DCIT 8(2), MUMBAI V. M S LUVISH PROJECTS P.LTD, MUMBAI

ITA 2751/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101151 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 02-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 08-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Question of law; Reassessment proceedings
• Section: 147; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ASSESSMENT YEARS: 2006-07, 2007-08, 2008-09 & 2009- 10 M/S. M.S. LUVISH PROJECTS (P) LTD., 102, SANI ARMAA, RAUT LANE, NEAR ISKCON TEMPLE, JUHU, VILE PARLE (WEST) MUMBAI - 400049 PAN: AAECM2300C VS. (1) DCIT, CIRCLE 8(2), MUMBAI (2) ACIT, CIRCLE 16(2), HYDERABAD (APPELLANT) (RESPONDENT) ITA NOS.2750, 2751 & 2746/M/2013 ASSESSMENT YEARS: 2007-08, 2008-09 & 2009-10 DCIT, CIRCLE 8(2), R.NO.216-A, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 4000 020 VS. M/S. M.S. LUVISH PROJECTS (P) LTD., SANI ARMAA, RAUT LANE, NEAR ISKCON TEMPLE, JUHU, VILE PARLE (WEST) MUMBAI - 400049 PAN: AAECM2300C (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI NARESH JAIN, A.R. REVENUE BY : SHRI YOGESH KAMAT, D.R. DATE OF HEARING : 02.06.2015 DATE OF PRONOUNCEMENT : 23.09.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE CAPTIONED APPEALS FOR A.YS. 2006-07 TO 20 09-10 BY THE ASSESSEE AND THE CORRESPONDING APPEALS BY THE REVEN UE FOR AY. 2007-08 TO ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 2 2009-10 RELATE TO THE SAME ASSESSEE. THE APPEAL OF THE ASSESSEE FOR AY 2006- 07 IS AGAINST THE ORDER OF THE CIT(A) DATED01.05.20 12 WHEREAS THE APPEALS FOR AY 2007-08 AND 2009-10 ARE AGAINST THE COMMON ORDER OF THE CIT(A) DATED 07.01.2013 AND THE APPEAL FOR AY 2008-09 IS AGAINST THE ANOTHER ORDER OF THE CIT(A) OF EVEN DATE. SINCE THE FACTS AND ISSUES INV OLVED THEREIN IN ARE IDENTICAL IN NATURE, HENCE THE SAME HAVE BEEN HEARD TOGETHER AND ARE TAKEN FOR DISPOSAL BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AN D BREVITY. FIRST WE TAKE UP THE REVENUES APPEALS. THE FACTS, FOR THE SAKE OF CONVENIENCE, HAVE BEEN TAKEN FROM ITA NO.2750/M/2013 FOR A.Y. 2007-08. 2. THE COMMON ISSUE INVOLVED IN THE APPEALS FILED B Y THE REVENUE IS AS TO WHETHER THE RENTAL INCOME EARNED BY THE ASSESSEE FR OM LEASED PREMISES IS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY OR AS BUS INESS INCOME. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PVT. LTD. COMPANY AND IS ENGAGED IN THE BUSINESS INTER ALIA TO ACQUIRE, DEVELOP, DISPOSE OF AND MAINTAIN THE PROPERTIES AND TO BUILD HIGH-TECH PORT S, INDUSTRIAL ESTATES, TOWNSHIPS, MARKETS OR OTHER BUILDINGS, RESIDENTIAL AND COMMERCIAL OR CONVENIENCES AND TO DEAL WITH THEM IN ANY MANNER IN CLUDING LETTING OUT ETC. OF THE SAME. THE SOURCE OF INCOME OF THE ASSESSEE COM PANY INCLUDES RENTAL INCOME FROM LETTING OFF OF PREMISES TO M/S. SHOPPER S STOP LTD., PUNE WHICH HAS BEEN A PART AND PARCEL OF THE MAIN ACTIVITIES O F THE ASSESSEE COMPANY. THE ASSESSEE HAD SHOWN THE RENTAL INCOME FROM THE LEASI NG OF THE PREMISES OF M/S. SHOPPERS STOP LTD. AS BUSINESS INCOME AND CLAIMED D EPRECIATION AND OTHER EXPENSES UPON IT. THE RETURN OF INCOME FILED BY TH E ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. HOWEVER, LATER ON , THE ASSESSMENT WAS REOPENED UNDER SECTION 147 OF THE ACT. DURING THE REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS T HE AO) ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE INCOME FROM LETTING OFF OF TH E COMMERCIAL COMPLEX (M/S. ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 3 SHOPPERS STOP LTD.) SHOULD NOT BE TREATED AS INCOME FROM HOUSE PROPERTY. THE ASSESSEE EXPLAINED THAT IT WAS A CASE OF COMPOS ITE LETTING OUT OF BUILDING AND PLANT & MACHINERY, ALL THE AMENITIES, EQUIPMENT S, FIXTURES, FITTINGS WERE LEASED OUT ALONG WITH THE BUILDING WHICH WAS THE BU SINESS ACTIVITY OF THE ASSESSEE. THE AO, HOWEVER, TREATED THE INCOME OFFE RED BY THE ASSESSEE AS INCOME FROM HOUSE PROPERTY. 4. THE LD. CIT(A), HOWEVER, VIDE IMPUGNED ORDER HE LD THAT THE INCOME OF THE ASSESSEE WAS DERIVED FROM OPERATION OF BUSINESS AFTER HAVING THE FOLLOWING OBSERVATIONS: 5.4 I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF TH E APPELLANT AND THE ORDER OF THE AO. THE APPELLANT HAD VIDE AGREEME NT DATED 19.04.2005 ACQUIRED AN AREA ADMEASURING 15382.5 SQU ARE YARDS EQUIVALENT TO 12755.20 SQUARE METERS. IN THIS AGREE MENT ON PAGE 2 PARA 2 & 3 IT IS MENTIONED AS UNDER: 2. BY A COMPOSITE (PROJECT MANAGEMENT) AGREEMENT DATED 26TH JULY, 2001 EXECUTED BETWEEN THE BUILDERS AS THE PROJECT MANAGER THEREIN AND THE CONFIRMING PART Y AS THE OWNER THEREIN, THE BUILDERS AGREED TO PROVIDE V ARIOUS SERVICES TO THE OWNER INCLUDING PUTTING UP CONSTRUC TION ON A PORTION OF THE LARGER PROPERTY (HEREINAFTER RE FERRED TO AS THE 'SAID PROPERTY' AND MORE PARTICULARLY MEN TIONED IN THE SECOND SCHEDULE HEREUNDER WRITTEN) BY UTILIZ ING THE ENTIRE F.S.I. OF THE LARGER PROPERTY AND ALSO BY CO NSUMING THE APPLICABLE/PERMISSIBLE TDR (TRANSFER OF DEVELOP MENT RIGHTS), ON THE TERMS AND CONDITIONS MUTUALLY AGREE D UPON THEREIN. 3. THE AFORESAID PROJECT MANAGEMENT AGREEMENT DATED 26TH JULY, 2001, HAS BEEN REGISTERED UNDER A CONFIR MATION DEED DATED 7TH OCTOBER, 2003 WITH THE SUB-REGISTRA R HAVELI-11 PUNE, VIDE RECEIPT NO. 5606 DATED 7TH OC TOBER, 2003.' 5.5 THE APPELLANT HAS ACQUIRED TOTAL OF 44615.47 S QUARE FEET BUILT-UP AREA. IT WAS AGREED BY THE BUILDERS THAT A MENITIES MENTIONED AS ANNEXURE-A WOULD ALSO BE PROVIDED. IN CONSIDERATION THEREOF THE APPELLANT PAID THE BUILDE R ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 4 RS.2,87,17,000/-. ON THE SAME DAY, THE APPELLANT HA D PURCHASED THE PREMISES AT A COST OF RS. 13 CRORES. THE BUILDE RS HAD ALREADY ENTERED INTO LEASE AGREEMENT WITH SHOPPERS STOP DAT ED 15.01.2004. IN THIS CLAUSE IT CAN BEEN SEEN THAT TH E BUILDERS HAVE AGREED TO HAND OVER POSSESSION OF THE SAID PRE MISES TO THE SAID LESSEES FOR NECESSARY FIT OUT WORKS AND ALSO H AD AGREED TO PROVIDE VARIOUS AMENITIES AND FACILITIES OUT OF THE SAID PREMISES MORE PARTICULARLY DESCRIBED IN THE MODE. THEREFORE, IT CAN BE SEEN FROM THE ABOVE THAT THE APPELLANT HAS ONLY TAK EN ON TRANSFER FROM THE BUILDERS THE PRELEASED PROPERTY T O SHOPPERS STOP. THE SAID PROPERTY WAS ALREADY HANDED OVER TO SHOPPERS STOP FOR FIT OUT EVEN BEFORE THE APPELLANT PURCHASE D IT FROM THE BUILDERS. THE FITTINGS, ETC. FOR WHICH THE APPELLAN T ENTERED INTO A SEPARATE AGREEMENT WERE ALREADY A PART THEREOF. 5.6 THE LD. CIT(A) HAS, IN APPELLANTS OWN CASE FOR AY 2006-07, DECIDED THE ISSUE, EX-PARTE AGAINST THE APPELLANT B Y RELYING ON THE ORDER OF M.S. LUVISH INFOTECH PROJECTS PVT. LTD . FOR AY 2005- 06. 5.7 I HAVE PERUSED THE ORDER OF THE CIT (A)-V, HYDE RABAD IN THE CASE OF M . S. LUVISH INFOTECH PROJECTS PVT. LTD. FOR A.Y. 2005-06. THE O NLY DIFFERENCE BETWEEN THE TWO CASES IS THAT M.S. LUVISH INFOTECH PROJECTS PVT. LT D. HAD ACQUIRED IN SIMILAR MODUS OPERANDI A BUILDING CALLED MARISOFT II WHICH IS AN IT PARK AND IN THE PRESENT CASE THE APPELLANT HAS TAKEN BUILDING AND LEASED TO SHOPPERS STOP. 5.8 HOWEVER, THERE IS A NEED TO EVALUATE THE AGREEM ENT AND THE FACTS OF THE CIRCUMSTANCES OF THE CASE AND THE DECISION TAKE N BY CIT (A)-V, HYDERABAD IN VIEW OF THE RECENT DECISIONS OF THE HON'BLE ITAT AN D JURISDICTIONAL HIGH COURT. 5.9 THE HON'BLE HIGH COURT OF BOMBAY HAS RECENTLY H ELD IN THE CASE OF CIT VS. RUNWAL DEVELOPERS PRIVATE LIMITED (201 L-TIOL-658-H C-MUM-IT) ON OCTOBER 5, 201L AS UNDER; '9. WE SEE NO MERIT IN THE AFORESAID CONTENTION. TH E FACT THAT THE ASSESSEE APART FROM CARRYING ON THE CONSTRUCTION ACTIVITY, I S IN FACT CARRYING ON THE BUSINESS OF RUNNING A MALL IN THE NAME OF 'R MALL' IS NOT IN DISPUTE. ADMITTEDLY, PART OF THE PREMISES CONSTRUCTED BY THE ASSESSEE HAS BEEN SOLD TO THIRD PARTIES ON OUTRIGHT SALE BASIS. IT IS ALSO NOT IN DISPUTE THAT MAINTENANCE CHARGES FOR PROMOTION AND UPKEEP OF THE MALL HAS BEEN COLLECTED NOT ONLY FROM THE PERSONS TO WHOM THE PRE MISES HAVE BEEN GIVEN ON LEASE BASIS BUT ALSO FROM PERSONS TO WHOM THE PR EMISES HAVE BEEN SOLD ON OUTRIGHT SALE BASIS. OBVIOUSLY, NO RENT COULD BE RECOVERED FROM THE PERSONS TO WHOM THE PREMISES WERE GIVEN ON OUTRIGHT SALE BASIS. THEREFORE, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE MAIN TENANCE CHARGES RECEIVED WERE TOWARDS THE MAINTENANCE AND PROMOTION OF THE COMMON ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 5 AREA AND THE AMOUNTS RECEIVED TOWARDS MAINTENANCE C HARGES WERE BUSINESS RECEIPTS LIABLE TO BE ASSESSED UNDER THE H EAD 'INCOME FROM BUSINESS'. 