATES THAT ASSET WERE CONSTRUCTED AND SOLD AS STOCK IN TRADE. A PART OF THE STOCK WAS LEASED OUT UNDER COMMERCIAL EXPEDIENCY FOR IMPR OVEMENT IN DEMAND. THUS INCOME FROM LEASING IS BUSINESS INCOME AS EXPLOITATION OF BUSINESS ASSETS AND NOT EXPLOITATION OF OWNERSHI P RIGHTS. 3. FEELING AGGRIEVED BY THE ORDER PASSED BY THE AO, THE ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A), WHO AFTER CONSIDERING THE VARIO US JUDGMENTS PASSED BY THE TRIBUNAL AND THE HIGH COURTS , MORE PARTICULARLY JUDGMENT PA SSED BY THE JAIPUR BENCH OF THE IN THE MATTER OF M/S. MAHIMA REAL ESTATE PVT. LTD. IN I TA NO. 818/JP/2011 AND OF M/S. VIBHUTI FINANCIAL SERVICES PVT. LTD. IN ITA NO. 313 /JP/2011 HAS HELD THAT THE ASSESSEE IS 6 ITA NO. 239/JP/2014 M/S. RATAN MAHAL PROPERTIES LTD. ENTITLED TO DEDUCTION UNDER SECTION 24(A) OF THE IT ACT. THE REASONING GIVEN BY LD. CIT (A) IN PARA 2.3 ARE AS UNDER :- 2.3. I HAVE CONSIDERED THE FACTS OF THE CASE; ASS ESSMENT ORDER AND APPELLANTS WRITTEN SUBMISSION. ASSESSING OFFICER T REATED RENT INCOME RECEIVED FROM UNSOLD STOCK OF PROPERTY BUSINESS AS BUSINESS INCOME AS AGAINST HOUSE PROPERTY INCOME DECLARED BY THE APPEL LANT. AS A RESULT OF THIS, APPELLANT WAS NOT ALLOWED 30% DEDUCTION UNDER SECTION 24(A) OF IT ACT. THE REASONS GIVEN BY THE AO FOR MAKING SUCH D ISALLOWANCE WAS THAT APPELLANT WAS INVOLVED IN THE BUSINESS OF CONSTRUCT ION OF PROPERTY AND, THEREFORE, UNSOLD PROPERTY WAS STOCK IN TRADE. ANY INCOME DERIVED FROM STOCK IN TRADE IS BUSINESS INCOME. HE ALSO EXAMINED APPELLANTS OBJECTIVE WHICH NO WHERE MENTIONED PROPERTY RENTAL AS ITS ACT IVITY. ON THE OTHER HAND APPELLANT SUBMITTED THAT ANY RENT RECEIVED ON PROPERTY NOT USED FOR THE PURPOSE OF ITS OWN BUSINESS, IS TAXABLE IN HOUS E PROPERTY HEAD. APPELLANT RELIED UPON SEVERAL JUDICIAL DECISIONS OF SUPREME COURT, VARIOUS HIGH COURTS AND ALSO OF ITAT. DECISION OF ITAT SPE CIAL BENCH DELHI, RELIED UPON BY THE APPELLANT IS ON THE SAME FACTS IN WHICH IT IS HELD THAT RENTAL INCOME FROM PROPERTY IS TAXABLE IN HOUSE PROPERTY H EAD ONLY, IRRESPECTIVE OF WHETHER IT IS PART OF STOCK IN TRADE. RESPECTFU LLY FOLLOWING THESE DECISIONS, IT IS HELD THAT RENTAL INCOME RECEIVED B Y THE APPELLANT IS TAXABLE IN HOUSE PROPERTY HEAD AND APPELLANT IS ENTITLED TO DEDUCTIONS ALLOWABLE IN HOUSE PROPERTY HEAD. 4. THE REVENUE IS AGGRIEVED BY THE ORDER OF LD. CI T (A), THEREFORE, THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE BEFORE US. 5. THE LD. D/R FOR THE REVENUE SUBMITTED THAT THE A O HAS PASSED THE ORDER AFTER CONSIDERING THE MAIN OBJECT