VIBHUTI FINANCIAL SERVICES P LTD., Jaipur V. DCIT, Jaipur

ITA 313/JPR/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59528 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 08-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Keywords: Business income; Depreciation
• Section: 234B

Judgement Text

1 ITA 313(2)-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 313/JP/2011 ASSTT. YEAR : 2006-07. M/S.VIBHUTI FINANCIAL SERVICES PVT. LTD., VS. THE D CIT, CENTRAL CIRCLE-2, NOW KNOWN AS MAHIMA REAL ESTATE JAIPUR. PVT. LTD., A-3, JAI SINGH HIGHWAY, BANI PARK, JAIPUR. ITA NO.312/JP/2011 ASSTT. YEAR : 2006-07. M/S. MAHIMA REAL ESTATE PVT. LTD., VS. THE DCIT, C ENTRAL CIRCLE-2, 8, NIKHIL APARTMENTS, JAIPUR. 670, ADARSH NAGAR, JAIPUR. (APPELLANTS) (RESPONDENT) APPELLANT BY : SHRI SANJAY JHANWAR RESPONDENT BY : SHRI D.K. MEENA DATE OF HEARING : 3.11.2011. DATE OF PRONOUNCEMENT : 09.01.2012. ORDER DATE OF ORDER : 09.01.2012. PER R.K. GUPTA, J.M. THESE ARE TWO APPEALS BY THE ASSESSEE AGAINST THE ORDERS OF THE LD. CIT (A) RELATING TO ASSESSMENT YEAR 2006-07. 2. SIMILAR FACTS ARE INVOLVED IN BOTH THESE APPEALS , THEREFORE, THEY ARE BEING DISPOSED OFF TOGETHER. 3. WE WILL DISCUSS THE FACTS OF THE CASE OF M/S. VI BHUTI FINANCIAL SERVICES PVT. LTD. 2 4. GROUND NO. 1 WAS NOT PRESSED, THEREFORE, THE SAM E IS DISMISSED AS NOT PRESSED. 5. IN GROUND NO. 2, THE ASSESSEE IS OBJECTING IN TR EATING THE RENT RECEIVED FROM LETTING/RENTING OF SHOPS/OFFICES IN THE COMMERCIAL COMPLEX AS WELL AS FROM LETTING/RENTING OF SPACE ON ROOF AND SPACE ON WALLS FOR ADVERTISEME NT AS INCOME FROM BUSINESS INSTEAD OF INCOME FROM HOUSE PROPERTY AND THEREBY DENYING DEDUCTION CLAIMED UNDER SECTION 24(A) OF THE ACT BEING 30% OF ANNUAL VALUE. 6. BRIEF FACTS OF THE CASE RECORDED BY LD. CIT (A) AT PAGES 2 TO 6 ARE AS UNDER :- 2.1 BRIEF FACTS ON THE ISSUE ARE THAT M/S MAHIM A REAL ESTATE PVT. LTD (DENOTED AS DEVELOPER) ENTERED INTO AN AGREEMENT WI TH M/S VIBHUTI FINANCIAL SERVICES P. LTD., (DENOTED AS OWNER) FO R CONSTRUCTION OF COMMERCIAL COMPLEX NAMED CRYSTAL MALL INTER-ALIA INCLUDING THE FOLLOWING RELEVANT CLAUSES. (I) PARTIES TO THE AGREEMENT I.E. M/S VIBHUTI FINA NCIAL SERVICES PVT. LTD. IS DENOTED AS OWNER AND M/S MAHIMA REAL ESTATE PVT. LTD IS DENOTED AS DEVELOPER. (II) THAT THE DEVELOPER WILL BEAR THE COST OF CONST RUCTION STARTING FROM ARCHITECT FEE, CONVERSION OF LAND INTO COMMERCIAL A PPROVAL OF MAP BY THE APPROPRIATE AUTHORITY AN COST OF SUPERSTRUCTURE AND ALL OTHER EXPENDITURE RELATING ADVERTISEMENT STATES PROMOTION AND BROKERA GE. (III) THAT THE DEVELOPER WILL PAY RS. 15 LAKHS TO T HE OWNER AS EARNEST MONEY. (IV) THE CONSTRUCTION IS TO BE COMPLETED WITHIN 2 Y EARS OTHERWISE DEVELOPER HAS TO PAY PENALTY FOR DEFAULT OF EVERY D AY. (V) THAT THE DEVELOPER WILL BE ENTITLED TO GET 50% SHARE ON SALE OF DIFFERENT PORTIONS OF THE BUILDING. 