10. MOREOVER, PERUSAL OF CLAUSE (6) IN THE BUSINESS CONDUCTING AGREEMENT CLEARLY SHOWS THAT THE MAINTENANCE CHARGES COLLECTE D BY THE ASSESSEE NOT ONLY RELATES TO THE OPEN AREA / COMMON AREA, REPAIR AND MAINTENANCE OF EQUIPMENT, LAND, ATRIUM, FIRE FIGHTING EQUIPMENTS, TRANSFORMERS, AIR CONDITIONER PLANTS, WATER TANK AND OTHER SERVICES I N THE COMMON AREAS OF THE COMPLEX, BUT ALSO TOWARDS THE CAST OF SECURITY SERV ICES AND OVERALL HOUSEKEEPING OF THE COMMON AREA. THE FACT THAT THE QUANTUM OF MAINTENANCE CHARGES UNDER THE AGREEMENT ARE BASED A N THE AREA OF THE PREMISES GIVEN ON LEASE /SALE BASIS CANNOT BE A GRO UND TO HOLD THAT THE MAINTENANCE CHARGES RECEIVED WERE PORT AND PARCEL O F THE RENT PAYABLE IN RESPECT OF THE LEASED PREMISES. 11. IN THESE CIRCUMSTANCES, THE DECISION OF THE ITA T IN HOLDING THAT THE MAINTENANCE CHARGES RECOVERED BY THE ASSESSEE TOWAR DS THE PROMOTION AND UPKEEP OF THE MALL, FROM THE PERSONS TO WHOM THE PR EMISES ARE LET OUT AND ALSO FROM THE PERSONS TO WHOM THE PREMISES WERE SOL D ARE ATTRIBUTABLE TO CONDUCTING THE BUSINESS ACTIVITY OF RUNNING THE MAL L AND THEREFORE, THE AMOUNT OF MAINTENANCE CHARGES RECEIVED WERE BUSINES S RECEIPTS ASSESSABLE UNDER THE HEAD 'BUSINESS INCOME' CANNOT BE FAULTED. 12. IN THE RESULT, WE SEE NO MERIT IN THE APPEALS A ND THE SOME ARE HEREBY DISMISSED WITH NO ORDER AS TO COSTS.' 5.10 SIMILARLY, THE HONBLE ITAT HAS HELD IN VARIOU S CASES AS UNDER: IN THE CASE OF ITO VS. SHANAYA ENTERPRISES (ITA NO .3648/MUM/2010 FOR AY 2006-07 ORDER DATED JUNE 30, 2011) THE ASSESSEE LET OUT ITS STUDIO TO PRODUCTION HOUSES FOR SHOOTING TV SERIALS ETC AND O FFERED THE HIRE CHARGES TO TAX AS BUSINESS INCOME. THE AO RELIED ON SULTAN BROTHERS VS. CIT 51 ITR 353 (SC) & CIT VS. SHAMBHU INVESTMEN TS 263 ITR 143 (SC) AND HELD THAT AS THE MAIN INTENTION WAS LETTING O UT OF PROPERTY, THE HIRE CHARGES WAS ASSESSABLE AS INCOME FROM HOUSE P ROPERTY. THE AO NOTED THAT TDS ON THE HIRE CHARGES WAS ASSESSABLE A S INCOME FROM HOUSE PROPERTY. THE AO NOTED THAT TDS ON THE HIRE CHARGES WAS DEDUCTED U/S 194-I. ON APPEAL, THE CIT(A) REVERSED THE AO ON THE GROUND THAT THE ASSESSEE HAD EXPLOITED THE PROPERT Y BY WAY OF COMMERCIAL ACTIVITY AND THE RECEIPTS CONSTITUTED BUSINESS INCOME. ON APPEAL BY THE DEPARTMENT TO THE TRIBUNAL, HELD DISM ISSING THE APPEAL: (I) THE LAW LAID DOWN IN CIT VS. SHAMBHU INVESTMENT 249 ITR 7 (CAL) APPROVED IN 263 ITR 143 (SC) IS THAT MERELY BECAUSE INCOME IS ATTACHED TO IMMOVABLE PROPERTY CANNOT BE THE SOLE ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 6 FACTOR FOR ASSESSMENT OF SUCH INCOME AS INCOME FROM PROPERTY. WHAT HAS TO BE SEEN IS THE PRIMARY OBJECT OF THE AS SESSEE WHILE EXPLOITING THE PROPERTY. IF THE MAIN INTENTION IS T O LET OUT THE PROPERTY, THE INCOME IS ASSESSABLE AS INCOME FROM HOUSE PROPERTY' WHILE IF THE MAIN INTENTION IS TO EXPLOIT THE IMMOVABLE PROPERTY BY WAY OF COMPLEX COMMERCIAL ACTIVITIES, T HE INCOME IS ASSESSABLE AS BUSINESS INCOME (SULTAN BROTHERS 51 I TR 353 (SC) EXPLAINED AS NOT BEING IN CONFLICT WITH SHOMBHU INV ESTMENTS 263 ITR 143 (SC)); (II) ON FACTS, THE CASE WAS NOT ONE OF SIMPLICITOR RENTING OF PREMISES BUT THERE WAS SIGNIFICANT VALUE ADDITION T O THE PREMISES BY PROVIDING A// INCIDENTAL AND SUPPORT SERVICES TO FACILITATE CINE SHOOTING AND RELATED ACTIVITIES. THE ASSESSEE HAD E XPLOITED THE PROPERTY BY WAY OF 'COMPLEX COMMERCIAL ACTIVITIES'. IT WAS A 'COMMERCIAL ADVENTURE' INVOLVING MARKETING AND PROM OTIONS AS ALSO APPROPRIATE IMPROVISATIONS ON A CASE TO CASE B ASIS. ACCORDINGLY, THE HIRE CHARGES WERE ASSESSABLE AS 'B USINESS PROFITS'. THE FACT THAT TAX WAS DEDUCTED U/S 194-I WAS IRRELEVANT. 5.11 THE HON'BLE ITAT 'B' BENCH, BANGALORE IN THE C ASE OF DCIT VS. GOIFLINK SOFTWARE PARK PRIVATE LIMITED HAS IN 1TA NO 40 AND 41/BANGALORE/2010 FOR AY 2005-06 AND AY 2006-07 HAS HELD ON MAY 31, 2011 AS UNDER: '9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE RELEVANT RECORDS AND ALSO THE RELEVANT CASE LAWS ON WHICH EI THER PARTY HAD PLACED THEIR STRONG RELIANCE. 9.1. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAD DEVELOPED A TECHNOLOGY PARK WHEREIN A NUMBER OF ELITE IT COMPAN IES HAVE BEEN HOUSED. IT WAS ALSO A FACT THAT THE ASSESSEE HAD NO T MERELY LET-OUT ITS BUILDINGS FOR RENT, BUT ALSO CARRIED ON A COMPLEX C OMMERCIAL ACTIVITY OF SETTING UP A SOFTWARE TECHNOLOGY PARK IN WHICH VARI OUS AMENITIES AND FIT-OUTS HAVE BEEN PROVIDED. 9.2. IN THIS CONNECTION WE RECALL THE RULING OF THE HIGHEST, JUDICIARY OF THE LAND IN DISTINGUISHING THE SIGNIFICANCE OF MERE LY LETTING OUT A BARE BUILDING AND A BUILDING BRACED UP WITH VARIOUS AMEN ITIES IN THE CASE OF CIT. BOMBAY CITY 1 V. NOTIONAL STORAGE PVT. LTD. RE PORTED IN 66 ITR 596 (SC) WHEREIN AFTER ANALYZING THE ISSUE AT LENGTH, T HE HON'BLE COURT HAD VISUALIZED THAT 9.2.1. FURTHER, AN IDENTICAL ISSUE TO THAT OF THE P RESENT ONE HAD CROPPED UP BEFORE THE EARLIER HON'BLE BANGALORE BEN CH IN THE CASE OF GLOBAL TECH PORK (P) LTD. V. ACIT - REPORTED IN (20 08) 119 7TJ (BANG) 421 - WHEREIN IT WAS OBSERVED THAT- 'THE ASSESSEE HAVING BEEN INCORPORATED WITH THE SOL E INTENTION OF ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 7 DEVELOPING TECHNOLOGY PORK FOR WHICH IT OBTAINED LE ASEHOLD LAND FROM ICIOC AND ALSO OBTAINED LOAN FROM BANK FOR CONSTRUC TING SUPERSTRUCTURE THEREON, IT COULD NOT BE CONSIDERED AS HAVING MODE INVESTMENT IN A PROPERTY FOR EARNING RENTAL INCOME ONLY. THE LEASE OF THE PROPERTY WAS SHOWN AS PART OF THE BUSINESS ACTI VITY, THUS, THE INCOME RECEIVED THERE FROM CANNOT BE SAID AS INCOME RECEIVED AS A LAND OWNER BUT AS A TRADER...................THE AC TIVITY WAS DONE BY THE ASSESSEE AS A BUSINESS VENTURE AND WAS IN ACCORDANC E WITH THE MAIN OBJECT OF THE COMPANY. THE INTENTION OF ANY PRUDENT BUSINESSMAN IS TO EARN; PROFIT AT A MAXIMUM LEVEL AND INVESTMENT MODE IN THE BUSINESS NEVER LOST ITS MAIN INTENTION FOR WHICH IT WAS INCORPORATED...............................THE ASSE SSEE IS PROVIDING WARD AND WATCH, MAINTENANCE OF COMMON AREA, MAINTENANCE OF L IGHT IN THE COMMON AREA, SUPPLY OF WATER, PROVIDING LIFT, INSTA LLATION OF ELECTRIC TRANSFORMER, POWER TO THE LESSEES, PROVIDING GENERA TOR, OVER-HEAD WATER TANKS, MAINTENANCE OF DRAINAGE ETC., THIS CLE ARLY ESTABLISHES THAT THE ENTIRE ACTIVITY IS IN ORGANIZED MANNER TO EARN PROFIT OUT OF INVESTMENT MADE BY THE ASSESSEE AS A COMMERCIAL VEN TURE. IN VIEW THEREOF, THE AO IS DIRECTED TO ASSESS THE RENTAL IN COME AS FROM BUSINESS...... 9.2.2. AS THE ISSUE BEFORE THE EARLIER BENCH WAS SI MILAR TO THAT OF THE PRESENT CASE WHEREIN THE HON'BIE BENCH TOOK COGNIZA NCE OF THE FACT THAT THE ASSESSEE IS PROVIDING WORD AND WATCH, MAIN TENANCE OF COMMON AREA, MAINTENANCE OF LIGHT IN THE COMMON ARE A, SUPPLY OF WATER, PROVIDING LIFT, INSTALLATION OF ELECTRIC TRA NSFORMER, POWER TO THE LESSEES, PROVIDING GENERATOR, OVER-HEAD WATER TANKS , MAINTENANCE OF DRAINAGE ETC., THIS CLEARLY ESTABLISHES THAT THE EN TIRE ACTIVITY IS IN ORGANIZED MANNER TO EARN PROFIT OUT OF INVESTMENT M ADE BY THE ASSESSEE AS A COMMERCIAL VENTURE' AND, ACCORDINGLY, ARRIVED AT A CONCLUSION THAT THE RENTAL RECEIPTS OF THE ASSESSEE IS TO BE ASSESSED AS 'BUSINESS INCOME'. IN CONFORMITY WITH THE FINDING O F THE EARLIER BENCH AS WELL AS RULING OF THE HON'BLE APEX COURT CITED S UPRA, WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT (A) WAS JUSTIFIED IN ARRIVING AT SUCH A CONCLUSION. IT IS ORDERED ACCORDINGLY. 9.2.3. BEFORE PARTING WITH THE ISSUE, WE WOULD LIKE TO EMPHASIS THAT WE HAVE DULY PERUSED THE CASE LAWS ON WHICH THE REV ENUE HAD PLACED ITS STRONG RELIANCE, CHIEFLY, IN THE CASE OF CIT V. BHOOPALAM COMMERCIAL COMPLEX AND INDUSTRIES PVT. LTD. [262 ITR 517 (KAR) ]. IN THAT CASE, THE ISSUE, IN BRIEF, WAS THAT THE ASSESSEE WAS A PRIVAT E LIMITED COMPANY AND ONE OF ITS DIRECTORS HAD TAKEN CERTAIN EXTENT O F LANDS SITUATED AT BANGALORE ON A LONGTERM LEASE OF 36 YEARS UNDER A R EGISTERED LEASE- DEED AND EXECUTED A REGISTERED DEED OF TRANSFER IN FAVOUR OF THE ASSESSEE-COMPANY TRANSFERRING HIS LEASEHOLD RIGHTS. SUBSEQUENTLY, THE ASSESSEE-COMPANY BUILT A COMMERCIAL COMPLEX ON THE SAID LAND AND ALLOTTED THE SAME TO THE VARIOUS PARTIES AND EARNED INCOME THERE- ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 8 FROM. FOR THE YEAR 1985-86 AND 86-87, THE ASSESSEE FILED ITS RETURNS OF INCOME SHOWING LOSSES FOR WHICH THE AO COMPLETED THE ASSES SMENTS MAKING MINOR ADJUSTMENTS IN COMPUTING THE LOSSES. T HE CIT INITIATED SUO MOTTO PROCEEDINGS U/S 263 AND AFTER SUCH PROCEE DINGS DIRECTED THE AO TO MAKE FRESH ASSESSMENTS COMPUTING THE INCO ME FROM RENTALS RECEIVED FROM THE COMMERCIAL COMPLEX UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY.' ON AN APPEAL BY THE ASSESSEE, THE TRIBUNAL HELD THA T THE INCOME DERIVED BY THE ASSESSEE COULD HAVE BEEN ASSESSED ON LY AS INCOME FROM BUSINESS AND NOT UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY'. ACCORDING TO THE TRIBUNAL, SINCE THE LAND OVER WHIC H THE PROPERTY HAD BEEN BUILT IS A LEASEHOLD LAND, THE ASSESSEE CANNOT BE TREATED AS THE OWNER OF THE LAND WHICH IS A CONDITION PRECEDENT FO R TREATING THE INCOME AS INCOME FROM HOUSE PROPERTY UNDER SECTION 22 OF THE ACT. THE HAN'BLE COURT, TAKING CUE FROM THE RULING OF TH E HON'BLE SUPREME COURT IN THE CASE OF CIT V. PODAR CEMENT (P.) LTD. [1997] 226 ITR 625, HAD HELD THAT THE INCOME DERIVED BY THE COMPANY FRO M SHOPS AND STALLS IS INCOME RECEIVED FROM PROPERTY AND FALLS U NDER THE SPECIFIC HEAD DESCRIBED IN SECTION 9. 92.4. WE WOULD LIKE TO POINT OUT THAT THE CASE LAW RELIED ON BY THE REVENUE IS CLEARLY DISTINGUISHABLE TO THE FACTS OF THE ISSUE ON HAND IN THE SENSE THAT THE PRESENT ASSESSEE, APART FROM PRO VIDING BARE BUILDING, HAD ALSO PROVIDED VARIOUS AMENITIES SUCH AS FIT-OUTS, CENTRAL AIR CONDITIONING, GENERATOR BACK UPS, STREET LIGHTS , ROADS, DRAINAGE FACILITIES, GARDEN, SECURITY, WATER FACILITIES, SEW ERAGE AND WATER TREATMENT PLANT, SUB-STATION FOR ELECTRICITY, WATER TREATMENT PLANT ETC., WHICH WERE NOT MADE AVAILABLE TO THE TENANTS IN THE CASE BHOOPALAM COMMERCIAL COMPLEX CASE CITED SUPRA. 9.3. IN THE CASE OF SHAMBHU INVESTMENT P. LTD. A. C IT REPORTED IN (2003) 263 ITR 143 (SC), THE ISSUE, IN BRIEF, WAS T HAT THE ASSESSEE OWNED AN IMMOVABLE PROPERTY, A PORTION OF WHICH WAS IN ITS POSSESSION AND LET OUT THE REST TO BE USED AS 'TABL E SPACE' TO OCCUPANTS WITH FURNITURE AND FIXTURES AND LIGHTS AN D AIR CONDITIONERS. THE ASSESSEE PROVIDED SERVICES LIKE WATCH AND WARD STAFF, ELECTRICITY, WATER AND OTHER COMMON AMENITIES. THE MONTHLY RENT PAYABLE WAS INCLUSIVE OF ALL CHARGES. THE ASSESSEE HAD ALSO REC OVERED BY WAY OF SECURITY FROM THE OCCUPANTS. THE HON'BLE HIGH COURT OF CALCUTTA [249 ITR 47 (CAL)] HELD THAT THE INCOME FROM THE PROPERT Y WAS ASSESSABLE IN THE HANDS OF THE ASSESSEE AS INCOME FROM HOUSE P ROPERTY. WHEN THE ISSUE CAME UP ON APPEAL BEFORE THE HON'BLE HIGH EST JUDICIARY OF THE LAND, THE APPEAL WAS DISMISSED, HOLDING THAT TH ERE WAS NO REASON TO INTERFERE WITH THE CONCLUSION ARRIVED AT BY THE HIGH COURT. ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 9 9.3.1. WE WOULD LIKE TO POINT OUT THAT THE ISSUE BE FORE THE HON'BLE HIGH COURT WAS THAT THE OCCUPANTS WERE ALLOWED TO U SE A PORTION OF PROPERTY AS 'TABLE SPACE' WITH FURNITURE AND FIXTUR ES, LIGHTS, AIR- CONDITIONERS ETC., AND THE MONTHLY RENT PAYABLE WAS INCLUSIVE OF ALL CHARGES WHEREAS THE ISSUE ON HAND IS ENTIRELY ON DI FFERENT FOOTING, NAMELY, THE ASSESSEE HAD DEVELOPED ABOUT 4.7 MILLIO N SQUARE FOOT OF A TECHNOLOGY PARK IN A SPRAWLING AREA OF MORE THAN 55 ACRES BY PROVIDING VARIOUS AMENITIES SUCH AS ROADS, STREET L IGHTS, DRAINAGE FACILITIES, GARDENS, HIGH CONNECTIVITY FACILITIES S UCH AS TELECOMMUNICATION TOWERS, SEWERAGE AND WATER TREATM ENT TANKS, WATER TREATMENT PLANTS TO ATTAIN THE STATUS OF A SOFT-WAR E TECHNOLOGY PARK WHEREAS IN THE CASE OF SHAMBHU INVESTMENT P. LTD., THE IMMOVABLE WAS A TINY PROPERTY AND THE SO CALLED AMENITIES PRO VIDED TO THE OCCUPANTS ONLY AS AGAINST THE AMENITIES PROVIDED IN A STP TO FEED A SPECIAL PURPOSE. LETTING OUT OF A BUILDING IN A STP IS INCIDENTAL WHEREAS THE FACT IN THE CASE OF SAMBHU INVESTMENT W AS RATHER PREDOMINANT AND, THUS, SAMBHU INVESTMENT CASE CANNO T, AT ANY STRETCH OF IMAGINATION, BE EQUATED WITH THAT OF THE PRESENT ASSESSEE. 9.4. TAKING INTO ACCOUNT THE FACTS AND CIRCUMSTANCE S OF THE ISSUE, WE ARE, THEREFORE, OF THE FIRM VIEW THAT THE CASE LAWS ON WHICH THE REVENUE PLACED RELIANCE CANNOT COME TO ITS RESCUE.' 5.12 THE HONBLE ITAT, 'A' BENCH MUMBAI IN THE CASE OF KRISHNA LAND DEVELOPERS PRIVATE LIMITED VS. ACIT -2(1) MUMBAI IN ITA NO. 5045/MUM./2011 FOR AY 2006-07 HAS HELD ON AUGUST 8, 2012 AS UNDER: '2. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED BEFORE US THAT ALL THE GROUNDS OF APPEAL ARE COVERE D IN FAVOUR OF THE ASSESSEE BY THE CO-ORDINATE BENCH DECISION BEING IT A NO.1057/MUM./2010, VIDE ORDER DATED 12TH AUGUST 201 1, IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2005- 06, A COPY OF WHICH IS PLACED ON RECORD. 3. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE FAIRLY CONCEDED WITH THE SUBMISSIONS BY THE LEARNED COUNSE L FOR THE ASSESSEE. 4. AFTER GOING THROUGH THE ORDERS OF THE AUTHORITIE S BELOW, IT IS SEEN THAT THE LEARNED COMMISSIONER (APPEALS) HAS FOLLOWE D THE CONCLUSIONS DRAWN BY HIM IN THE IMMEDIATELY PRECEDING YEAR I.E. , A.Y. 2005- 06 AND HAS DECIDED THE ISSUE AGAINST THE ASSESSEE. THE SAI D ORDER HAS BEEN REVERSED BY THE TRIBUNAL IN ASESSEE'S OWN CASE CITE D SUPRA. THE ISSUE RAISED IN GROUND NO.1, HAS BEEN DEALT WITH AND DISC USSED VIDE PARA-13 OF THE ORDER DATED 12TH AUGUST 2011 (SUPRA), PASSED BY THE TRIBUNAL IN ASSESSEE'S OWN CASE, WHICH READS AS FOLLOWS:- ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 10 13. THE UNDISPUTED FACT IS THAT THE PROPERTY IN QU ESTION IS ON I. T. PARK, WITH ALL INFRASTRUCTURE FACILITIES AND SERVIC ES. THIS IS NOT A SIMPLE BUILDING. THE MINISTRY OF COMMERCE AND INDUS TRIES, NOTIFIES CERTAIN BUILDING AS I.T. PARK ONLY IF VARIOUS FACIL ITIES AND INFRASTRUCTURE, AS SPECIFIED BY THE DEPARTMENT, ARE PROVIDED. IT IS AN UNDISPUTED FACT THAT ALL THE TECHNICAL REQUIR EMENTS, INFRASTRUCTURES, FACILITIES AND SERVICES ARE BEING PROVIDED IN THIS BUILDING AND IT WAS ONLY FOR THIS REASON THAT NOT O NLY THE MINISTRY OF COMMERCE & INDUSTRIES, BUT ALSO THE CBDT NOTIFIED T HE SOME AS AN I.T. PARK WHICH ENTITLES THE ASSESSEE TO EARN CERTA IN INCENTIVES. THE INTENTION OF THE ASSESSEE WHILE PURCHASING THE PROP ERTY IS TO PARTICIPATE IN THE I.T. PARK AND IT CANNOT BE SAID THAT THE INTENTION IS ONLY TO INVEST IN PROPERTY. THE HON'BLE SUPREME COURT IN SHAMBHU INVESTMENTS P. LTD. (SUPRA), CLEARLY LAYS D OWN THAT WHAT IS TO BE SEEN WAS THE PRIMARY OBJECT OF THE ASSESSEE W HILE EXPLOITING THE PROPERTY. IF IT IS FOUND BY APPLYING SUCH TEST, THAT THE MAIN INTENTION IS TO LET OUT THE PROPERTY, IT MUST BE CO NSIDERED AS RENTAL INCOME OR INCOME FROM PROPERTY. IN CASE IT I S FOUND THAT THE MAIN INTENTION IS TO EXPLOIT THE PROPERTY BY WA Y OF COMPLEX COMMERCIAL ACTIVITIES, IN THAT EVENT, IT MU ST BE HELD AS BUSINESS INCOME. IN THE CASE BEFORE US, THE ASSESSE E IS OFFERING COMPLEX SERVICES BY WAY OF PROVIDING OPERATION PLAC E IN A NOTIFIED I.T. PARK, WITH ALL SERVICES AND AMENITIES SUCH AS INFRASTRUCTURE FACILITIES, WAITING ROAM, CONFERENCE ROOM, VALET PARKING, RECEPTION, CANTEEN, 24 HOURS SECURITIES, I NTERNAL FACILITIES, HIGH SPEED LIFT, POWER BACK-UP, ETC. JUST BECAUSE A SISTER CONCERN INCURRED THIS EXPENDITURE AND CLAIMS REIMBURSEMENT FROM THE ASSESSEE, IT CANNOT BE SAID THAT THE FACILITIES ARE NOT PROVIDED BY THE ASSESSEE. WHOEVER MAINTAINS THEM, THE FACT REMA INS THAT IT IS THE ASSESSEE WHO ULTIMATELY BEARS SUCH EXPENDITURE FOR THE SERVICES AND UNDERTAKES TO PROVIDE SUCH SERVICES. THE FACILI TIES ARE MADE AVAILABLE BY THE ASSESSEE TO THE PERSON OCCUPYING T HE PREMISES. COMING TO THE CASE LAWS IN SAPTORSHI SERVICES LTD. (SUPRA), THE HON'BLE GUJARAT HIGH COURT HELD THAT THE INCOME EAR NED FROM BUSINESS CENTRE IS TO BE ASSESSED UNDER THE HEAD 'I NCOME FROM BUSINESS & PROFESSION'. THE SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THIS JUDGMENT WAS REJECTED BY THE H ON'BLE SUPREME COURT WHICH IS REPORTED AS 264 ITR (ST.) 36 . COMING TO THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN HAR VINDARPAL MEHTO (SUPRA), THE TRIBUNAL, IN THIS DECISION, AFTE R CONSIDERING THE JUDGMENT IN SHAMBHU INVESTMENTS P. LTD., HELD THAT THE INCOME EARNED FROM BUSINESS CENTRE IS TO BE ASSESSED UNDER THE HEAD 'INCOME FROM BUSINESS & PROFESSION'. THE DECISION O F MUMBAI BENCH OF THE TRIBUNAL IN SHANAYO ENTERPRISES (SUPRA ) HELD THAT WHEN THE PROPERTY IS USED FOR SPECIFIC PURPOSES AND IN THE NATURE OF PROVIDING COMPLEX SERVICES, THE INCOME IS TAXABLE UNDER ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 11 THE HEAD 'INCOME FROM BUSINESS & PROFESSION'. APPLY ING THE PROPOSITIONS LAID DOWN IN THESE CASE LOWS, WE HOLD THAT THE PROPERTY CAN BE USED ONLY FOR A SPECIFIC PURPOSE I. E., I.T. OPERATION AND THE ASSESSEE HAS PROVIDED COMPLEX SER VICE FACILITIES AND INFRASTRUCTURE FOR OPERATING SUCH BU SINESS AND ON THIS FACTUAL MATRIX, WE UPHOLD THE CONTENTION OF TH E ASSESSEE THAT THE INCOME IN QUESTION SHOULD BE ASSESSED UNDER THE HEAD 'INCOME FROM BUSINESS & PROFESSION'. CONSEQUENTLY, WE SET A SIDE THE ORDER PASSED BY THE COMMISSIONER (APPEALS) AND ALLOW THE GROUND RAISED BY THE ASSESSEE.' 