OF THE ASSESSEE COMPANY , THE TERMS AND CONDITIONS OF THE 7 ITA NO. 239/JP/2014 M/S. RATAN MAHAL PROPERTIES LTD. RENT AGREEMENT, THE PURPOSE OF LETTING ETC. AND ON THE BASIS OF THE THESE DOCUMENTS, HE CAME TO THE CONCLUSION THAT THE MAIN OBJECT OF T HE ASSESSEE COMPANY WAS TO MANAGE AND BUILD THE BUILDINGS AND OTHER PROPERTIES AND TO CARRY OUT THE BUSINESS OF BUILDERS AND CONTRACTORS. THE LD. D/R ALSO POINTED OUT THAT LONG TERM LEASE OF 9 YEARS WERE EXECUTED BY THE ASSESSEE IN FAVOUR OF M/S. IND US TOWERS LTD. AND M/S. ERICSSON INDIA PVT. LTD. IT WAS FURTHER CONTENDED THAT RENT ING OF THE PREMISES WAS FOR THE PURPOSE OF DERIVING PROFIT BY USING THE BUSINESS AS SETS OF THE COMPANY AND IS, THEREFORE, A BUSINESS INCOME AND IS REQUIRED TO BE TREATED UNDER SECTION 28 OF THE IT ACT. 6. PER CONTRA, THE LD. A/R FOR THE ASSESSEE HAS SUB MITTED THAT THE ORDER PASSED BY THE LD. CIT (A) IS A REASONED ORDER AND HAS SUBMITT ED THAT THE HONBLE SUPREME COURT IN THE MATTER OF EAST INDIA HOUSING AND LAND DEVELOP MENT TRUST LTD. VS. CIT (1961) 42 ITR 49 (SC) HAS LAID DOWN THE GUIDING PRINCIPLE FOR DETERMINING THE CHARACTER OF INCOME WHETHER THE INCOME EARNED BY USING THE PROPERTY WIL L FALL UNDER THE HEAD 'INCOME FROM THE HOUSE PROPERTY' OR WAS THE '' BUSINESS IN COME''. AFTER ELABORATELY DISCUSSING THE ISSUE, THE HONBLE SUPREME COURT HELD THAT THE DISTINCT HEADS SPECIFIED IN SECTION 6 (ACT NO. 11 OF 1922) INDICATED THAT THE SOURCES ARE MUTUALLY EXCLUSIVE AND INCOME DERIVED FROM DIFFERENT SOURCES IF FALLING UNDER SPE CIFIC HEADS HAS TO BE COMPUTED FOR THE PURPOSE OF TAXATION IN THE MANNER PROVIDED BY THE A PPROPRIATE SECTION. IT WAS FURTHER HELD THAT IF THE INCOME FROM A SOURCE FALLS WITHIN A SPECIFIC HEAD SET OUT IN SECTION 6, THE FACT THAT IT MAY INDIRECTLY BE COVERED BY ANOTH ER HEAD WILL NOT MAKE THE INCOME TAXABLE UNDER THE LATTER HEAD. IT WAS FURTHER ARG UED BY THE LD. A/R THAT THE HONBLE 8 ITA NO. 239/JP/2014 M/S. RATAN MAHAL PROPERTIES LTD. HIGH COURTS AND TRIBUNAL IN VARIOUS OTHER JUDGMENTS FOLLOWED THE JUDGMENT OF EAST INDIA HOUSING AND LAND DEVELOPMENT TRUST LTD. (SUPRA) . LASTLY IT WAS CONTENDED BY THE LD. A/R FOR THE ASSESSEE THAT THE TRIBUNAL IN THE IDENT ICAL FACT IN THE MATTER OF M/S. MAHIMA REAL ESTATE PVT. LTD. IN ITA NOS. 312/JP/2011 DATED 09.01.2012 AND ITA NO. 818/JP/2011 DATED 02.02.2012 FOR A.YS. 2006-07 AND 07-08 RESPECTIVELY HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE THEREBY HOLDING THAT THE INCOME FROM THE SHOPS LET OUT IN THE COMMERCIAL COMPLEX IS REQUIRED TO BE TRE ATED AS INCOME FROM HOUSE PROPERTY AND NOT INCOME FROM THE BUSINESS. 