3 (VI) ALL SALE OF AGREEMENT TO SALE WILL BE AFFECTED BY THE SIGNATURE OF BOTH THE PARTIES. IN THIS WAY DEVELOPER WILL HAVE L IEN OVER 50% OF LAND AND BUILDING. (VII) THAT THE DEVELOPER WILL CONSTRUCT OR MAKE CRE ATION OF AT LEAST RS. 10 LAKHS ON THE ROOF ONLY THEN HE WILL HAVE RIGHT O VER ROOF. THERE ARE OTHER CLAUSES IN THE AGREEMENT BUT ONLY A FEW RELEVANT CLAUSES ARE ENUMERATED ABOVE. 2.2 A.O. NOTED THAT APPELLANT HAS SOLD MOST OF SHOP /OFFICES IN THIS COMMERCIAL COMPLEX AND UNSOLD SHOP/OFFICES HAVE BEE N GIVEN ON RENT AND SHOWN INCOME FROM HOUSE PROPERTY. A.O. NOTED THE FO LLOWING FEATURES:- 1. FROM COLLABORATION AGREEMENT M/S VIBHUTI FINANCIAL SERVICES PVT. LTD. AND M/S MAHIMA REAL ESTATE PVT. LTD. THERE IS NO MENTION OF INTENTION OF LETTING OUT OF PROPERTY REMAINED UNSOL D. THEY ENTERED INTO AN AGREEMENT FOR CONSTRUCTION AND SALE OF THE COMME RCIAL BUILDING. 2. IT WAS LETTING OUT OF UNSOLD CLOSING STOCK (BUSINES S ASSET) FOR A TEMPORARY PERIOD TO EARN PROFIT. 3. IT IS SORT OF ARRANGEMENT TO FACILITATE SERVICES TO THE OWNERS OF THE SHOP IN THE COMPLEX. SUCH AS CRYSTAL MALL DEVELOPERS AND MAINTENANCE IS A COMPANY OF THE SAME GROUP HAVING SOME COMMON DIRECT ORS. IT HAS UNDERTAKEN THE TASK OF MAINTENANCE OF THE SHOPKEEPE RS OF THE COMPLEX BY PROPER UP KEEP OF THE BUILDING. 4. SIMILAR IS THE CONDITION OF LETTING OUT FOR CANTEEN . IT IS DONE WITH THE OBJECTIVE TO ATTRACT THE INTENDED BUYERS OF SHOP IN THE COMMERCIAL COMPLEX WHICH IS THE ULTIMATE BUSINESS PURPOSE. 4 5. SECONDLY, SHOPS OR SPACE GIVEN ON RENT STILL FORM T HE PART OF THE CLOSING STOCK. IT MEANS ASSESSEES HAVE NOT LEFT THE IDEA T O SALE THE LET OUT SPACE AND IT DOES NOT MATTER EVEN AFTER THE EXPIRY OF LEASE PERIOD. 6. THIRDLY, THERE HAVE BEEN SALE OF SPACE IN COMMERCIA L COMPLEX IN THE YEAR UNDER CONSIDERATION. 7. AGAIN THERE IS AN INCREASE OF ABOUT RS. 2 CRORE IN WORK-IN-PROGRESS INVENTORY (INVESTMENT IN CONSTRUCTION OF SHOP ETC.) FOR SALE IN THE RELEVANT YEAR. 8. SINCE INCEPTION COMPANY HAS UNDERTAKEN ONLY THE BUS INESS OF DEVELOPMENT AND SALE OF REAL ESTATE. 9. IT MEANS LETTING OUT OF BUSINESS ASSET WITH THE INT ENT TO REGAIN IT IS A MOTIVE TO EARN PROFIT BY EXPLOITATION OF BUSINESS A SSET UTILIZES THE PROFIT IN ANOTHER BUSINESS. 10. IN THE RELEVANT PREVIOUS YEAR SHOPS LET OUT TO GAIL INDIA LTD. HAS BEEN HYPOTHECATED TO PNB TO SECURE A LOAN OF RS. 21.82 L AKHS PAYABLE WITHIN 21 MONTHS. 