5. KEEPING IN VIEW THE AFORESAID FINDINGS OF THE TR IBUNAL, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER ( APPEALS) AND ALLOW GROUND NO.1, RAISED BY THE ASSESSEE. 5.22. HENCE, IN THE PRESENT CASE, FOLLOWING THE DEC ISION OF THE JURISDICTIONAL HONBLE ITAT IN THE CASE OF KRISHNA LAND DEVELOPERS , WHAT IS TO BE SEEN WAS THE PRIMARY OBJECT OF THE APPELLANT WHILE EXPLOITING TH E PROPERTY. IF IT IS FOUND BY APPLYING SUCH TEST, THAT THE MAIN INTENTION IS TO L ET OUT THE PROPERTY, IT MUST BE CONSIDERED AS RENTAL INCOME OR INCOME FROM PROPERTY . IN CASE IT IS FOUND THAT THE MAIN INTENTION IS TO EXPLOIT THE PROPERTY BY WAY OF COMPLEX COMMERCIAL ACTIVITIES, IN THAT EVENT, IT MUST BE HELD AS BUSINESS INCOME. IN THE CASE BEFORE US, THE APPELLANT IS OFFERING COMPLEX SERVICES BY WAY OF PR OVIDING OPERATION PLACE IN A NOTIFIED I.T. PARK, WITH ALL SERVICES AND AMENITIES SUCH AS INFRASTRUCTURE FACILITIES, WAITING ROOM, CONFERENCE ROOM, VALET PARKING, RECEP TION, CANTEEN, 24 HOURS SECURITIES, INTERNAL FACILITIES, HIGH SPEED LIFT, P OWER BACK-UP, ETC. 5.23 IN THE INSTANT CASE, THE APPELLANT HAS ACQUIRE D TOTAL OF 44615.47 SQUARE FEET BUILT-UP AREA. IT WAS AGREED BY THE BUILDERS T HAT AMENITIES MENTIONED AS ANNEXURE-A WOULD ALSO BE PROVIDED. THE ANNEXURE-A R EADS AS UNDER: 'ANNEXURE-A AMENITIES, FIXTURES AND SPECIFICATIONS TO BE PROV IDED IN THE 'SAID PREMISES' AS ABOVE REFERRED. CIVIL WORKS AND PLASTERING FOR TOILETS. PLUMBING WORKS FOR TOILET, TOILETS AND PANTRY. CONSTRUCTION OF TOILETS TO COMPLETE ALL CIVIL WO RKS UPTO PLASTERING. INTERNAL PAINTING/POP, AND FLOORING FALSE CEILING. ESCALATORS TO BE FROM GROUND TO 1 ST AND FROM 1 ST TO 2 ND FLOOR WITH A LIFT IN THE PREMISES. THE MAKE TO BE OF OTIS/MITSUHSHI/KONE . THE WIDTH OF THE ESCALATOR TO BE MINIMUM 1.00 MTRS. HIGH SIDE EQUIPMENTS OF HVAC (AIR CONDITIONING PL ANT, AHUS, CONTROL PANELS CHILLED WATER PIPES ETC.). PROVISION OF CHILLED WATER AND AHUS IN THE AREA A S PER HVAC LAYOUT AND ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 12 SPECIFICATIONS. 100% POWER BACK UP. CENTRAL AIR CONDITIONING PLANT-SUPPLY AND INSTALL ATION OF CENTRAL AIR-CONDITIONING PLANT OF ADEQUATE CAPACITY TO COVE R THE PREMISES INCLUDING STOREROOMS ETC. ACTUAL TONNAGE REQUIREMEN T TO BE CALCULATED SO AS TO MAINTAIN UNIFORM TEMPERATURE OF 22+, - DEG REES CELSIUS INSIDE THE PREMISES AND FRESH AIR OPENING FOR AHU LOCATION S. TO PROVIDE THE AIR-CONDITIONING PLANT AND CONTROL PANELS, AIR-HAND LING UNITS, FAN COIL UNITS AND OTHER EQUIPMENT REQUIRED FOR OPERATION OF THE AIR-CONDITION PLANT. AIR CONDITIONING PLANTS WOULD BE OF RECIPROC AL TYPE/SCREW TYPE/BLUE STAR/CARRIER OR SIMILAR MAKE. CHILLED WATER LINES U PTO AHU/FAN COILS UNITS IN EACH FLOOR LEVEL. COMMON AREAS OF THE COMPLEX TO B E USED BY THE PUBLIC SHALL BE FULLY AIR-CONDITIONED. COMPLETE FLOORING WALL PAINTING, FALSE CEILING, W IRING UPTO ONE POINT OF THE PREMISES AND OTHER WORKS FOR DEVELOPMENT/FIN ISHING IN RESPECT OF ALL THE COMMON AREAS OF THE COMPLEX. COMMISSIONING OF AIR-CONDITIONING PLANTS AND SUPPL YING OF AIR-CONDITIONING WITHIN THE PREMISES.' 5.24 IT IS ALSO PERTINENT TO SEE CLAUSE 5 AND 6 OF THE PURCHASE AGREEMENT AS MENTIONED IN PAGE 32 OF THE PAPER BOOK WHICH REA DS AS UNDER: '5) WITH A VIEW TO PROVIDE CONTINUOUS COMMON MAINTE NANCE OF THE ENTIRE COMPLEX, IT HAS BEEN AGREED THAT THE PURCHAS ER SHALL PAY TO THE BUILDERS A SUM OF RS. 66,92,320.50 (RUPEES SIXTY SI X LACS NINETY TWO THOUSAND THREE HUNDRED TWENTY AND PAID FIFTY ONLY), TOWARDS THE CORPUS DEPOSIT CALCULATED @ RS. 150/- PER CHARGEABL E SQ.FT. AREA OF 44,615.47 SQ.FT., PAYABLE ON ALONG WITH THE FINAL P AYMENT REFERRED IN CLAUSE 2(U) ABOVE. THE BUILDER SHALL PAY THE SAID C ORPUS DEPOSIT (AFTER DEDUCTING MONIES PAID AS DEPOSITS OF PERMANENT NATU RE) TO THE ASSOCIATION OF APARTMENT OWNERS/SOCIETY/LIMITED COMPANY AFTER I TS REGISTRATION AND AFTER EXECUTING DEEDS OF APARTMENT/SALE DEED/ANY OT HER INSTRUMENT OF TRANSFER IN FAVOUR OF ALL THE PURCHASERS OR AFTER F INAL COMPLETION CERTIFICATE IS RECEIVED, WHICHEVER IS LATER. THE AFORESAID CORP US DEPOSIT IS WORKED OUT ON THE BASIS OF PRESENT MARKET CONDITIONS, AND IF F OR ANY REASON IN FUTURE, ON ACCOUNT OF INFLATION OR OTHER EXIGENCIES, ADDITI ONAL AMOUNTS ARE REQUIRED TO BE CONTRIBUTED FOR THE MAINTENANCE CORPUS, THE P URCHASERS HEREBY AGREE THAT THEY SHALL BE BOUND TO CONTRIBUTE PROPOR TIONATE AMOUNTS IN THAT BEHALF. 6) THE PURCHASER/S SHALL, IN ADDITION TO THE ABOVE PURCHASE PRICE/CONSIDERATION AND THE CORPUS FUND/DEPOSIT, PA Y TO THE BUILDERS THE FOLLOWING CHARGES:- A) RS. 21,41,542=56 (RUPEES TWENTY ONE LAKHS FORTY ONE ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 13 THOUSAND FIVE HUNDRED FORTY TWO AND PAISE FIFTY SIX ONLY) CALCULATED RS. 2/- PER CHARGEABLE SQ.FT. PER MONTH, PAYABLE UP FRONT FOR 2 YEARS IN ADVANCE TOWARDS COMMON MAINTENANCE CHARGES, PAYA BLE FROM THE DATE OF POSSESSION OF THE PREMISES. THE BUILDERS HE REBY AGREE TO GIVE PROPER ACCOUNT FOR THE COMMON MAINTENANCE EXPE NSES TO THE PURCHASER/S OR THE SOCIETY/CONDOMINIUM ETC. THA T MAY BE FORMED IN THE DUE COURSE. B) A LUMPSUM AMOUNT OF RS. 22,30,773=50 (RUPEES TWENTY TWO LAKHS THIRTY THOUSAND SEVEN HUNDRED SEVENTY THREE A ND PAID FIFTY ONLY) CALCULATED @ RS. 50/- PER CHARGEABLE SQ.FT. A REA, TOWARDS ELECTRICITY METER DEPOSITS, LEGAL CHARGES, CONTRIBU TION OF SHARE MONEY, ENTRANCE FEES FOR MEMBERSHIP OF THE CO-OPERA TIVE SOCIETY/CONDOMINIUM/LIMITED COMPANY TO BE FORMED AN D CHARGES FOR FORMATION, REGISTRATION OF THE CO-OPERATIVE SOCIETY/CONDOMINIUM/LIMITED COMPANY ETC. THESE CHAR GES ARE PAYABLE TO THE BUILDERS ALONG WITH THE PAYMENT OF B ALANCE CONSIDERATION REFERRED IN THE CLAUSE 2(II) ABOVE.' (EMPHASIS SUPPLIED) 5.25 THE ABOVE EMPHASIZED PORTION SHOWS THAT THE AM OUNT TOWARD MAINTENANCE OF THE PREMISES AND THE FACILITIES WAS PAID IN ADVANCE BY THE APPELLANT AND IN FACT HAS MADE CONTRIBUTION TO THE CORPUS OF THE MAINTENANCE FUND. 5.26 THE FOURTH SCHEDULE MENTIONED IN THE AGREEMENT WHEREIN THE SPECIFICATIONS HAVE BEEN MENTIONED AS UNDER: 'THE FOURTH SCHEDULE ABOVE REFERRED TO OFFICE/SHOP NO.G-1 (PART NO.2), ON THE GROUND FLO OR (INCLUDING AREA OF BALCONY IF APPLICABLE) (WITH ADJOINING TERRACE - IF APPLICABLE AND IF MARKED ON THE PLAN ANNEXED HERETO) BUILT-UP AREA AD MEASURING 3648.03 SQ.FT. I.E. 338.91 SQ.MTRS, CARPET AREA (UN-PLASTER ED WALL TO UN-PLASTERED WALL) 3172.15 SQ.FT I.E. 294.70 SQ.MTRS. OFFICE/SHOP NO. F-1 (PART NO.2) ON THE FIRST FLOO R (INCLUDING AREA OF BALCONY IF APPLICABLE) (WITH ADJOINING TERRACE IF A PPLICABLE AND IF MARKED ON THE PLAN ANNEXED HERETO) BUILT-UP AREA ADMEASURI NG 4221.10 SQ.FT. I.E. 392.15 SQ. MTRS. CARPET AREA (UN-PLASTERED WAL L TO UN-PLASTERED WALL) 3670.52 SQ.FT. I.E. 341 SQ.MTRS. OFFICE /SHOP NO.S-1 (PART-2) ON THE SECOND FLOOR (INCLUDING AREA OF BALCONY IF APPLICABLE) (WITH ADJOINING TERRACE IF A PPLICABLE AND IF MARKED ON THE PLAN ANNEXED HERETO) BUILT-UP AREA AD MEASURING 4270.62 SQ.FT. I.E. 396.75 SQ.MTRS, CARPET AREA (UN -PLASTERED WALL TO UN- PLASTERED WALL) 3713.58 SQ.FT. I.E. 345 SQ.MTRS. THE ABOVE PREMISES ADMEASURING IN AGGREGATE ABOUT 12,139.75 SQ.FT. BUILT-UP/CHARGEABLE AREA I.E. 1127.81 SQ.MTRS....OR THEREABOUTS IN THE BUILDING TO BE KNOWN AS 'NUCLEUS' UNDER CONSTRUCTIO N ON THE PART OF ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 14 THE SAID PROPERTY MORE PARTICULARLY DESCRIBED IN TH E FIRST SCHEDULE HEREIN ABOVE WRITTEN. SPECIFICATIONS RCC FRAMED STRUCTURE INTERNAL WALLS 6' THICK, SAND FACED PLASTER TO EXTERNAL WALLS, IPS FLOORING BATHROOM SHELL AUTOMATIC ELEVATORS OF REPUTED MAKE WELL APPOINTED EXTERNAL LOBBY TO THE BUILDING FIRE FIGHTING SYSTEM IN THE COMMON AREAS MODERN ELEVATION WITH STRUCTURAL GLAZING AND ALUC O-BOND PANEL WET & DRY RAISER IN THE COMMON AREAS U/G & 0/H WATER TANK WITH PUMP.' THE AMENITIES PROVIDED BY THE APPELLANT TO SHOPPERS STOP HAVE BEEN LISTED IN STATEMENT-C OF THE LEASE AGREEMENT DATED 21.04.2 005 WHICH READS AS UNDER: 'THE AMENITIES AND THE FIXTURES AND FITTINGS IN THE DEMISED PREMISES FLOORING FALSE CEILING EXTERNAL GLAZING EXCALATORS CONNECTING EACH LEVEL, ORS/M/K, 1 MT R WIDTH FIRE FIGHTING EQUIPMENTS, FIRE HOSE CABINETS AS P ER CFO SPRINKLERS AND SMOKE DETECTORS IN COMMON AREAS ALL SHAFTS OF UTILITIES OF POWER, DATA, COMMUNICE WITH FIRE RATED DOORS 10 NUMBERS OF EARTHING PITS AS REQUIRED BY LESSEE FOR ELECTRICAL AND ELECTRONIC EQUIPMENT, ELECTRICAL RISING MAINS ON AL L LEVELS AT PRE SPECIFIED LOCATIONS, HIGH SIDE EQUIPMENTS OF ELECTR ICAL AND POWER (TRANSFORMERS, CONTROL PANELS, RISING MAINS, METERS AS REQUIRED, MAIN DISTRIBUTION PANEL, DISTRIBUTION BOARDS AT EACH LEV EL AT MUTUALLY AGREED LOCATION. LESSOR TO PROVIDE POWER SUPPLY AT ONE POINT ONLY WITH, ONE DB AND ONE MAIN SWITCH DIRECTLY TO MSEB. IN CASE METERING IS T HROUGH SUB-METER, TRANSMISSION LOSS NEEDS TO BE TAKEN INTO ACCOUNT AN D PAID BY SPACE OCCUPIER. TOTAL POWER REQUIREMENTS BY LESSEE IS @ 2 0 WATTS PER SQ. FT. OF CARPET AREA. WATER SUPPLY, PLUMBING AND SEWERAGE AS PER MUNICI PAL RULES. HIGH SIDE EQUIPMENTS OF HVAC (AIR CONDITIONING PL ANT, AHUS, CONTROL PANELS CHILLED WATER PIPES, ETC.) AS LESSEE HEAT LO AD REQUIREMENTS AS GIVEN BY LESSEE. PROVISION OF CHILLED WATER AT AHUS IN LESSEE AREA AS PER HVAC LAYOUT AND SPECIFICATION OF LESSEE. LESSOR TO PROVIDE ON LIFT-VVF TYPE WITH STAINLESS STEEL CAGE INTERIORS ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 15 (MINIMUM 15 PASSENGERS). LIFT INTERIORS INCLUDING FLOORING, CEILING, HANDR AIL AND LIGHTING ETC. AS PER MANUFACTURERS SPECIFICATIONS. 100% POWER BACK UP IS TO BE PROVIDED BY LESSOR TO LESSEE. ELEVATION DESIGN AS PER LESSORS ARCHITECHT'S DESI GN FOR BUILDING ELEVATIONS. SUITABLE BUILDING ELEVATIONS AS DESIGNED BY THE L ESSORS ARCHITECT TO MAKE STRUCTURAL PROVISION FOR INSTALLATION OF SIGNAGES ON THE BUILDING ELEVATION. TO PUT IN PROPER SIZE IN MUTUAL LY ACCEPTED LOCATION ON THE ELEVATION AS PER THE LESSEE'S REQUI REMENTS. TO PROVIDE SHOW WINDOWS WITH OPENING AND FIXED GL AZNG ON SHOW WINDOWS AS PER ARCHITECTURAL DESIGN. CENTRAL AIR-CONDITIONING PLANT-SUPPLY AND INSTALL ATION OF CENTRAL AIR- CONDITIONING PLANT OF ADEQUATE CAPACITY TO COVER TH E SPECIFIED PREMISES INCLUDING STOREROOMS ETC. ACTUAL TONNAGE R EQUIREMENTS TO BE CALCULATED SO AS TO MAINTAIN UNIFORM TEMPERATURE OF 22+, - DEGREES CELSIUS INSIDE THE SPECIFIED PREMISES AND F RESH AIR OPENING FOR AHU LOCATIONS. TO PROVIDE THE AIR- CONDITIONING PLANT WITH CONTROL PANELS, AIR-HANDING UNIT, FAN COIL UNITS AN D OTHER EQUIPMENT REQUIRED FOR OPERATION OF THE AIR-CONDITIONING PLAN T, AIR CARRIER OR SIMILAR MAKE. CHILLED WATER LINES UPTO AHU, PROVISI ON OF AHU/FAN COILS UNITS IN EACH FLOOR LEVEL. COMMON AREAS OF TH E COMPLEX TO BE USED BY THE PUBLIC SHALL BE FULLY AIR-CONDITIONED. FIRE PROTECTION/SAFETY AS PER RULES. TO COMPLETE FLOORING, WALL PAINTING, FALSE CEILIN G, WIRING UPTO ONE POINT OF THE SPECIFIED PREMISES AND OTHER WORKS FOR DEVELOPMENT/FINISHING IN RESPECT OF ALL THE COMMON AREAS OF THE COMPLEX. SANCTION OF ELECTRICAL LOAD FROM THE POWER SUPPLY COMPANY. SUPPLY AND COMMISSIONING OF POWER FOR THE SPECIFIED PREMIS ES AND FOR THE COMMON AREA, DRIVEWAYS, PARKINGS ETC. TO OBTAIN NECESSARY APPROVALS/FIRE FITTINGS FROM THE CFO. TO OBTAIN NECESSARY APPROVALS/CONNECTIONS FROM TH E WATER SUPPLY AND DRAINAGE AUTHORITY AND ENSURE SUPPLY OF WATER S UPPLY AND DRAINAGE FACILITY.' 5.27 A PERUSAL OF THE ABOVE SHOWS THAT MOST OF THE ITEMS WERE ALREADY A PART OF THE OTHER ORIGINAL PURCHASE AGREEMENT FOR E XAMPLE AUTOMATIC ELEVATORS, FIRE FIGHTING SYSTEM, MODEM ELEVATION, E TC. SOME OF THE ITEMS HAVE BEEN TAKEN IN THE PROJECT MANAGEMENT AGREEMENT AS MENTIONED ABOVE. THE MAINTENANCE OF THE ABOVE IS PART OF THE COMMON MAINTENANCE FUND PAID BY THE APPELLANT TO THE BUILDER AND HENCE THE PROFIT AND LOSS ACCOUNT DOES NOT SHOW ANY PAYMENT TOWARDS THE REPAI RS AND MAINTENANCE OF THESE FACILITIES. FURTHER, IT IS PERTINENT TO NO TE THAT THE PREPARATION OF THE SHOPS FOR USE BY SHOPPER STOP WAS CARRIED OUT B Y THE APPELLANT BY GETTING THE SAME DONE FROM THE BUILDER BY PAYING TH E BUILDER. ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 16 5.28 HENCE, IN THE INSTANT CASE THE APPELLANT WAS P ROVIDING MAINTENANCE OF COMMON AREA, MAINTENANCE OF LIGHT IN THE COMMON ARE A, MAINTENANCE OF A WHOLE LOT OF OTHER FACILITIES. IN EFFECT, THE ENTI RE ACTIVITY IS CARRIED OUT IN AN ORGANIZED MANNER AS BUSINESS VENTURE WITH MANY DAY TO DAY ACTIVITIES BEING CARRIED OUT. 5.29 THE FOLLOWING CASE LAWS HAVE DEALT WITH SIMILA R ISSUE: (I) COMMISSIONER OF EXCESS PROFITS VS. SHRI LAKSHMI SIL K MILLS LTD (20 ITR 451) (SC). (II) 69 ITR 247 (PUJ) - GINNING FACTORY LEASED OUT FOR Y EARS A GOING CONCERN - COURT HELD THAT INCOME DERIVED IS BUSINES S INCOME. (III) 96 ITR 499 (PAT) - CINEMA AS A GOING CONCERN HELD A S BUSINESS INCOME (IV) 128 ITR 497 (DEL) - LEASING OUT CINEMA HOUSE IS ASS ESSABLE UNDER BUSINESS INCOME. (V) 164 ITR 571 (MP) - RICE MILL AND THEATRE BOTH L EASED OUT - RENTALS ARE CHARGEABLE TO BUSINESS INCOME. (VI) 284 ITR 229 (BORN) - LEASING OF HOTELS WITH FITTING S & FIXTURES WAS HELD TO BE BUSINESS INCOME. (VII) 283 ITR 162 (MP) - BIDI MANUFACTURING ACTIVI TIES AND LET OUT SOME OF ITS GODOWN - ASSESSABLE AS BUSINESS INCOME. (VIII) 114 ITR 779 (KOL) - EVEREST HOTELS - THE ENTIRE HOTEL BUSINESS UNDER THE NAME AND STYLE HOTEL MOUNT EVEREST - RS. 7500/- LEASEHOLD RENT PER ANNUM FOR A PERIOD OF 5 YEARS. T HE COURT HELD THAT RENTAL INCOME DERIVED FROM LEASE SHOULD B E TAXED U/S. 10 OF THE INCOME TAX ACT, 1922. IF THE APPELLA NT IS TAXED U/S. 12(4), IT LOSES CERTAIN OTHER ALLOWANCES U/S. 10 BY REASON OF DEPRECIATION. IN THAT CASE THE HON'BLE HIGH COUR T REFERRED TO THE DECISION IN 51 ITR 353. SEC. 9 OF THE INCOME TA X ACT, 1922 REFERRED TO INCOME FROM HOUSE PROPERTY. SEC. 10 PRO FIT AND GAIN OF BUSINESS - TERMS AND CONDITIONS ARE IDENTIC AL. (IX) 282 ITR 61 (ALL) - INCOME FROM LETTING OUT OF HOUSE PROPERTY AND IN ADDITION HAD LEASE RENT FROM LETTING OUT OF WORKSHOP, COLD STORAGE, MOTOR GARAGE, RAJ OIL AND INTEREST IN COME AND MISC. INCOME - RECEIPT OF RENTAL - BUSINESS INCOME. IN THAT CASE DECISION OF THE HON'BLE SUPREME COURT IN 51 ITR 353 WAS REFERRED TO. THE COURT ALSO CONSIDERED THE DECISION IN 20 ITR 451 (SC) - PLANT WAS UNUSED FOR SOME TIME, AFTER SO ME TIME LET OUT ON MONTHLY RENT - COURT HELD THAT IT WAS CHARGE ABLE TO 'BUSINESS INCOME'. (X) 147 ITR 692 (MAD) - BUILDING CONSISTING OF 68 ROOMS AND WITH VARIOUS FACILITIES SATISFIED REQUIREMENT OF LODGING HOUSE BEING RUN ON COMMERCIAL BASIS - INCOME DERIVED FORM LETTI NG OUT THE LODGING HOUSE SHOULD BE ASSESSED UNDER BUSINESS INC OME. ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 17 (XI) 282 ITR 61 - RENT FROM COLD STORAGE, MOTOR GARAGE E TC. MAY BE TAXED UNDER INCOME FROM BUSINESS. (PAGE 24). (XII) 298 ITR 371 (KOL) - AGREEMENT WITH USERS OF SHOPPIN G MALLS PROVIDING SERVICES TO USERS - BUSINESS INCOME IN TH IS CASE ALSO 51 ITR 353 WAS REFERRED TO. 82 ITR 547 AND 114 ITR 779 (KOL) IN EVEREST HOTELS WAS ALSO CONSIDERED. IN PAGE 382 THE HON BLE COURT OBSERVED THAT THE RATIO OF THE DECISION OF TH E HON'BLE CALCUTTA HIGH COURT IS OF LITTLE HELP TO THE DEPART MENT AND ACTUALLY SUPPORTS THE STAND OF THE APPELLANT. (PAGE NO. 25 OF APPEAL PAPER BOOK). (XIII) 298 ITR (AT) 394 (DEL) - LEASE OF THEATRE FOR A SHO RT PERIOD - INCOME FROM LEASE ASSESSABLE AS 'BUSINESS INCOME'. THE HON'BLE TRIBUNAL ALSO FOLLOWED THE DECISION IN 237 ITR 454 (SC). 5.30 IN THE CASE OF UNIVERSAL PLAST LTD VS.CIT (237 ITR 454), THE HON'BLE SUPREME COURT HAS LAID DOWN THE GENERAL PRI NCIPLES RELATING TO THE INCOME FROM LEASING OUT THE ASSETS OF THE BUSINESS BY AN ASSESSEE, WHICH IS REFERRED BY THE H ONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MOHIDDIN H OTELS P LTD (2006) (284 ITR 229) AS UNDER:- THE GENERAL PRINCIPLES LAID DOWN BY THE SUPREME CO URT IN THIS CONNECTION ARE THUS AS UNDER (PAGE 461): (1) NO PRECISE TEST CAN BE LAID DOWN TO ASCERTAIN WHETHER INCOME (REFERRED TO BY WHATEVER NOMENCLATURE, LEASE, AMOUNT, RENTS LICENSE 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 INTERPRETATION OF THE AGREEMENT UNDER WHICH THE ASSETS ARE LET OUT.; (3) WHERE ALL THE ASSETS OF THE BUSINESS ARE LET OUT, THE PERIOD FOR WHICH THE ASSETS ARE LET OUT IS A RELEVANT FACTOR TO FIND OUT 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 OUT TEMPORARILY, WHILE THE ASSESSEE IS CARRYING OUT HIS OTHER BUSINESS ACTIVITIES, THEN IT IS A CASE OF EXPLOITING THE BUSINESS ASSETS OTHERWISE THAN EMPLOYING THEM FOR HIS OWN USE FOR MAKING PROFIT FOR THAT BUSINESS; BUT IF THE BUSINESS NEVER STARTED OR HAS STARTED BUT CEASED WITH NO ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 18 INTENTION TO BE RESUMED, THE ASSETS WILL CEASE TO BE BUSINESS ASSETS AND THE TRANSACTION WILL ONLY BE EXPLOITATION OF PROPERTY BY OWNER THEREOF, BUT NOT EXPLOITATION OF BUSINESS ASSETS. 