7. IN OUR VIEW AFTER PASSING OF THE JUDGMENT IN THE MATTER OF EAST INDIA HOUSING AND LAND DEVELOPMENT TRUST LTD. (SUPRA), THE OTHER JUDGMENTS NAMELY, SULTAN BROTHERS PVT. LTD. VS. CIT, 5 SCR 807, KARANPURA DEVELOPMENT CO. VS. CIT, (1962) 44 ITR 362 & ORS. WERE ALSO PASSED BY THE HONBLE SUPREME COURT WHEREIN THE HONBLE SUPREME COURT HAS SUCCINCTLY HELD AS UNDER :- 'WE THINK EACH CASE HAS TO BE LOOKED AT FROM A BUSI NESSMAN'S POINT OF VIEW TO FIND OUT WHETHER THE LETTING WAS THE DOING OF A BUSINESS OR THE EXPLOITATION OF HIS PROPERTY BY AN OWNER. WE DO NOT FURTHER THIN K THAT A THING CAN BY ITS VERY NATURE BE A COMMERCIAL ASSET. A COMMERCIAL ASS ET IS ONLY AN ASSET USED IN A BUSINESS AND NOTHING ELSE, AND BUSINESS MAY BE CARRIED ON WITH PRACTICALLY ALL THINGS. THEREFORE, IT IS NOT POSSIB LE TO SAY THAT A PARTICULAR ACTIVITY IS BUSINESS BECAUSE IT IS CONCERNED WITH A N ASSET WITH WHICH TRADE IS COMMONLY CARRIED ON. WE FIND NOTHING IN THE CASES R EFERRED TO SUPPORT THE PROPOSITION THAT CERTAIN ASSETS ARE COMMERCIAL ASSE TS IN THEIR VERY NATURE.' 9 ITA NO. 239/JP/2014 M/S. RATAN MAHAL PROPERTIES LTD. 7.1 IN THE MATTER OF COMMISSIONER OF INCOME TAX VS. HOTEL RATANADA INTERNATIONAL P. LTD. [2007]293ITR557(RAJ) THE JURISDICTIONAL HIGH COURT IN PARA 10 HAS HELD AS UNDER : 10. THE THREE-JUDGE BENCH OF THE SUPREME COURT IN THE CASE OF UNIVERSAL 10 PLAST LTD. (CIVIL APPEAL NO. 207 OF 1995) AND GUNTUR MER CHANTS COTTON PRESS CO. LTD. V. CIT MANU/SC/0200/1999 : [1999]237ITR454(SC) , WAS CONCERNED WITH THE DECISIONS FROM THE CALCUTTA AND ANDHRA PRADESH HIG H COURTS. THE PRINCIPAL QUESTION WAS WHETHER THE INCOME RECEIVED BY THE ASSESSEE BY LEASING OUT THE FACTORY WAS BUSINESS INCOME ? THE SUPREME COURT CONSIDERED SOM E OF ITS EARLIER DECISIONS AND CULLED OUT THE LEGAL POSITION THUS (PAGE 461): (1) NO PRECISE TEST CAN BE LAID DOWN TO ASCERTAIN WHETHER INCOME (REFERRED TO BY WHATEVER NOMENCLATURE, LEASE, AMOUNT, RENTS, LICENCE FEE) RECEIVED BY AN ASSESSEE FROM LEASING OR LETTING OUT OF ASSETS WOULD FALL UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' ; (2) IT IS A MIXED QUESTION OF LAW AND FACT AND HAS TO BE DETERMINED FROM THE POINT OF VIEW OF A BUSINESSMAN IN THAT BUSINESS ON THE FACTS AND IN THE CIRCUMSTANCES OF EACH CASE, INCLUDING TRUE INTERPR ETATION OF THE AGREEMENT UNDER WHICH THE ASSETS ARE LET OUT; (3) WHERE ALL THE ASSETS OF THE BUSINESS ARE LET O UT, THE PERIOD FOR WHICH THE ASSETS ARE LET OUT IS A RELEVANT FACTOR TO FIND OU T WHETHER