11. HOT NUT RESTAURANT WAS INTENDED TO RUN BY THE ASSES SEE COMPANIES ITSELF BUT IT HAS BEEN LET OUT WITH PLANTS AND MACH INERY AND UTENSILS. DEPRECIATION ON SUCH PLANTS AND MACHINERY HAS BEEN CLAIMED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. HENCE THE AMOUNT RECEIVED IS FOR THE AREA LET OUT A S WELL AS FOR THE PLANTS AND MACHINERY AND UTENSILS. LET OUT AMOUNT C ANNOT BE SURROGATED FOR AREA AND PLANT AND MACHINERY. 5 2.3 A.O. FURTHER OBSERVED AS FOLLOWS:- (I) TOTAL CONSTRUCTION AREA IS REPRESENTED AND VALU ED IN CLOSING STOCK. IT SHOWS THE INTENTION OF THE ASSESSEE THAT UNSOLD STOCK LET OUT FOR CERTAIN PERIOD IS THE BUSINESS ASSET OF THE ASSESSEE COMPAN Y. (II) PREMISES NO. 304 TO 309 AND 401 TO 404 LET OUT GAIL INDIA LTD. UNDER A LEASE AGREEMENT FOR 9 YEARS. (III) AGAINST THE PROPOSED SALE OF THE SAME PREMISE S ASSESSEE HAS GOT ADVANCE RS. 45 LAKH FROM M/S KAMDHENU SUPPLIERS PVT . LTD. ADVANCES WERE RECEIVED FROM 28.8.03 TO 31.12.2003. (IV) LEASE RENT OUT WAS DISCOUNTED WITH PNB AND AGA INST SECURITY ON RENT RECEIVABLE FOR GAIL INDIA LTD FOR SHOP NO. 304 TO 309 AND 401 TO 404 LOAN OF RS. 1.60 CRORE HAS BEEN RAISED. IT HAS BEEN UTILIZED FOR THE PAYMENT OF OUTSTANDING LOAN OF THE COMPANY. COVENANT FOR TRANSFER OF SAID PROPERTY TO M/S KAMDH ENU SUPPLIERS PVT. LTD IS WAITING FOR COMPLIANCE ON THE PART OF B UYER TILL THEN THE BUSINESS ASSET WAS GIVEN ON LEASE AND LEASE RENT WA S DISCOUNTED TO RAISE LOAN AND IN CIRCUMSTANCES OF THE CASE, IT IS INFERR ED THAT IT IS THE EXPLOITATION OF BUSINESS ASSET DURING THE PERIOD IT REMAINED UNSOLD TO SATISFY OTHER BUSINESS NEEDS. ADVANCE FOR SALE HAS BEEN RECEIVED AND STILL THE AS SESSEE COMPANY HAS NOT BEEN GIVEN UP THE IDEA TO SALE IT. IMMATERI AL FOR THE PERIOD IT IS GIVEN ON LEASE. IT IS THE INTENTION OF THE ASSESSEE COMPANY TO ENJOY THE IMPUGNED SHOP AS BUSINESS ASSET I.E. STOCK-IN-TRADE NOT AS OWNER OF THE PROPERTY. THUS THE TOTAL LEASE RENT RS.33,76,584/- RECEIVED F OR M/S GAIL INDIA LIMITED IS TREATED AS BUSINESS RECEIPT NOT AS INCOM E FROM HOUSE PROPERTY. 6 (V) HOT NUT RESTAURANT WAS INITIALLY INTENDED TO RU N BY THE OWNER COMPANY WITH THIS OBJECTIVE CERTAIN KITCHEN EQUIPME NT WERE PURCHASED BY M/S VIBHUTI FINANCIAL SERVICES PVT. LTD THE OWNER I .E. 50% OWNER OF THE LAND AND BUILDING ALONGWITH PREMISES, KITCHEN EQUIP MENTS ARE GIVEN ON RENT TO M/S HOT NUT RESTAURANT, TO RUN UNDER THE SA ME MANAGEMENT RENT FOR KITCHEN EQUIPMENT (WDV ON 1.4.2005 RS. 454129/- ) IS DECLARED AS BUSINESS RECEIPTS BY M/S VIBHUTI FINANCIAL SERVICES PVT. LTD. HERE AGAIN THE EXPLOITATION OF THE BUSINESS ASSET I S MADE IN SOME OTHER WAY BUT IT STILL FORMS THE PART OF THE CLOSIN G STOCK. ABOVE ALL THE OWNER AND DEVELOPER COMPANY HAVE NOT GIVEN UP THE I DEA TO SALE THE PREMISES TO THE OTHER COMPANY UNDER SAME MANAGEMENT . THE COMMERCIAL ASSET STILL RETAINS THE CHARACTERISTICS THE COMMERC IAL ASSET DOES NOT MATTER WHETHER UTILIZED BY THE ASSESSEE OR SOME OTHERS. TH US AGAIN RENT RS.1,80,000/- RECEIVED FROM M/S HOT NUT RESTAURANT IS HELD AS BUSINESS INCOME NOT INCOME FROM HOUSE PROPERTY. (VI) SIMILAR IS THE CONDITION WITH RESPECT RENT REC EIVED BY LETTING OUT THE SHOP TO OTHER TENANTS AND REALIZATION OF RENTAL INC OME BY THE ASSESSEE WAS THE EXPLOITATION OF BUSINESS ASSET COMMERCIALLY IN THE COURSE OF ITS BUSINESS IN PROSECUTION OF ITS COLLABORATION OBJECT S. THUS RENT RECEIPT OF RS.2,52,000/- (FROM CRYSTAL MALL DEVELOPER RS.90,00 0/- SHASHI ARORA RS.60,000/- TULSIDAS SOMANI RS.30,000/- AND MURLI K UMAR RS.72,000/-) IS HELD AS BUSINESS RECEIPTS. (VII) ASSESSEE HAS SHOWN RECEIPT OF RS.22,40,353/- BY LETTING OUT THE ROOF FROM AND OTHER OPEN SPACE ON AND AROUND THE CO MMERCIAL BUILDING FOR SIGNAGE. ADVERTISEMENT BOARDS AND V SAT ANTENNA. IN THIS REGARD DIRECTOR OF THE COMPANY HAS ALREADY SUBMITTED BY REPLY DATED 5.12.08 TO TREAT THIS INCOME AS INCOME FROM OTHER SOURCES 7 INSTEAD OF INCOME FROM HOUSE PROPERTY. THIS VIEW WA S EXPRESSED TO AVOID LITIGATION WITH THE DEPARTMENT. HOWEVER, THE CONTEN TION OF THE ASSESSEE IS EXAMINED IN THE LIGHT OF STATUTE. IN THE INSTANT CASE OPEN SPACE ON AROUND THE BUILDI NG SUCH AS ROOF PARAPET FACE OF BUILDING ADJACENT OPEN CONSPICUOUS SPACE AROUND THE COMMERCIAL BUILDING ARE USED FOR ADVERTISEMENT SIGN AGE OR HOARDING AND INSTALLATION OF V SAT ANTENNA TO PROVIDE INTERNET B ROAD BAND SERVICE ARE THE UTILIZATION OF OPEN SPACE OF A COMMERCIAL BUILDING WHICH IS NECESSARILY NOT THE UTILIZATION OF THE BUILDING BUT THE EXPLOITATIO N OF SPACE OF COMMERCIAL ASSET. THUS THE ROOF OF OPEN SPACE ON AND AROUND A COMMERC IAL BUILDING CANNOT BE TERMED BUILDING OR LAND APPURTENANT THERE TO IN THE SPIRIT OF STATUTE DESCRIBED U/S 22 OF THE I.T. ACT. THEREFORE RECEIPTS BY LET-OUT SUCH OPEN SPACE DO NOT COME WITHIN THE AMBIT OF INCOME F ROM HOUSE PROPERTY. 2.5 ACCORDINGLY, THE A.O. HELD THE RECEIPT OF RS.30 ,24,468/- (50% SHARE OF THE APPELLANT) AS BUSINESS RECEIPTS INSTEA D OF INCOME FROM HOUSE PROPERTY AND DISALLOWED DEDUCTION U/S 24(A). 7. DETAILED SUBMISSIONS WERE FILED BEFORE LD. CIT ( A) WHICH ARE REPRODUCED IN THE ORDER OF LD. CIT (A) AT PAGE 6 OF HIS ORDER, ARE AS UNDER :- IT IS SUBMITTED THAT SECTION 22 OF I.T. ACT, 1961 HAS APPLICATION TO PROPERTY CONSISTING OF ANY BUILDING OR LANDS APARTM ENT THERETO. IF THE CONSTITUENT BUILDINGS, ETC ARE NOT OCCUPIED BY THE OWNER FOR THE PURPOSE OF ANY BUSINESS OR PROFESSION CARRIED ON BY HIM THE PROFITS OF WHICH ARE CHARGEABLE TO INCOME TAX. THE INCOME DERIVED BY THE OWNER FROM LETTING OUT THE BUILDING SUCH AS SHOPS GODOWN ETC IS ASSESS ABLE UNDER THIS SECTION AS INCOME FROM HOUSE PROPERTY (P.V.G. RAJU V. CIT 1967 66 ITR 122 8 (AP)), IT HELD IN THE CASE OF EAST INDIA HOUSING AN D LAND DEVELOPMENT TRUST LTD V. CIT (1961) 42 ITR 49 (SC) THAT EVEN IF THE COMPANY SET UP WITH THE OBJECT OF BUYING AND DEVELOPING LANDED PRO PERTIES AND PROMOTING AND DEVELOPING MARKETS, PURCHASED A PIECE OF LAND A ND BUILT THEREON A MARKET CONSISTING OF SHOPS AND STALLS ETC WHICH IT HAD LET OUT AND EARNED INCOME THEREBY THE INCOME WAS TO BE ASSESSED AS INC OME FROM HOUSE PROPERTY AND NOT FROM BUSINESS. IF AN ASSESSEE CARR IES ON BUSINESS OF PURCHASING AND SELLING BUILDING, INCOME RECEIVED FR OM THE BUILDING SO LONG AS THEY ARE OWNED BY THE ASSESSEE WILL BE SHOW N UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND NOT UNDER THE HEAD PROFITS AND GAIN OF BUSINESS. CIT V. CHUGANDAS & CO. (1965) 55 ITR 17 (SC). IN THE CASE OF COMPANIES BUILDING SPACES WHICH WERE LET OUT WERE T RADED AS ITS FIXED ASSET BEFORE LETTING OUT TO TENANTS. THERE IS NO LE TTING OUT OF PROPERTY TEMPORARILY OR FOR A SHORT PERIOD AND THEREFORE THE RE IS NO REASON TO ASSESS ANY PART OF RENTAL INCOME FROM PROPERTY AS BUSINESS INCOME. THE LD. A.O. IS WRONG IN ASSESSING THE INCOME FROM LETTING OUT O F BUILDING OWNED BY ASSESSEE AS INCOME FROM BUSINESS INSTEAD OF INCOME FROM HOUSE PROPERTY. THE LD. A.O. IS ALSO WRONG IN TREATING THE RENTAL I NCOME DERIVED BY ASSESSEE COMPANY FROM LETTING OUT, ROOF, PARAPET WA LL AND OUTER WALL OF BUILDING AS RENTAL INCOME DERIVED FROM OPEN SPACE A ND NOT FROM BUILDING. IN THIS CONNECTION, IT IS SUBMITTED THAT IN SECTION 22 OF I.T. ACT NO DEFINITION OF BUILDING OR LAND APPURTENANT THERETO HAS BEEN GIVEN AND THEREFORE ITS ORDINARY MEANING HAS TO BE ADOPTED. T HE WORD BUILDING WOULD THEREFORE INCLUDE BUILDING OCCUPIED OR INTEND ED FOR RESIDENCE, BUILDING LET OUT FOR OFFICE USE OR FOR STORAGE OR F OR WAREHOUSING OR FOR USE AS A FACTORY ETC. THE BUILDING INCLUDES ITS ROOF, P ARAPETS AND OUTER WALLS AND THEY CANNOT BE HELD AS SEPARATE FROM BUILDING O R MERELY OPEN SPACES. THE V. SATS ARE EITHER INSTALLED AT ROOF OR PARAPET WALLS OF BUILDINGS AND SIGNAGE AND ADVERTISEMENTS HOARDINGS ARE DISPLAYED ON WALLS OF BUILDING AND THUS THE RENT RECEIVED FROM LETTING OUT SPACES OF BUILDING FOR 9 INSTALLATION OF V. SAT AND FOR DISPLAY OF SIGNAGE A ND HOARDINGS ARE INCOME FROM PROPERTY ASSESSABLE U/S 22 OF I.T. ACT. IN VIEW OF ABOVE SUBMISSIONS THE LD. A.O. IS WRONG IN ASSESSING THE INCOME FROM LETTING OUT OF PROPERTY OWNED BY AS SESSEE COMPANY AS INCOME FROM BUSINESS INSTEAD OF INCOME FROM HOUSE P ROPERTY AS CLAIMED BY IT AND THEREBY DISALLOWING DEDUCTION OF RS. 9,54 ,423/- CLAIMED BY ASSESSEE U/S 24(A) OF I.T. ACT, 1961. 8. AFTER CONSIDERING THE SUBMISSIONS, THE LD. CIT ( A) FOUND THAT AO WAS JUSTIFIED IN TREATING THE RENTAL INCOME AS INCOME FROM BUSINESS AGAINST CLAIM OF THE ASSESSEE AS INCOME FROM HOUSE PROPERTY. THE FINDINGS OF LD. CI T (A) HAVE BEEN RECORDED IN PARA 2.7. THE DETAILED SUBMISSIONS WERE FILED BEFORE THE TRIB UNAL BY LD. A/R. THE SUBMISSIONS FILED BEFORE THE TRIBUNAL ARE SIMILAR TO THE SUBMIS SIONS FILED BEFORE LD. CIT (A). RELIANCE HAS BEEN PLACED BY LD. A/R ON VARIOUS CASE LAWS. A FTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT ASSES SEE DESERVES TO SUCCEED IN THE GROUNDS RAISED HERE BEFORE THE TRIBUNAL. IT IS SEEN THAT T HE ASSESSEE HAS DEVELOPED THE COMMERCIAL COMPLEX AND HAS SOLD TO VARIOUS PARTIES. SOME OF T HE SHOPS AND SPACE OF BUSINESS WAS LET OUT BY THE ASSESSEE AND THE RECEIPTS ON ACCOUNT OF RENTAL WERE SHOWN AS INCOME FROM HOUSE PROPERTY. IT IS NOT THE CASE OF THE DEPARTME NT THAT ASSESSEE CHARGING THE RENT ON ACCOUNT OF ALLOWING VARIOUS FACILITIES. A SPECIFIC SPACE HAS BEEN GIVEN ON RENT OR SHOP HAS BEEN GIVEN ON RENT AND RENT HAS BEEN SHOWN AS R ENTAL INCOME. THERE ARE CERTAIN OTHER FACILITIES WHICH ARE OBTAINED FROM PRIVATE AGENCIES I.E. LIFT CHARGES. THESE LIFT CHARGES ARE CONTRIBUTED BY ALL THE TENANTS INDIVIDUALLY AND THE RE WAS NO CLAIM OF THE ASSESSEE ON THIS ACCOUNT. IT IS NOT EVEN THE CLAIM OF THE DEPARTMEN T THAT ASSESSEE COLLECTED LIFT CHARGES AND THEN PAID TO THE LIFT OPERATOR. THESE EXPENSES ARE OF INDIVIDUAL AND INDIVIDUALLY HAD BEEN 10 MET BY VARIOUS PARTIES. THE ASSESSEE IS OWNER OF T HE PORTION WHICH HAS BEEN LET OUT BY IT. THEREFORE, IN OUR CONSIDERED VIEW, THE AO WAS NOT J USTIFIED IN TREATING THE RENTAL INCOME AS INCOME FROM BUSINESS. 9. SECTION 22 HAS APPLICATION TO PROPERTY CONSISTIN G OF ANY BUILDINGS OR LANDS APPURTENANT THERETO. IF THE CONSTITUENT BUILDING E TC. ARE NOT OCCUPIED BY THE OWNER THEN FOR THE PURPOSE OF ANY BUSINESS CARRIED ON BY HIM, THE PROFITS OF WHICH ARE CHARGEABLE TO INCOME-TAX. OTHERWISE THE RENT CHARGES BY ASSESSEE ON THE PROPERTY RENTED BY ASSESSEE ARE CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PRO PERTY. IN CASE OF PVG RAJU, 66 ITR 122 (AP), THE HONBLE ANDHRA PRADESH HIGH COURT HAS HELD THAT LETTING OUT THE BUILDING SUCH AS SHOPS, GODOWN ETC. IS ASSESSABLE UNDER THIS SECTION AS INCOME FROM HOUSE PROPERTY. 10. IN CASE OF EAST INDIA HOUSING AND LAND DEVELOPM ENT TRUST, 42 ITR 49 (SC), THE HONBLE SUPREME COURT HAS HELD THAT EVEN IF THE COM PANY SET UP WITH THE OBJECT OF BUYING AND DEVELOPING LANDED PROPERTIES AND PROMOTI NG AND DEVELOPING MARKETS, PURCHASED A PIECE OF LAND AND BUILT THEREON A MARKE T CONSISTING OF SHOPS AND STALLS ETC. WHICH IT HAD LET OUT AND EARNED INCOME THEREBY THE INCOME WAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY AND NOT FROM BUSINESS. 11. SIMILARLY IN CASE OF CHUGANDAS & CO., 55 ITR 17 (SC), THE HONBLE SUPREME COURT HAS HELD THAT INCOME IS ASSESSABLE AS INCOME FROM HOUSE PROPERTY. IN THIS CASE IT WAS HELD THAT IN CASE OF COMPANIES BUILDING SPACES WHICH WERE LET OUT WERE TRADED AS ITS FIXED ASSET BEFORE LETTING OUT TO TENANTS. THERE I S NO LETTING OUT OF PROPERTY TEMPORARILY OR FOR A SHORT PERIOD AND THEREFORE THERE IS NO REASON TO ASSESS ANY PART OF RENTAL INCOME FROM PROPERTY AS BUSINESS INCOME. 11 12. IN THE PRESENT CASE UNDISPUTEDLY THE PROPERTIES ARE NOT RENTED OUT TEMPORARILY OR FOR A SHORT PERIOD AND, THEREFORE, IN OUR CONSIDERE D VIEW, THERE WAS NO REASON TO HOLD THAT THIS IS A BUSINESS INCOME AND NOT INCOME FROM HOUSE PROPERTY. ACCORDINGLY, WE HOLD THAT AO AND LD. CIT (A) WERE NOT JUSTIFIED IN HOLDING TH AT INCOME OF THE BUILDING WAS INCOME FROM BUSINESS AND NOT FROM HOUSE PROPERTY. ACCORDIN GLY, WE ALLOW THE GROUND OF THE ASSESSEE AND THE AO IS DIRECTED TO ALLOW DEDUCTION AS PER PROVISIONS OF LAW APPLICABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 13. SIMILAR FACTS ARE INVOLVED IN CASE OF OTHER ASS ESSEE I.E. M/S. MAHIMA REAL ESTATE PVT. LTD. WHO IS 50% OWNER OF THE SAME LAND, AND WE HAVE ALREADY ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE WHILE DISPOSING THE APPEAL I N CASE OF M/S. VIBHUTI FINANCIAL SERVICES PVT. LTD. THEREFORE, ON THE SAME BASIS, W E ALLOW THE GROUND IN FAVOUR OF THE ASSESSEE AND DIRECT THE AO TO TREAT THE INCOME AS I NCOME FROM HOUSE PROPERTY AGAINST BUSINESS INCOME AS HELD BY AO. THE AO IS DIRECTED T O ALLOW STATUTORY DEDUCTION UNDER SECTION 24(A) OF THE ACT AS PER PROVISIONS OF LAW. 14. IN THIS CASE ALSO, THE GROUND NO. 1 WAS NOT PRE SSED. THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 15. REMAINING GROUND IN BOTH THE APPEALS IS AGAINST CHARGING OF INTEREST UNDER SECTION 234B AND 234D WHICH IS CONSEQUENTIAL IN NATURE. AC CORDINGLY, THE AO IS DIRECTED TO ALLOW CONSEQUENTIAL RELIEF, IF ANY. 16. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE S ARE ALLOWED IN PART. 17. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09 .01.2012. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER 12 JAIPUR, D/- COPY FORWARDED TO :- M/S. VIBHUTI FINANCIAL SERVICES PVT. LTD., JAIPUR. M/S. MAHIMA REAL ESTATE PVT. LTD., JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 313(2)/JP/2011) BY ORDER, AR ITAT JAIPUR.