5.31 IN THE CASE OF MOHIDDIN HOTELS P LTD, REFERRED SUPRA, THE ASSESSEE THEREIN CONSTRUCTED A HOTEL AND LET IT OUT ON A FIX ED ANNUAL AMOUNT, FROM THE DAY ONE WHEN IT WAS READY FOR COMMISSIONING, IN THE FAC TS OF THE SAID CASE, THE HON'BLE BOMBAY HIGH COURT FOUND THAT THERE WERE ENO UGH MATERIALS IN THE RECORD TO FIND THE INTENTION OF THE PARTIES AND FUR THER THEY SUGGESTED THAT THE ASSESSEE THEREIN ACTUALLY INTENDED TO EXPLOIT T HE HOTEL AS ITS BUSINESS ASSETS, AS HELD BY HON'BIE SUPREME COURT IN THE CAS E OF MOHIDDING HOTELS P LTD, REFERRED SUPRA. UNDER THOSE CIRCUMSTANCES, IT WAS H ELD THAT THE RENTAL INCOME RECEIVED THERE IN IS BUSINESS INCOME. 5.32 IN THE CASE OF EVEREST HOTELS LTD VS. CIT (114 ITR 779), THE HON'BLE CALCUTTA HIGH COURT FOUND THAT THE ASSESSEE HAD RES UMED THE HOTEL BUSINESS EVEN BEFORE THE ASSESSMENT WAS COMPLETED B Y THE ASSESSING OFFICER. UNDER THOSE CIRCUMSTANCES, THE HIGH COURT HELD THAT THE RENTAL INCOME IS ASSESSABLE AS BUSINESS INCOME. 5.33 THE HON'BLE SUPREME COURT HAD AN OCCASION TO C ONSIDER THE ISSUE ABOUT THE NATURE OF RENTAL INCOME IN THE CASE OF SH ARNBHU INVESTMENT PVT LTD (263 ITR 143), WHEREIN THE APEX COURT HAS UPHEL D THE DECISION RENDERED BY HON'BLE KOLKATTA HIGH COURT IN THAT CAS E REPORTED IN 249 ITR 47. THE FACTS OF THAT CASE HAVE BEEN EXPLAINED AS UNDER BY THE HON'BLE CALCUTTA HIGH COURT. 'SHAMBHU INVESTMENT (P) LIMITED, THE ASSESSEE ABOVE NAMED, IS THE OWNER OF A BUILDING AT RAHEJA CHAMBERS, NARIMAN POI NT, MUMBAI. THE SAID PREMISES HAVE BEEN FURNISHED BY THE ASSESS EE AND HAVE BEEN LET OUT TO VARIOUS PERSONS AND /OR FIRMS AND/O R ORGANISATIONS WITH ALL FURNITURE, FIXTURES, LIGHT, AIR-CONDITIONE RS FOR BEING USED AS 'TABLE SPACE'. THE SAID ASSESSEE UNDER THE AGREEMEN T WITH THOSE OCCUPIERS IS TO PROVIDE SERVICES LIKE WATCH AND WAR D STAFF, ELECTRICITY, WATER AND OTHER COMMON AMENITIES'. 5.34 THE QUESTION ABOUT ITS TAXABILITY, I.E. WHETHE R THE RENT RECEIVED IS BUSINESS INCOME OR HOUSE PROPERTY INCOME AROSE BEFO RE THE HON'BLE HIGH COURT, WHICH CONSIDERED THE TEST LAID DOWN BY THE H ON'BLE SUPREME COURT IN THE CASE OF SULTAN BROTHERS PVT. LTD (1964)(51 ITR 33). THE RELEVANT OBSERVATIONS MADE BY THE HON'BLE HIGH COURT IS EXTR ACTED BELOW:- 'BEFORE TAKING A DECISION ON THE ISSUE LET US FIRST DEAL WITH THE DECISIONS CITED BY MR. MURARKA. (I) SULTAN BROTHERS PVT. LTD. VS. CIT (1964) 51 ITR 353 (SC) : A FIVE JUDGES' BENCH OF THE APEX COURT HEREIN HAS CON SIDERED A CASE :. ? .1 ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 19 WHERE IN THE ASSESSEE CONSTRUCTED A BUILDING AND FI LLED IT UP WITH FURNITURE AND FIXTURES AND LET IT OUT ON LEASE FULL Y EQUIPPED AND FURNISHED FOR THE PURPOSE OF RUNNING A HOTEL. THE L EASE PROVIDED FOR A MONTHLY RENT FOR THE BUILDING AND A HIRE CHAR GE FOR THE FURNITURE AND FIXTURES.' 5.35 DEALING WITH THE SAID CASE, THE APEX COURT HEL D THAT THE LETTING OUT OF THE SAID BUILDING DID NOT AMOUNT TO THE CARRYING ON OF A BUSINESS AND THE INCOME TINDER THE LEASE WOULD NOT, THEREFORE, BE AS SESSED AS INCOME FROM BUSINESS. THE APEX COURT DIRECTED THE SAID INCOME T O BE ASSESSED ACCORDINGLY. 5.36 TO DECIDE SUCH AN ISSUE THE APEX COURT GAVE A GUIDELINE THAT TO COME TO T CONCLUSION ONE HAS TO FIND OUT THE ANSWER ON T HREE ISSUES NAMELY: (A) WAS IT THE INTENTION IN MAKING THE LEASE - AND IT MATTERS NOT WHETHER THERE IS ONE -LEASE OR TWO, I.E., SEPARATE LEASES IN RESPECT OF THE FURNITURE AND THE - THAT THE TWO SHO ULD BE ENJOYED TOGETHER? (B) WAS THE INTENTION TO MAKE THE LETTING OF THE TW O PRACTICALLY ONE LETTING? (C) WOULD ONE HAVE BEEN LET ALONE, AND A LEASE OF IT ACCEPTED, WI THOUT THE OTHER? IF THE ANSWERS TO THE FIRST TWO QUESTIONS ARE IN TH E AFFIRMATIVE AND THE LAST IN THE NEGATIVE, THEN IT HAS TO BE HEL D THAT THE LETTINGS WOULD BE INSEPARABLE. 5.37 THE HON'BLE HIGH COURT, ALTERNATIVELY, APPLIED THE TESTS PRESCRIBED BY THE HON'BLE SUPREME COURT ON THE FACT S PREVAILING IN THE CASE OF SHAMBU INVESTMENTS PVT. THE RELEVANT OBSERVATIONS MADE BY THE HIGH COURT AR E EXTRACTED BELOW:- LET US APPROACH THE PROBLEM FROM ANOTHER ANGLE BY APPLYING THE TEST SUGGESTED BY THE FIVE JUDGES' BENCH IN THE CASE OF SULTAN BROTHERS PVT. LTD. (1964) 51 ITR 353 (SC). THE THREE QUESTIONS FRAMED BY THE APEX COURT ARE APPLIED IN THE INSTANT CASE AS FOLLOWS (PAGE 363): (A) WAS IT THE INTENTION IN MAKING THE LEASE - AND IT MATTERS NOT WHETHER THERE IS ONE LEASE OR TWO, I.E., SEPARATE L EASES IN RESPECT OF THE FURNITURE AND THE BUILDING - THAT THE TWO SHOUL D BE ENJOYED TOGETHER? ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 20 IN THE INSTANT CASE THERE IS NO SEPARATE AGREEMENT FOR FURNITURE AND FIXTURES OR FOR PROVIDING SECURITY AND OTHER AM ENITIES. THE ONLY INTENTION, IN OUR VIEW, WAS TO LET OUT THE POR TION OF THE PREMISES TO THE RESPECTIVE OCCUPANTS. HENCE, THE IN TENTION IN MAKING SUCH AGREEMENT IS TO ALLOW THE OCCUPANTS TO ENJOY THE TABLE SPACE TOGETHER WITH THE FURNITURE AND FIXTURE S. HENCE, THIS QUESTION SHOULD BE ANSWERED IN THE AFFIRMATIVE. (B) WAS IT THE INTENTION TO MAKE THE LETTING OF THE TWO PRACTICALLY ONE LETTING (PAGE 363): FROM A PLAIN READING OF THE AGREEMENT IT APPEARS TH AT THE INTENTION OF THE PARTIES TO THE SAID AGREEMENT IS CLEAR AND U NAMBIGUOUS BY WHICH THE FIRST PARTY HAS ALLOWED THE SECOND PARTY TO ENJOY THE SAID TABLE SPACE UPON PAYMENT OF THE COMPREHENSIVE MONTHLY RENT. HENCE, THIS QUESTION SHOULD BE ANSWERED IN TH E AFFIRMATIVE. (C) WOULD ONE HAVE BEEN LET ALONE, AND A LEAST OF I T ACCEPTED, WITHOUT THE OTHER (PAGE 363)? AS WE HAVE DISCUSSED HEREINBEFORE THAT IT IS COMPOS ITE TABLE SPACE LET OUT TO VARIOUS OCCUPANTS, THE AMENITIES GRANTED TO THOSE OCCUPANTS INCLUDING THE USER OF THE FURNITURE AND FIXTURES AR E ATTACHED TO SUCH LETTING OUT AND THE LAST QUESTION, IN VIEW OF THE S AME, MUST BE ANSWERED IN THE NEGATIVE. APPLYING THE SAID TEST WE HOLD THAT BY THE SAID AGR EEMENT THE PARTIES HAVE INTENDED THAT SUCH LETTING OUT WOULD BE AN INS EPARABLE ONE. HENCE, WE HOLD THAT THE PRIME OBJECT OF THE ASSESSE E UNDER THE SAID AGREEMENT WAS TO LET OUT THE PORTION OF THE SAID PR OPERTY TO VARIOUS OCCUPANTS BY GIVING THEM ADDITIONAL RIGHT OF USING THE FURNITURE ARID FIXTURES AND OTHER COMMON FACILITIES FOR WHICH RENT WAS BEING PAID MONTH BY MONTH IN ADDITION TO THE SECURITY FEE ADVA NCE COVERING THE ENTIRE COST OF THE SAID IMMOVABLE PROPERTY. IN VIEW OF THE FACTS AND LAW DISCUSSED ABOVE WE HOL D THAT THE INCOME DERIVED FROM THE SAID PROPERTY IS AN INCOME FROM PR OPERTY AND SHOULD BE ASSESSED AS SUCH. THE VIEW TAKEN BY THE HON'BLE CALCUTTA HIGH COURT W AS APPROVED BY THE HON'BLE SUPREME COURT AND THE SAID DECISION OF THE APEX COURT IS REPORTED IN 263 ITR 143. 5.33 IN THE INSTANT CASE, THE THREE QUESTIONS FRAME D BY THE APEX COURT ARE APPLIED IN THE INSTANT CASE AS FOLLOWS: ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 21 (A) WAS IT THE INTENTION IN MAKING THE LEASE -AND I T MATTERS NOT WHETHER THERE IS ONE LEASE OR TWO, I.E. SEPARATE LEASES IN RESPECT OF THE FURNITURE AND THE BUILDING - THAT THE TWO SHOULD BE ENJOYED TOGET HER? IN THE INSTANT CASE THERE IS NO SEPARATE AGREEMENT FOR THE FURNITURE AND FIXTURES OR FOR PROVIDING SECURITY AND OTHER AMENIT IES. THE ONLY INTENTION WAS TO LET OUT THE PREMISES TO THE OCCUPANT. HENCE, THE INTENTION WAS TO ALLOW THE OCCUPANT TO USE THE SPACE. THERE WAS NO INTENTI ON THAT THE TWO SHOULD BE ENJOYED TOGETHER. HENCE, THIS QUESTION SHOULD BE ANSWERED IN THE NEGATIVE. (B) WAS IT THE INTENTION TO MAKE THE LETTING OF THE TWO PRACTICALLY ONE JETTING? FROM A PLAIN READING OF THE AGREEMENT IT APPEARS TH AT THE INTENTION OF THE PARTIES TO THE LEASE AGREEMENT WAS TO EXPLOIT THE C OMMERCIAL ASSET AND NOT THE PROPERTY ALONE. HENCE, THIS QUESTION SHOULD BE ANSWERED IN THE NEGATIVE. (C) WOULD ONE HAVE BEEN LET ALONE, AND A LEAST OF I T ACCEPTED, WITHOUT THE OTHER? THE APPELLANT HAD LET OUT THE PREMISES AND AS PER T HE DIRECTIONS OF THE LESSEE PROVIDED VARIOUS AMENITIES IN IT SO THAT THE PREMISES CAN BE USED AS A MALL. THE PREMISES COULD HAVE BEEN LET OUT INDEPEND ENTLY AND THE AMENITIES PROVIDED THEREIN WHERE AT THE BEHEST OF THE LESSEE. HENCE, IN VIEW OF THE SAME, THE QUESTION MUST BE ANSWERED IN THE NEGATIVE . 5.39 SINCE, FOR HOLDING THE INCOME AS HOUSE PROPERT Y, THE FIRST TWO QUESTIONS SHOULD BE ANSWERED IN POSITIVE AND THE LAST ONE IN NEGATIVE WAS NOT SO IN THE INSTANT CASE, THE RENTAL INCOME WILL HAVE TO BE HEL D AS BUSINESS INCOME. THEREFORE THE GROUND OF APPEAL OF THE APPELLANT IS ALLOWED. 5. THE REVENUE HAS COME IN APPEAL BEFORE US AGITATI NG THE ABOVE FINDINGS OF THE CIT(A) VIDE WHICH HE HAS HELD THAT THE INCOM E FROM LEASED PREMISES IS TO BE TREATED AS BUSINESS INCOME OF THE ASSESSEE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORDS. WE FIND THAT THE LD. CIT(A) HAS DISCUSSED IN DETAIL THE NATURE OF ACTIVITIES OF THE ASSESSEE AND THEREAFTER HAS EXAMI NED THE FACTS OF THE CASE OF THE ASSESSEE IN THE LIGHT OF THE VARIOUS JUDICIAL D ECISIONS OF THE HIGHER AUTHORITIES AS REPRODUCED ABOVE. HE HAS RIGHTLY OB SERVED THAT IT WAS NOT A SIMPLE CASE OF LETTING OUT OF THE PROPERTY. THE PR EMISES IN QUESTION WAS ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 22 SPECIALLY DESIGNED TO BE OPERATED AS A COMMERCIAL C OMPLEX WITH LOT OF AMENITIES AND FACILITIES ATTACHED TO IT, WHICH ACTI VITY WAS A PART OF THE OBJECTS OF THE ASSESSEE COMPANY AS PROVIDED IN THE MEMORAND UM OF ASSOCIATION OF THE COMPANY. THE LD. CIT(A) HAS OBSERVED THAT THE MAIN INTENTION OF THE ASSESSEE IN THIS CASE WAS TO EXPLOIT THE PROPERTY B Y WAY OF COMPLEX COMMERCIAL ACTIVITIES. THE ASSESSEE HAD BEEN OFFER ING COMPLEX SERVICES BY WAY OF PROVIDING AMENITIES SUCH AS INFRASTRUCTURE F ACILITIES, EXCALATORS, POWER BACK-UP, CENTRAL AIR- CONDITIONING, LIFTS, MAINTENA NCE OF THE COMMON AREA AND MAINTENANCE OF A WHOLE LOT OF OTHER FACILITIES. TH E LD. CIT(A) HAS LISTED THE VARIOUS FACILITIES AND AMENITIES OFFERED BY THE ASS ESSEE TO THE OCCUPANTS IN THE RELEVANT PART OF HIS ORDER AS REPRODUCED ABOVE.. T HE LD. CIT(A) HAS ALSO OBSERVED THAT THE AMOUNT TOWARDS MAINTENANCE OF THE PREMISES AND THE FACILITIES WAS PAID IN ADVANCE BY THE ASSESSEE AND IN FACT HAD MADE CONTRIBUTION TO THE CORPUS OF THE MAINTENANCE OF TH E FUND. AFTER ANALYZING THE ENTIRE LEASE AGREEMENT AND THE DETAILS OF THE SERVI CES AND AMENITIES OFFERED BY THE ASSESSEE HE ARRIVED AT A CONCLUSION THAT THE EN TIRE ACTIVITY WAS CARRIED OUT BY THE ASSESSEE IN AN ORGANIZED MANNER AS BUSINESS VENTURE WITH MANY DAY TO DAY ACTIVITIES BEING CARRIED OUT BY THE ASSESSEE. THE INTENTION OF THE ASSESSEE WAS TO EXPLOIT THE COMMERCIAL ASSET AND NOT THE PRO PERTY ALONE. THE SERVICES AND AMENITIES PROVIDED BY THE ASSESSEE COMPANY WERE INSEPARABLE. 7. IT HAS BEEN TIME AND AGAIN HELD BY THE VARIOUS J UDICIAL AUTHORITIES THAT MERELY BECAUSE INCOME WAS ATTACHED TO A PROPERTY IT COULD NOT BE A SOLE FACTOR FOR ASSESSING SUCH INCOME AS INCOME FROM HOUSE PROP ERTY. IT HAS TO BE SEEN THAT WHETHER IT WAS THE PRIMARY OBJECTIVE OF THE AS SESSEE TO EXPLOIT THE PROPERTY IN A SIMPLE MANNER OR TO EXPLOIT IT COMMER CIALLY BY WAY OF COMPLEX COMMERCIAL ACTIVITIES TO GENERATE INCOME. THE ASSE SSEE IN THIS CASE HAS DEVELOPED THE SHOPPING MALL AND HAS LET OUT THE SAM E BY PROVIDING HOST OF ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 23 SERVICES/FACILITIES/AMENITIES AND THE BASIC INTENTI ON OF THE ASSESSEE HAS BEEN TO COMMERCIALLY EXPLOIT THE PROPERTY. THEREFORE, THE INCOME DERIVED FROM THE SHOPPING MALL IS LIABLE TO BE ASSESSED AS BUSINESS INCOME. IT IS AN UNDISPUTED FACT THAT IN THE MEMORANDUM OF ASSOCIATION OF COMPA NY, SOME OF THE MAIN OBJECTS OF THE COMPANY INTER ALIA ARE TO PURCHASE, ACQUIRE, TAKE ON LEASE ETC. AN AREA, LAND, BUILDING STRUCTURE AND TO DEVELOP AN D MAINTAIN THE SAME AS MARKETS OR OTHER BUILDINGS, RESIDENTIAL AND COMMERC IAL OR CONVINCES, DRAINAGE FACILITY, ELECTRIC, TELEPHONIC, TELEVISION INSTALLA TIONS AND TO DEAL WITH THE SAME IN ANY MANNER WHATSOEVER, TO CONSTRUCT, ERECT, BUIL D, LET OUT BUILDING STRUCTURES, HIGH TECH PARKS, HOUSES, APARTMENTS, HO SPITALS ETC. IT IS ALSO MENTIONED IN THE MAIN OBJECTS OF THE COMPANY TO CAR RY ON THE BUSINESS OF THE BUILDER TO DEVELOP THE PROPERTIES BY CONSTRUCTION O F MULTISTORIED COMMERCIAL COMPLEX AND TO GRANT THE SAME ON LEASE OR LICENSE O R TO SALE OR OTHERWISE DISPOSE OF THE PROPERTIES SO CONSTRUCTED AND ALSO T O MANAGE AND MAINTAIN THE PROPERTIES SO CONSTRUCTED. WHEN AS PER THE MEMORAN DUM OF ASSOCIATION OF THE COMPANY THE MAIN OBJECT OF THE COMPANY WAS TO T O PURCHASE AND ACQUIRE AND DEVELOP THE PROPERTY AND TO GIVE THE SAME ON LE ASE OR LICENSE BASIS ALONG WITH COMPLEX COMMERCIAL ACTIVITIES THEN THE COMPANY WAS JUSTIFIED IN DECLARING ITS INCOME FROM SUCH PROPERTY AS BUSINESS INCOME. THE INTENTION OF THE ASSESSEE WAS TO COMMERCIALLY EXPLOIT THE PROPER TY BY WAY OF COMPLEX ACTIVITIES AS PER ITS MAIN OBJECTS. THE OTHERWISE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE THE RENTAL INCOME FROM LEASING OF THE PREMISES INCLUDE SUBSTAN TIAL INCOME FROM PROVIDING AMENITIES AND FACILITIES. SUCH FACILITIES ARE NOT THE BASIC FACILITIES REQUIRED FOR OCCUPATION OR RENTING OF A BUILDING OR PREMISES, BUT THESE ARE THE SPECIAL FACILITIES FOR RUNNING OF THE MULTIPLEX/ SH OPPING MALL ETC. AND ARE MEANT TO ATTRACT THE CUSTOMERS AND PROVIDE COMFORT OF SHO PPING TO THEM. THESE FACILITIES CAN NOT BE SAID TO BE BASIC/NORMAL FACIL ITIES REQUIRED FOR OCCUPATION OF ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 24 THE PREMISES. NOT ONLY THE COST OF COMMON FACILITIE S HAS BEEN EMBEDDED IN THE LEASE RENTALS BUT ALSO THE SUBSTANTIAL AMOUNT ON AC COUNT OF PROVIDING AMENITIES/FACILITIES TO THE OCCUPANTS/TENANTS. THE ASSESSEES ACTIVITY THUS CAN NOT BE SAID TO BE MERE LETTING OF THE BUILDING OWNE D BY IT BUT ITS ACTIVITY IS A BUSINESS ACTIVITY OF CONSTRUCTION OF MALL, MAINTAIN ING IT, LEASING THE SHOPS/ AREA FOR THE PURPOSE OF COMMERCIAL EXPLOITATION OF THE A SSET, ARRANGE AND PROVIDE THE FACILITIES AND AMENITIES NOT ONLY TO THE OCCUPA NTS/LESSEES BUT ALSO TO PROVIDE AND MAINTAIN FACILITIES AND AMENITIES IN THE COMMON AREAS FOR THE ATTRACTION, CONVENIENCE AND COMFORT OF THE CUSTOMERS/VISITORS. IN OUR VIEW, AS PER THE MODERN DAY TRENDS OF RETAIL BUSINESS AND CUSTOMER PREFERENCES, NOT ONLY THE QUANTUM OF RENT/INCOME FR OM THE MULTIPLEX BUT ALSO THE VERY LETTING OF THE PREMISES DEPENDS UPON THE P ROVISIONS OF FACILITIES AND AMENITIES PROVIDED TAKING INTO CONSIDERATION NOT ON LY THE NEED AND REQUIREMENTS OF THE BUSINESS ENTITIES/OCCUPANTS BUT ALSO THE COMFORT ZONE OF THE CUSTOMERS/VISITORS. THE LD. A.R. OF THE ASSESSEE IN THIS RESPECT HAS EXPLAINED THAT THE RENTAL INCOME RECEIVED BY THE ASSESSEE FRO M LETTING OUT THE COMMERCIAL COMPLEX ALONG WITH AMENITIES WAS VERY HIGH IN COMPA RISON TO THE ORDINARY LETTING OFF OF ANY BUILDING. HE HAS EXPLAINED THAT FOR AN INVESTMENT OF ABOUT RS.25 CRORES THE ASSESSEE WAS GETTING THE RENTAL IN COME OF RS.2.5 CRORES WHICH WAS MUCH MORE THAN THE INCOME THAT CAN BE FAILED FR OM ORDINARY LETTING OF THE BUILDING. THE ASSESSEE HAD MADE HIGH INVESTMENTS F OR EQUIPMENTS AND INFRASTRUCTURE FOR PROVIDING THE AMENITIES. HE HAS FURTHER EXPLAINED THAT IN THE CASE OF THE SISTER CONCERN OF THE ASSESSEE M/S. KHA NDELWAL ESTATE PVT. LTD., UNDER SIMILAR CIRCUMSTANCES, THE RENTAL INCOME HAS BEEN HELD TO BE AS BUSINESS INCOME BY THE TRIBUNAL VIDE ORDER DATED 07.02.2014 PASSED IN ITA NO.2692/M/2010. HE HAS FURTHER INVITED OUR ATTENTI ON TO THE BALANCE SHEET OF THE ASSESSEE TO SHOW THAT THE ASSESSEE HAD BORROWED HUGE FUNDS FOR THE CONSTRUCTION AND DEVELOPMENT OF THE COMMERCIAL COMP LEX WHICH ACTIVITY WAS ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 25 NOT LIKE THAT OF AN ORDINARY OWNER OF THE PROPERTY WHO LETS OUT THE SAME FOR EARNING RENTAL INCOME BUT THE SAME WAS AN ORGANIZED , PLANNED ACTIVITY TO CONSTRUCT THE SHOPPING MALL, PROVIDE THE INFRASTRUC TURE AND RELATED AMENITIES AND TO EXPLOIT THE SAME COMMERCIALLY. IN AN ORDINA RY LETTING NO ONE WILL BORROW SUCH A HUGE AMOUNT JUST TO LET OUT THE PROPE RTY FOR EARNING RENTAL INCOME WHICH GENERALLY DOES NOT GIVE APPROPRIATE RE TURNS AS COMPARED TO THE INVESTMENTS. IN THIS CASE, THE ASSESSEE HAD TAKEN HUGE RISK OF BORROWINGS AND LOSS WHICH WAS TEMPTED BY THE EXPECTATIONS OF HIGH RETURNS AND THE SAME CANNOT BE SAID TO BE ORDINARY LETTING OF THE HOUSE PROPERTY. THE ACTIVITY OF CONSTRUCTION OF MULTIPLEX ITS MAINTENANCE AND PROVI DING AMENITIES AND FACILITIES THEREIN, THUS CAN NOT BE SAID TO BE MERE LETTING OUT OF THE PROPERTY BUT IN OUR VIEW IS A COMPOSITE BUSINESS ACTIVITY. 8. THE HON'BLE SUPREME COURT IN THE CASE OF KARNANI PROPERTIES LTD. V. CIT [1971] 82 ITR 547 HAS LAID DOWN THE PRECISE TES TS THAT ARE NECESSARY TO DETERMINE WHETHER THE SERVICES RENDERED BY AN ASSES SEE TO ITS TENANTS/RECIPIENTS OF SERVICE, ARE IN THE NATURE OF BUSINESS ACTIVITIE S AND INCOME GENERATED THEREFROM ASSESSABLE AS BUSINESS INCOME, OR NOT. TH E HON'BLE SUPREME COURT HAS EXPRESSED THE VIEW THAT IF THE SERVICES RENDERE D BY THE ASSESSEE ARE THE RESULTS OF ITS ACTIVITIES CARRIED ON CONTINUOUSLY I N AN ORGANIZED MANNER, WITH A SET PURPOSE AND WITH A VIEW TO EARN PROFITS, THOSE ACTIVITIES WOULD CONSTITUTE BUSINESS ACTIVITIES AND THE INCOME ARISING THEREFRO M WOULD BE ASSESSABLE AS BUSINESS INCOME UNDER SECTION 28 OF THE ACT. THE ACTIVITIES OF THE ASSESSEE IN THIS CASE IN PROV IDING THE VARIOUS SERVICES/FACILITIES/AMENITIES MEET ALL THE AFORESAI D FOUR REQUIREMENTS LAID DOWN BY HON'BLE SUPREME COURT TO QUALIFY AS BUSINESS ACT IVITIES. 9. IN A VERY RECENT JUDGMENT, THE HON'BLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENT LTD. [2015] 373 I TR 673(SC) HAS NOTED ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 26 THAT IN ITS (SUPREME COURT) EARLIER JUDGMENT IN THE CASE OF KARANPURA DEVELOPMENT CO. LTD. VS. CIT 44 ITR 362 (SC), TH E POSITION OF LAW ON THIS ISSUE HAS BEEN SUMMED UP IN THE FOLLOWING WORDS:- 'AS HAS BEEN ALREADY POINTED OUT IN CONNECTION WITH THE OTHER TWO CASES WHERE THERE IS A LETTING OUT OF PREMISES AND COLLECTION O F RENTS THE ASSESSMENT ON PROPERTY BASIS MAY BE CORRECT BUT NOT SO, WHERE THE LETTING OR SUB-LETTING IS PART OF A TRADING OPERATION. THE DIVING LINE IS DIFFICULT T O FIND; BUT IN THE CASE OF A COMPANY WITH ITS PROFESSED OBJECTS AND THE MANNER OF ITS AC TIVITIES AND THE NATURE OF ITS DEALINGS WITH ITS PROPERTY, IT IS POSSIBLE TO SAY O N WHICH SIDE THE OPERATIONS FALL AND TO WHAT HEAD THE INCOME IS TO BE ASSIGNED.' THE HON'BLE SUPREME COURT THUS HAS EMPHASIZED THE P ROFESSED OBJECTS AND THE MANNER OF ACTIVITIES CARRIED OUT BY AN ASSE SSEE. IT HAS ALSO BEEN POINTED OUT THAT THE NATURE OF DEALINGS WITH THE PROPERTY W OULD ALSO BE FACTOR TO DETERMINE WHETHER THE ACTIVITIES FALL FOR CONSIDERA TION UNDER THE HEAD `'BUSINESS INCOME'' OR 'HOUSE PROPERTY INCOME'. THE HONBLE SU PREME COURT THUS NOTICED THE AFORESAID PRINCIPLE AND APPLIED THE SAME TO THE FACTS OF THE CASE BEFORE IT. THE FACTS OF THE CASE BEFORE THE HONBLE SUPREME CO URT WERE THAT AS PER THE MEMORANDUM OF ASSOCIATION, THE MAIN OBJECTS OF THE APPELLANT COMPANY WAS TO ACQUIRE AND HOLD THE PROPERTIES KNOWN AS CHENNAI H OUSE AND FIRHAVIN ESTATE BOTH IN CHENNAI AND TO LET OUT THOSE PROPER TIES AS WELL AS MAKE ADVANCES UPON THE SECURITY OF LANDS AND BUILDINGS O R OTHER PROPERTIES OR ANY INTEREST THEREIN. IN THE RETURN THAT WAS FILED, THE ENTIRE INCOME WHICH ACCRUED AND WAS ASSESSED IN THE SAID RETURN WAS FROM LETTIN G OUT OF THOSE PROPERTIES. THE HONBLE SUPREME COURT WHILE RELYING UPON ITS TH E VARIOUS OTHER DECISIONS HELD THAT IN SUCH A CASE THE IRRESISTIBLE CONCLUSIO N WOULD BE THAT THE LETTING OF THE PROPERTIES WAS IN FACT THE BUSINESS OF THE ASSE SSEE AND THE INCOME ARISING THEREFROM WAS TO BE TREATED UNDER THE HEAD INCOME FROM BUSINESS AND THAT IT CANNOT BE TREATED AS INCOME FROM HOUSE PROPERTY. WH AT THE HONBLE SUPREME COURT EMPHASIZED UPON WAS THAT THE HOLDING THE AFOR ESAID PROPERTIES AND ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 27 EARNING INCOME BY LETTING OUT THOSE PROPERTIES WAS THE MAIN OBJECTIVE OF THE COMPANY. THE FACTS OF THE CASE OF THE ASSESSEE BEFORE US ARE ON BETTER FOOTINGS. THE ASSESSEES OBJECTS ARE NOT IN RESPECT OF LETTING OF ANY PARTICULAR PROPERTY, BUT IT HAS THE MAIN OBJECTS OF ACQUIRING, CONSTRUCTING, OP ERATING AND MAINTAINING OF THE MULTIPLEXES, BUSINESS CENTER, I.T. PARKS, SOFTW ARE ZONES, COMMERCIAL & RESIDENTIAL COMPLEXES AND TO GRANT THE SAME ON LEAS E/LICENSE ALSO. THE VERY OBJECT IS THE COMMERCIALLY EXPLOITATION OF THE PROP ERTIES. BESIDES THAT THE ASSESSEE IS ALSO PROVIDING HOSTS OF AMENITIES AND F ACILITIES, AS DISCUSSED ABOVE, WHICH AMOUNTS TO COMPOSITE BUSINESS ACTIVITY. THUS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ABOVE NOTED DECISIONS OF THE HONBLE SUPREME COURT. WE THEREFORE HOLD THAT THE INCOME/LOSS FROM THE MUL TIPLEX IS LIABLE TO BE ASSESSED AS BUSINESS INCOME/LOSS AND NOT AS INCOME FROM HOUSE PROPERTY. THE ASSESSEE CONSEQUENTLY IS ALSO ENTITLED TO THE CLAIM OF DEDUCTIONS IN RESPECT OF EXPENDITURE INCURRED AND DEPRECIATION ON ASSETS ETC . IN RELATION TO SUCH INCOME. HENCE, WE DO NOT FIND ANY REASON TO DEVIATE FROM TH E FINDINGS RECORDED BY THE LD. CIT(A) ON THIS ISSUE. 10. THE NEXT ISSUE RAISED BY THE REVENUE IS AS TO W HETHER THE INTEREST ON FIXED DEPOSITS KEPT WITH BANK IS TO BE TREATED AS B USINESS RECEIPTS OR INCOME FROM OTHER SOURCES. ADMITTEDLY, THE INTEREST WAS E ARNED FROM THE BANK RECEIPTS. THE LD. A.R. COULD NOT CONVINCE US AS TO HOW THE INTEREST EARNED ON FIXED DEPOSITS CAN BE SAID TO BE BUSINESS ACTIVITY OF THE ASSESSEE. WE DO NOT AGREE WITH THE FINDING OF THE LD. CIT(A) THAT SINCE THE INCOME FROM THE LETTING OUT OF THE COMMERCIAL COMPLEX HAS BEEN TREATED AS B USINESS INCOME THEN THE INTEREST FROM FDRS IS ALSO TO BE TREATED AS BUSINES S INCOME. THE INTEREST ON FDRS HAS NO RELATION WITH THE BUSINESS OF LETTING O UT OF THE PROPERTY OF THE ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 28 ASSESSEE. THIS ISSUE IS ACCORDINGLY DECIDED AGAINS T THE ASSESSEE AND IN FAVOUR OF THE REVENUE. GROUND NO.6 OF THE REVENUE IS THER EFORE TREATED AS ALLOWED. 11. THE IDENTICAL ISSUES TAKEN BY THE REVENUE IN AL L THE APPEALS ARE THEREFORE DECIDED ACCORDINGLY. 12. NOW COMING TO THE APPEALS FILED BY THE ASSESSEE . THE ASSESSEE IN HIS APPEAL FOR A.Y. 2006-07 HAS RAI SED THE FIRST ISSUE AS TO THE TREATMENT OF INCOME FROM LETTING OF THE COMMERCIAL COMPLEX. IN VIEW OF OUR OBSERVATIONS MADE ABOVE, THE INCOME FROM THE LETTIN G OUT OF THE COMMERCIAL COMPLEX IS HELD AS BUSINESS INCOME OF THE ASSESSEE. THIS ISSUE IS DECIDED ACCORDINGLY. 13. THE NEXT ISSUE RAISED IN THIS APPEAL IS RELATIN G TO THE TREATMENT OF INTEREST INCOME AS TO WHETHER THE SAME IS TO BE ASSESSED AS BUSINESS INCOME OR INCOME FROM OTHER SOURCES. IN VIEW OF OUR OBSERV ATIONS MADE ABOVE, THE SAME IS HELD TO BE INCOME FROM OTHER SOURCES. THIS GROUND IS ACCORDINGLY DECIDED AGAINST THE ASSESSEE. 14. THE ASSESSEE HAS TAKEN AN ADDITIONAL GROUND AGI TATING THE DISALLOWANCE OF INTEREST EXPENDITURE IN PROPORTION TO THE LOAN G IVEN TO SISTER CONCERNS. THE LD. A.R. OF THE ASSESSEE HAS SUBMITTED THAT THE ASS ESSEE HAD SUFFICIENT INTEREST FREE FUNDS AVAILABLE TO IT TO MEET THE ADVANCES GIV EN TO SISTER CONCERNS. HENCE, AS PER THE PROPOSITION OF LAW LAID DOWN BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. 221 CTR 435 WHEREIN IT HAS BEEN HELD THAT IF THERE BE INTEREST FREE FUNDS AVAILABLE TO AN ASS ESSEE SUFFICIENT TO MEET ITS INVESTMENTS AND AT THE SAME TIME THE ASSESSEE HAD RAISED A LOAN IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM THE INTEREST FREE FUNDS AVAILABLE. THE ASSESSEE HAD SUFFICIENT OWN FUNDS AND AS PER T HE LAW ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 29 LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA) THE PRESUMPTION WILL BE THAT THE ADVANCES WERE GIVEN OUT OF THE OWN FUNDS. CONSIDERING THE ABOVE SUBMISSION OF THE ASSESSEE, WE RESTORE THIS I SSUE TO THE FILE OF THE AO TO EXAMINE WHETHER THE ASSESSEE WAS HAVING SUFFICIENT OWN FUNDS TO MEET THE ADVANCES GIVEN TO SISTER CONCERNS, IF THE CONTENTIO N OF THE ASSESSEE IS FOUND TO BE CORRECT THEN NO DISALLOWANCE WOULD BE ATTRACTED IN THE LIGHT OF THE PROPOSITION OF THE LAW LAID DOWN BY THE HONBLE JUR ISDICTIONAL HIGH COURT (SUPRA). THIS ISSUE IS DECIDED ACCORDINGLY. 15. IN ASSESSEES APPEAL FOR A.Y. 2007-08, 2008-09 & 2009-10 IDENTICAL GROUNDS HAVE BEEN RAISED WHEREIN THE SOLE ISSUE INV OLVED IS IN RELATION TO THE DISALLOWANCE OF INTEREST EXPENDITURE IN PROPORTION TO INTEREST FREE LOAN GIVEN TO SISTER CONCERNS. IN VIEW OF OUR FINDINGS GIVEN ABO VE, THE ISSUE IS RESTORED TO THE FILE OF THE AO TO EXAMINE AS TO WHETHER THE ASS ESSEE WAS HAVING SUFFICIENT OWN FUNDS TO MEET THE ADVANCES GIVEN TO SISTER CONC ERNS AND TO DECIDE THE ISSUE IN THE LIGHT OF THE LAW LAID DOWN BY THE HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. (SU PRA). 16. IN VIEW OF OUR OBSERVATIONS MADE ABOVE, THE DIF FERENT ISSUES RAISED IN THE ABOVE TITLED APPEALS ARE HELD TO BE DECIDED ACCORDI NGLY. THE APPEALS OF THE REVENUE ARE THUS ALLOWED IN PART. THE APPEAL OF THE ASSESSEE FOR AY 2006-07 IS TREATED AS PARTLY ALLOWED WHEREAS THE APPEALS FOR A Y 2007-08 TO 2009-10 ARE ALLOWED IN THE TERMS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 23.09.2015. SD/- SD/- (G.S. PANNU) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 23.09.2015. * KISHORE, SR. P.S. ITA NO.919/H/2012, ITA NOS.1989, 1990 & 1991/M/2013 ITA NOS.2750, 2751 & 2746/M/2013 M/S. M.S. LUVISH PROJECTS (P) LTD. 30 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.