THE INTENTION OF THE ASSESSEE IS TO GO OUT OF BUSINESS ALTOGETHER OR TO COME BACK AND RESTART THE SAME ; (4) IF ONLY A FEW OF THE BUSINESS ASSETS ARE LET O UT TEMPORARILY, WHILE THE ASSESSEE IS CARRYING OUT HIS OTHER BUSINESS ACTIVI TIES, THEN IT IS A CASE OF EXPLOITING THE BUSINESS ASSETS OTHERWISE THAN EMPL OYING THEM FOR HIS OWN USE FOR MAKING PROFIT FOR THAT BUSINESS; BUT IF TH E BUSINESS NEVER STARTED OR HAS STARTED BUT CEASED WITH NO INTENTION TO BE RES UMED, THE ASSETS ALSO WILL CEASE TO BE BUSINESS ASSETS AND THE TRANSACTION WI LL ONLY BE EXPLOITATION OF PROPERTY BY AN OWNER THEREOF, BUT NOT EXPLOITATION OF BUSINESS ASSETS. 7.2 IF WE APPLY THE LAW LAID DOWN BY HONBLE SUPREM E COURT AND JURISDICTIONAL HIGH COURT IN THE GIVEN FACTS AND CIRCUMSTANCES, IN OUR OPINION, MORE ENQUIRY IS REQUIRED TO BE CONDUCTED BY THE AO TO ASCERTAIN THE TRUE NATURE OF ASSESSEES ACTIVITIES WITH A VIEW TO ASCERTAIN WHETHER THE LETTING WAS A BUSINESS ACT IVITY OR WAS EXPLOITATION OF PROPERTY 10 ITA NO. 239/JP/2014 M/S. RATAN MAHAL PROPERTIES LTD. BY THE OWNER. IN OUR VIEW, FOR THAT PURPOSES AO I S REQUIRED TO MAKE MORE ENQUIRIES LIKE WHETHER THERE ARE ANY OTHER SOURCE OF INCOME BESIDES GIVING THE PROPERTIES ON RENT OR WHAT IS TRUE INTENTION OF THE ASSESSEE BY LETTI NG THE PROPERTY OR WHETHER THE PROPERTIES WERE LEASED OUT INTERREGNUM PERIOD WAIT ING ACTUAL THE SALE OF THE PROPERTY WITH A VIEW TO MITIGATE THE LOSS AS WOULD HAVE BEEN DONE BY AN ORDINARY PROPERTY OWNER. WE NOTICE THAT THE VARIOUS PORTIONS OF THE P ROPERTY, LIKE THE GROUND FLOOR, 1 ST FLOOR, 6 TH FLOOR AND 7 TH FLOOR WERE LYING VACANT AS MENTIONED IN THE CLOSIN G STOCK AS ON 31.3.2011. IN OUR OPINION, AO SHOULD ALSO BEAR IN M IND THE STATUS OF VACANT FLOORS IN THE PROPERTY WHILE DECIDING THE ISSUE. 8. IN THE LIGHT OF OUR ABOVE OBSERVATIONS, WE RESTO RE THE MATTER TO THE FILE OF AO TO DECIDE AFRESH AFTER AFFORDING REASONABLE OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. 9. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR ST ATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30/10/201 5. SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30/10/2015 DAS/ VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ACIT, CIRCLE-6, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- M/S. RATAN MAHAL PROPERTIES PVT. LTD . JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 11 ITA NO. 239/JP/2014 M/S. RATAN MAHAL PROPERTIES LTD. 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 239/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR