Gulmohar Park Mall Pvt. Ltd., Ahmedabad V. The Dy.CIT, Circle-4, Ahmedabad

ITA 3560/AHD/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0896 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 18-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N R SONI
• Assessee Lawyers: P B PARMAR
• Keywords: Business income; Depreciation; TDS
• Section: 143(3); 201; 208

Judgement Text

ITA NOS. 3559 & 3560/AHD/2015 GULMOHAR PARK MALL PVT LTD VS. DCIT ASSESSMENT YEAR: 2010-11 & 2011-12 PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD [CORAM: JUSTICE P P BHATT, PRESIDENT AND PRAMOD KUM AR, VICE PRESIDENT] ITA NOS.3559 & 3560/AHD/2015 ASSESSMENT YEAR: 2010-11 & 2011-12 GULMOHAR PARK MALL PVT LTD ...... ......APPELLANT GULMOHAR PARK, SATELLITE ROAD, AHMEDABAD [PAN : AACCN 2111 Q] VS. DY. COMMISSIONER OF INCOME-TAX .. .. RESPONDENT CIRCLE 4, AHMEDABAD APPEARANCES BY TUSHAR HEMANI & PB PARMAR, FOR THE APPELLANT NR SONI, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 04.06.2019 DATE OF PRONOUNCEMENT : 27.08.2019 O R D E R PER PRAMOD KUMAR, VICE PRESIDENT: 1. THESE TWO APPEALS PERTAIN TO THE SAME ASSESSEE, INVOLVE SOME COMMON ISSUES ARISING OUT OF A COMMON SET OF FACTS, AND WE RE HEARD TOGETHER. AS A MATTER OF CONVENIENCE, THEREFORE, WE ARE DISPOSING OF THESE A PPEALS TOGETHER BY THIS CONSOLIDATED ORDER. 2. WE FIRST TAKE UP ITA NO. 3559/AHD/2015. THIS AP PEAL IS DIRECTED AGAINST THE ORDER DATED 23.10.2015 PASSED BY THE CIT(A)-2, AHME DABAD IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME-TAX A CT, 1961, FOR THE ASSESSMENT YEAR 2010-11. 3. THE GRIEVANCES RAISED BY THE ASSESSEE ARE AS FOL LOWS:- 1.0 THE CIT(A) ERRED IN UPHOLDING COMPUTATION OF I NCOME AT RS.15,37,872/- AS AGAINST LOSS OF RS. 7,63,06,820/- RETURNED BY TH E APPELLANT. THE APPELLANT SUBMITS THAT COMPUTATION OF THE LOSS RETURNED BY TH E APPELLANT WAS IN CONSONANCE WITH THE PROVISIONS OF LAW AND THE FACTS IN THE CASE OF THE APPELLANT. THE APPELLANT SUBMITS THAT IT BE SO HELD NOW. 2.0 THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THAT RS.9,28,81,991/- WAS ASSESSABLE UNDER THE HEAD INCO ME FROM HOUSE PROPERTY AS AGAINST UNDER THE HEAD PROFIT AND GAINS OF BUSIN ESS RETURNED BY THE APPELLANT. ITA NOS. 3559 & 3560/AHD/2015 GULMOHAR PARK MALL PVT LTD VS. DCIT ASSESSMENT YEAR: 2010-11 & 2011-12 PAGE 2 OF 8 2.1 THE ASSESSING OFFICER OUGHT TO HAVE ASSESSED IN COME OF RS. 9,28,81,991/- UNDER THE HEAD PROFIT AND GAINS OF BUSINESS. RS. 9, 28,81,991/- BE ASSESSED UNDER THE HEAD PROFIT AND GAIN OF BUSINESS. 3.0 THE APPELLANT WITHOUT PREJUDICE TO ABOVE SUBMI TS THAT IT HAD LET ON HIRE MACHINERY, PLANT ETC. AND LETTING OF THE BUILDING I S INSEPARABLE FROM LETTING OF THE MACHINERY, PLANT ETC. THE CIT(A) THEREFORE OUGH T TO HAVE HELD THAT INCOME OF RS. 9,28,81,991/- WAS CHARGEABLE TO TAX UNDER TH E HEAD INCOME FROM OTHER SOURCES UNDER PROVISIONS OF SECTION 57(2)(III). THE CIT(A) FURTHER OUGHT TO HAVE ALLOWED DEDUCTIONS FOR EXPENSES AND DEPRECIATI ON U/S 57. THE APPELLANT SUBMITS THAT IT BE SO HELD. 4.0 THE APPELLANT SUBMITS THAT EACH AND EVERY EXPEN DITURE DEBITED TO THE PROFIT AND LOSS ACCOUNT AND CONSIDERED IN COMPUTATI ON OF THE TOTAL INCOME WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. THE ASSESSING OFFICER OUGHT TO HAVE ALLOWED DEDUCTION I N RESPECT OF EACH AND EVERY EXPENSES AND ALSO IN RESPECT OF DEPRECIATION AS PER THE PROVISIONS OF LAW. THE APPELLANT SUBMITS THAT IT BE SO HELD NOW. 5.0 THE ASSESSING OFFICER ERRED IN RESTRICTING D EDUCTION TO RS. 6,33,86,149/- BEING INTEREST ON BORROWED FUNDS. THE APPELLA NT SUBMITS THAT EXPENDITURE OF RS.7,87,11,753/- WAS INCURRED BY THE APPELLANT BY WAY OF INTEREST ON THE BORROWED FUNDS WHICH WERE UTILIZED FOR CONSTRUCTING THE HOUSE PROPERTY AND ACQUIRING PLANTS AND MACHINERY AND EQUIPMENTS WHERE FROM INCOME WAS DERIVED. THE ASSESSING OFFICER OUGHT TO HAVE ALL OWED DEDUCTION OF RS.7,87,11,753/- IN COMPUTATION OF THE TOTAL INCOME . THE APPELLANT SUBMITS THAT IT BE SO HELD NOW. 6.0 THE ASSESSING OFFICER ERRED IN NOT ALLOWING DE DUCTION IN RESPECT OF VARIOUS EXPENSES INCURRED WHOLLY AND EXCLUSIVELY FOR THE PU RPOSE OF THE BUSINESS AND DEPRECIATION ON THE FIXED ASSETS AGAINST INCOME FRO M BUSINESS OPERATIONS OF RS. 15,37,872/- COMPUTED BY HIM. THE APPELLANT SUBM ITS THAT EACH AND EVERY EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS AND THE FIXED ASSETS WERE USED FOR THE PUR POSE OF THE BUSINESS OF THE APPELLANT. THE APPELLANT SUBMITS THAT THE ASSES SING OFFICER OUGHT TO HAVE ALLOWED DEDUCTION IN RESPECT OF VARIOUS EXPENSES AN D ALSO DEPRECIATION ON PLANT AND MACHINERY, MACHINERY EQUIPMENTS ETC. WHER EFROM INCOME FROM BUSINESS WAS DERIVED. THE APPELLANT SUBMITS THAT IT BE SO HELD NOW. 7.0 THE ASSESSING OFFICER ERRED IN RAISING DEMAND O F RS. 5,64,482/-. THE APPELLANT SUBMITS THAT THE DEMAND IS ERRONEOUS AND CONTRARY TO THE FACTS AND NOT ENFORCEABLE IN THE EYES OF LAW. THE DEMAND BE Q UASHED. 7.1 THE APPELLANT WITHOUT PREJUDICE TO ABOVE FURTHE R SUBMITS THAT THE ASSESSING OFFICER HAS COMMITTED AN ERROR IN COMPUTI NG THE DEMAND OF RS.5,64,482/-. THE ASSESSING OFFICER BE DIRECTED TO MAKE CORRECT COMPUTATION OF THE TAX AND HE BE DIRECTED TO ALLOW CREDIT IN RE SPECT OF EACH AND EVERY PAYMENT OF TAX. THE APPELLANT SUBMITS THAT INTEREST IF ANY CHARGED BY THE ASSESSING OFFICER BE QUASHED. ITA NOS. 3559 & 3560/AHD/2015 GULMOHAR PARK MALL PVT LTD VS. DCIT ASSESSMENT YEAR: 2010-11 & 2011-12 PAGE 3 OF 8 4. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFI CER NOTICED THAT THE ASSESSEE HAS SHOWN THE RECEIPTS FROM VARIOUS LET-OUT PROPERT IES LOCATED IN AHMEDABAD IN THE NAME OF NAVRATNA S.G. HIGHWAY PROPERTIES PVT LTD. THE INCOME IS CLASSIFIED IN TWO DIFFERENT HEADS, I.E. (I) MALL OPERATING REVENUE AN D (II) COMMON AREA MAINTENANCE REVENUE. THE ASSESSEE HAS ALSO CLAIMED ALL THE BUSI NESS EXPENDITURE AGAINST SUCH INCOME. THE ASSESSING OFFICER NOTED THAT THE ASSES SEE HAS TAKEN DEPOSIT FROM ALL THE PARTIES TO WHOM THE AREAS WERE LEASED OUT IN TH E MALL PREMISES. IT WAS IN THIS BACKDROP THAT THE ASSESSING OFFICER REQUIRED THE AS SESSEE TO SHOW-CAUSE AS TO WHY THE INCOME FROM BUSINESS SHOULD NOT BE TREATED AS I NCOME FROM HOUSE PROPERTY. THE ASSESSEE MADE ELABORATE SUBMISSIONS IN RESPONSE TO THE SHOW-CAUSE NOTICE AND, INTER ALIA, POINTED OUT THAT THE INCOME HAS BEEN DERIVED NOT ON LY FROM LEASING OUT OF THE PROPERTIES SIMPLICITER, BUT ALSO ON ACCOUNT OF COMPLEX INTEGRATED SERVICES WHICH HAVE GENERATED THE REVENUE IN QUESTION. HE ALSO PO INTED OUT THAT, IN A MALL, APART FROM PROVIDING THE PLACE FOR OPERATING BUSINESS, VA RIOUS SERVICES SUCH AS SECURITY, CLEANLINESS, HOUSEKEEPING, REPAIRS AND MAINTENANCE, ELECTRIFICATION, MAINTENANCE OF THE ELEVATORS, SECURITY TO BUILDING ROUND THE CLOCK , VEHICLE PARKING SERVICES AND OTHER SERVICES ARE TO BE PROVIDED. ASSESSEE HAS ALSO REL IED UPON SERIES OF JUDICIAL PRECEDENTS. NONE OF THESE SUBMISSIONS, HOWEVER, IM PRESSED THE ASSESSING OFFICER. HE PROCEEDED TO TREAT THE ENTIRE INCOME AS INCOME F ROM HOUSE PROPERTY. HIS LINE OF REASONING IS AS FOLLOWS:- 4. THE ASSESSEES REPLY IS DULY CONSIDERED BUT N OT FOUND ACCEPTABLE IN VIEW OF THE FOLLOWING: 4.1 THE ASSESSEE DERIVES INCOME FROM LEASING VARI OUS SPACES IN THE MALL. FURTHER, THE ASSESSEE HAS ALSO COLLECTED DEPOSITS F ROM VARIOUS TENANTS TO WHOM THE PREMISES ARE GIVEN ON LEASE. THE ASSESSEE IN ITS REPLY DATED 03.01.2013 STATED THAT IT HAS PROVIDED CERTAIN INCI DENTAL SERVICES SUCH AS MAINTENANCE OF THE BUILDING, MAINTAINING THE INNER AREAS GIVEN ON LEASE, MAINTAINING ELEVATORS, PROVISION OF SECURITY SERVIC E ETC. THE ASSESSEE CLAIMS DEPRECIATION ON THE ASSETS AND CLAIMS INTEREST COST S UNDER THE HEAD OF PROFIT & GAINS OF BUSINESS OR PROFESSION. IN FACT, THE A SSESSEES INCOME IN HAVING THE NATURE OF HOUSE PROPERTY AND NOT BUSINESS INCOM E IN CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSEE DERIVES ITS MAJOR PART OF INCOME FROM GIVING ON LEASE THE MALL PREMISES. IT HAS COLLECTED DEPOSIT FROM THE TENANTS WHILE LEASING OUT THE VARIOUS SPACE/ARE A OF THE MALL PREMISES AND COLLECTS RENT REGULARLY FROM THESE TENANTS AS PER T HE AGREEMENT. THE ABOVE INGREDIENTS OF THE TRANSACTIONS TOOK PLACE DURING T HE YEAR UNDER ASSESSMTN BRINGS ITS NATURE OF INCOME IN THE FORM OF INCOME FROM HOUSE PROPERTY. 4.2 THE ASSESSEE CLAIMED DURING THE ASSESSMENT PRO CEEDING THAT IN THE AUDIT REPORT ISSUED BY THE AUDITOR IN FORM 3CD THE INCOME IS DERIVED FROM DEVELOPMENT AND MAINTENANCE OF IMMOVABLE PROPERTIES AND MALL MANAGEMENT. THE PLEA OF THE ASSESSEE ON THE BASIS O F THIS ASPECT ONLY CANNOT BE ACCEPTED WHERE ITS VERY BASIC NATURE OF I NCOME IS FALLING UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IT IS ALSO APPAR ENT FROM THE FACTS OF THE CASE THAT MERELY STATING THE ABOVE IN FORM NO. 3 CD DOES NOT BRING THE INCOME OF THE ASSESSEE UNDER THE HEAD 'PROFIT & GAI NS FROM BUSINESS OR PROFESSION' ITA NOS. 3559 & 3560/AHD/2015 GULMOHAR PARK MALL PVT LTD VS. DCIT ASSESSMENT YEAR: 2010-11 & 2011-12 PAGE 4 OF 8 4.3 ON VERIFICATION OF THE DETAILS OF LEGAL AND PRO FESSIONAL CHARGES SUBMITTED BY THE ASSESSEE VIDE SUBMISSION DATED 24/12/2012, A NNEXURE 16 THE TDS DEDUCTED BY VARIOUS PARTIES OF RS.80,760/- UNDER TH E PROVISION OF SECTION 194 I OF THE ACT WHICH DEALS WITH TDS ON RENT FROM LETT ING OUT PROPERTY. THIS TDS MADE BY VARIOUS PARTIES ALSO CONFIRMS THE FACT THAT THE ASSESSEE DERIVED THE RENT INCOME WHICH IS LIABLE TO BE TREATED UNDER THE HEAD OF HOUSE PROPERTY ONLY AND CAN BE BRING TO TAX UNDER THE HEAD OF BUSI NESS INCOME. 4.4. THE ASSESSEE STATED IN ITS REPLY DATED 13.03. 2013 THAT IT PUTS RELIANCE ON THE DECISION K.DEV CO. LTD VS. CIT REPORTED AT 44 I TR 362 (SC) AND IN CASE OF SHEETAL KHURANA FOOD LTD. VS. ITAT REPORTED AT 1 1 TAXMAN.COM 68 WHEREIN HONBLE PUNJAB & HARYANA HIGH COURT HELD TH AT WHERE THE TRANSACTIONS OF LEASING IS INVOLVING THE BUSINESS O PERATIONS THE INCOME FALLS UNDER THE HEAD BUSINESS INCOME AND ONE HAS TO CONSI DER ALL THE FACTORS FOR THE PURPOSE OF DERIVING WHETHER IT IS BUSINESS OPER ATIONS OR NOT. THE ASSESSEE FURTHER STATED THAT IT HAS PROVIDED SEVERA L SERVICES AND BUSINESS FACILITIES TO THE LESSEES AND ALL THE BUSINESS ACTI VITIES NAMELY LEASING OF THE UNITS AND PROVIDING OTHER VARIOUS SERVICES ARE INSE PARABLE AND UNDER THE CIRCUMSTANCES EACH AND EVERY REVENUE IS BUSINESS TR ADING RECEPT AND HAS BEEN CONSIDERED ACCORDINGLY. THE ASSESSEE FURTHER RELIED UPON THE PRINCIPLE SETTLED BY THE HONBLE SUPREME COURT IN THE CASE OF SULTAN BROS. PVT LTD. VS. CIT REPORTED AT 51 ITR 353. THE ASSESSEE PUT RELIA NCE ON THE FOLLOWING CASE LAWS: (A) MAZAGAON DOCK LTD VS. CIT 34 ITR 368 (SC) (B) B P RAY VS. ITO 129 295 (SC) (C) S.V. MERCANTILE CORPO (P) LTD VS. CIT, 83 ITR 7 00 (SC) (D) CIT VS. KHOSTLA INDIA LTD , 700 (SC) (E) UNIVERSAL PLANT LTD, 237 ITR 454 (SC) (F) CIT VS. VIKRAM COTTON MILLS LTD, 169 ITR 597 (S C) (G) BALAJI ENTERPRISES VS. CIT 225 ITR 471 (KERALA ) (H) PFH MALL & RETAILS MGT. LTD. VS. ASST, CIT 16 G OT 83 (KOLKATA LTAT). THE ABOVE CASE LAWS ARE DULY CONSIDERED BUT THE SAM E ARE NOT FOUND ACCEPTABLE IN VIEW OF THE FACTS AND CIRCUMSTANCES O F THE ASSESSEE'S CASE. THE ASSESSEES EASE IS A CLEAR CASE WHICH INVOLVES WRON G TREATMENT OF THE BASIC NATURE OF INCOME AND BY WHICH CLAIMING THE DEDUCTIO NS/EXPENSES WHICH ARE NOT ALLOWABLE AS PER THE LAW. RELIANCE IS PUT ON TH E FOLLOWING LEGAL DECISIONS RELEVANT TO THE PRESENT CASE: (A) EAST INDIA HOUSING & LAND DEVELOPMENT TRUST LTD. VS. COMMISSIONER OF INCOME TAX (42 ITR 49 [SC] 1961): INCOME RECEIVED FROM TENANTS FROM SHOPS AND STAFFS BY AN ASSESSEE COMPANY FORMED WITH AN OBJECT OF DEVELOPING LANDED PROPERTIES IS LIABLE TO BE TAXED AS PROPERTY INCOME AND NOT AS BU SINESS INCOME. FURTHER, IN THIS CASE IT WAS ALSO HELD THAT INCOME FROM TENANTS OF SHOPS AND STALLS IS INCOME FROM PROPERTY IRRESPECTIVE OF THE FACT THAT IT IS RECEIVED BY A COMPANY FORMED WITH THE OBJECT OF DEV ELOPING AND SETTING UP MARKETS AND THE OCCUPANTS ARE NOT PERMAN ENT. ITA NOS. 3559 & 3560/AHD/2015 GULMOHAR PARK MALL PVT LTD VS. DCIT ASSESSMENT YEAR: 2010-11 & 2011-12 PAGE 5 OF 8 (B) FURTHER RELIANCE IS ALSO PLACED ON : - SHAMBHU INVESTMENT (P) LTD VS. CIT (2003) 263 ITR 1 43 (SC) - CIT VS. NEW BHARAT ENGINEERING (JAM) PVT LTD (1992) 203 ITR 678 (GUJ) - ITO V. SHRI DWARKADHIS ESTATE (1992) 203 ITR 678 (G UJ) - CIT VS. NEW INDIA INDUSTRIES LTD (1993) 201 ITR 208 (BOM) - PAREKH TRADERS VS. CIT (1984) 150 ITR 310 (BOM) - SCINDIA POTTERIES (P) LTD VS. CIT (2001) 171 CTR 45 7 (DEL) - CIT VS. CHENNAI PROPERTIES & INVESTMENTS LTD (2004) 266 ITR 685 (MAD) - AR COMPLEX VS. ITO (2007) 292 ITR 615 (MAD.) THE ABOVE REFERRED CASE LAWS EMPHASIZE THE FACT THA T INCOME FROM LETTING-OUT THE SPACE AND THE PROPERTY WHICH IS SHO WN AS BUSINESS ASSETS/STOCK IN TRADE IN THE BALANCE SHEET AND WHIC H IS GIVEN ON RENT DOES NOT CHANGE THE NATURE OF INCOME. THUS, IN VIEW OF THE ABOVE THE FACT IS LEADING TO TREAT THE INCOME OF THE ASSESSEE TO BE CONSIDERED AS INCOME FROM HOUSE PROPERTY. IN VIEW OF THE FACTS ME NTIONED ABOVE, I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCU RATE PARTICULARS OF ITS INCOME AND HENCE PENALTY PROCEEDINGS U/S. 271(1 )(C) OF THE ACT IS INITIATED SEPARATELY FOR FURNISHING INACCURATE PART ICULARS ON THIS COUNT. 5. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. LEARNED CIT(A) WAS OF THE CONS IDERED VIEW THAT THE ASSESSEE HAS UNDOUBTEDLY GIVEN SERVICES TO THE PERSONS OCCUP YING BUSINESS PREMISES IN THE MALL, BUT THEN HE HAS ALSO CHARGED COMMON AREA MAIN TENANCE CHARGES (CAM) AS WELL. UNDER THESE CIRCUMSTANCES, THE CIT(A) WAS OF THE VIEW THAT THE ENTIRE INCOME CANNOT BE TREATED AS BUSINESS INCOME. HE ALSO NOTE D THAT AS EVIDENT FROM FORM NO. 26AS OF THE APPELLANT, THE TENANTS HAVE MADE TAX DE DUCTED AT SOURCE (TDS) UNDER SECTION 194-I, WHICH SUPPORTS THE VIEW OF THE ASSES SING OFFICER TREATING THE INCOME UNDER THE HEAD INCOME FROM THE HOUSE PROPERTY. T HE ACTION OF THE ASSESSING OFFICER WAS THUS CONFIRMED. THE ASSESSEE IS AGGRIE VED AND IS IN FURTHER APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 7. WE HAVE NOTED THAT IN ASSESSEES OWN CASE FOR TH E ASSESSMENT YEAR 2009- 10, THE ASSESSING OFFICER HIMSELF HAS ACCEPTED THE TREATMENT OF INCOME IN QUESTION AS PROFITS AND GAINS FROM BUSINESS OR PROFESSION. NO DOUBT THE PRINCIPLES OF RES JUDICATA DO NOT APPLY TO THE INCOME-TAX PROCEEDINGS , BUT WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH DIFFERENT ASSESSMENT YEAR S HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSI TION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL APPRO PRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. THIS IS SO HELD BY T HE HONBLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG V. CIT [1992] 193 ITR 32 1 (SC). IN THIS PERSPECTIVE, WHEN WE APPROACH THE FACTS OF THE PRESENT CASE, WE FIND THAT WHETHER THE INCOME IN QUESTION IS TO BE TREATED AS INCOME FROM HOUSE PROP ERTY OR INCOME FROM BUSINESS OR PROFESSION IS A QUESTION WHICH MUST DEPEND ON THE A PPRECIATION OF COMPLEX WEB OF ITA NOS. 3559 & 3560/AHD/2015 GULMOHAR PARK MALL PVT LTD VS. DCIT ASSESSMENT YEAR: 2010-11 & 2011-12 PAGE 6 OF 8 FACTS PERTAINING TO THE SERVICES OFFERED BY MALL TO , AND FOR, THOSE OCCUPYING THE BUSINESS PREMISES ON SUCH MALL. ONCE THE ASSESSING OFFICER HIMSELF COMES TO THE CONCLUSION THAT GIVEN THE COMPLEXITY OF THESE SERVI CES AND ALL THESE FACTS BEING TAKEN AS INTEGRATED WHOLLY THE INCOME IN QUESTION IS TO B E TAXED AS BUSINESS INCOME, IT WOULD NOT AT ALL APPROPRIATE FOR THE ASSESSING OFFI CER TO DEVIATE FROM SUCH A STAND, WITHOUT ANY MATERIAL CHANGE IN THE FACTS AND CIRCUM STANCES IN A SUBSEQUENT YEAR. IN ANY EVENT, THE MAINTENANCE CHARGE FOR COMMON AREA M AINTENANCE IS ONLY ONE OF THE SEGMENTS OF SERVICES PROVIDED TO THE UNIT HOLDERS I N THE MALL. THE COMMON AREA MAINTENANCE IS ONE ASPECT WHERE COSTS ARE SHARED BU T THAT DOES NOT MEAN THAT ALL OTHER SERVICES AND AMENITIES ESSENTIAL TO SMOOTH FU NCTIONING AND CONDUCIVE TO BUSINESS, CAN BE IGNORED FOR THE PURPOSE OF ASCERTA INING THE NATURE OF BUSINESS MODEL. IT, THEREFORE, CANNOT BE SAID, ON THE FACTS AND CIRCUMSTANCES THAT ALL THE SERVICES WHICH HAVE BEEN PROVIDED TO THE UNIT HOLDE RS HAVE BEEN SEPARATELY TAXED AS BUSINESS INCOME. THE FACT REMAINS THAT EVEN THO UGH COMMON AREA MAINTENANCE SERVICES ARE CHARGED FOR CERTAIN SERVICES, THERE AR E LARGER NUMBER OF SERVICES SUCH AS ROUND-THE-CLOCK SECURITY, ELECTRIFICATION, CLEAN LINESS, PARKING SERVICES AND MOST OF OTHER SERVICES WHICH ARE INTEGRATED AND ESSENTIAL F OR SUCCESSFUL OPERATION OF MALL, CONSIDERATION FOR WHICH IS INCLUDED IN THE CHARGES RECEIVED FROM UNIT HOLDERS. THE FACT THAT THESE UNIT HOLDERS TREAT THESE CHARGES AS RENT SIMPLICITER AND TAX DEDUCTED AT SOURCE UNDER SECTION 194-I CANNOT DETERMINE THE QUESTION OF TAXABILITY IN THE HANDS OF THE RECIPIENT. IN THE BUSINESS MODEL EMBE DDED BY THE OPERATION OF THE SHOPPING MALL, AS WE HAVE POINTED OUT EARLIER, A CO MPLEX WEB OF INTEGRATED SERVICES ARE TO BE PROVIDED AND THE CONSIDERATION RECEIVED F ROM THOSE OCCUPYING THE BUSINESS PREMISES IS NOT SIMPLY AS SUCH RENT FOR TH E PREMISES. AS WE HOLD SO, WE FIND SUPPORT FROM HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF CIT VS. E CITY REAL ESTATE (P.) LTD., [2018] 100 TAXMANN.COM 94 (S C), WHEREIN THEIR LORDSHIPS HAS, INTER ALIA, OBSERVED AS FOLLOWS:- 14. IN THE PRESENT CASE, THE FACTS ARE OTHERWISE. THE SUBSTANTIVE INCOME OF THE ASSESSEE IS FROM LEASING OUT THE SHOP/STALLS. 15. THE TRIBUNAL IN ITS JUDGMENT, WHILE APPRECIATIN G THE FACTS, HAS OBSERVED THAT THE VARIOUS MALLS ARE BUILT BY ASSESSEE AND AR E OPERATED FROM THE YEAR 2001. THE OPERATIONAL INCOME RECEIVED FROM THE SAID ACTIVITY, IN THE FORM OF RENT, AND OTHER SERVICE CHARGES WAS CONSISTENTLY OF FERED TO TAX AS ITS BUSINESS INCOME IN THE EARLIER YEARS AND THE SAME WAS ACCEPT ED BY THE DEPARTMENT AS A BUSINESS INCOME. AFTER DEMERGER, BOTH THE ASSESSE E COMPANIES TOOK OVER THE ASSETS AND LIABILITIES OF THE DEMERGED COMPANY AND CONTINUED THE SAME BUSINESS OF OPERATING AND RUNNING THE MALLS. THE TR IBUNAL HAS CONSIDERED THE NATURE OF THE BUSINESS ACTIVITIES OF THE ASSESSEE C OMPANY, AS WELL AS, TERMS AND CONDITIONS OF THE RELEVANT AGREEMENTS, UNDER WH ICH THE COMMERCIAL SPACE IN THE MALL WAS GIVEN ON HIRE BY THE ASSESSEE COMPA NIES TO THE CONCERNED PARTIES. IT ALSO CONSIDERED THE VARIOUS SERVICES PR OVIDED BY THE ASSESSING COMPANIES DURING THE COURSE OF OPERATION AND RUNNIN G OF THE FAMILY ENTERTAINMENT CENTRE-CUM-MALLS. ON APPRECIATION OF FACTS, THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAVE CONCURRENTLY ARRIVE D AT A CONCLUSION THAT THE INTENTION OF THE ASSESSING COMPANIES WAS TO COMMERC IALLY EXPLOIT THE PROPERTY BY WAY OF COMPLEX COMMERCIAL ACTIVITIES AN D IT WAS NOT A CASE OF LETTING OUT THE PROPERTY SIMPLICITOR. THE RENTAL IN COME AND THE SERVICE CHARGES THUS WERE RECEIVED BY THE ASSESSEE COMPANY AS BUSIN ESS INCOME DURING THE ITA NOS. 3559 & 3560/AHD/2015 GULMOHAR PARK MALL PVT LTD VS. DCIT ASSESSMENT YEAR: 2010-11 & 2011-12 PAGE 7 OF 8 COURSE OF BUSINESS CARRIED OUT BY THEM OF OPERATING AND RUNNING A MALL AS A COMMERCIAL ACTIVITY. THE FACTS OF THE PRESENT CASE ARE MUCH SIMILAR TO THE CASE OF CHENNAI PROPERTIES AND INVESTMENTS LTD. (RE FERRED TO SUPRA). 16. WE FIND THAT THE APPRECIATION OF EVIDENCE BY TH E COMMISSIONER (APPEALS) AND TRIBUNAL IS NOT PERVERSE AND THE FINDING ARRIVE D AT BY THEM IS PLAUSIBLE ONE. 8. SPECIFICALLY DEALING WITH A MATERIALLY SIMILAR Q UESTION, THE HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. OBERON EDIFICES & ESTA TES (P) LTD, REPORTED IN [2019] 103 TAXMANN.COM 413 (KERALA), HAVE, INTER ALIA, OBSERVED AS FOLLOWS:- 27. IN THE INSTANT CASE, IT IS NOT A LETTING OUT O F PROPERTY SIMPLICITER, WITHOUT ANYTHING MORE. A HOST OF SERVICES ARE BEING PROVIDE D BY THE ASSESSEE AT THE SHOPPING MALL. THE ASSESSEE IS ENGAGED IN A COMPLEX SET OF ACTIVITIES AT THE SHOPPING MALL. MANAGEMENT OF THE SHOPPING MALL IS D ONE BY THE ASSESSEE. THE BASIC PURPOSE IS COMMERCIAL EXPLOITATION OF THE PROPERTY. THE ASSESSEE HAS EARNED THE INCOME NOT MERELY BY LETTING OUT THE SHOP ROOMS BUT ALSO BY PROVIDING AMENITIES AND FACILITIES AT THE SHOPPING MALL. SUCH AMENITIES AND FACILITIES ARE NOT THE BASIC FACILITIES REQUIRED FO R OCCUPATION OF A SHOP ROOM BY A TENANT. THEY ARE THE SPECIAL FACILITIES FOR RUNNI NG THE SHOPPING MALL AND ARE MEANT TO ATTRACT THE CUSTOMERS AND PROVIDE THEM THE COMFORT AND CONVENIENCE OF SHOPPING. IN CASES WHERE THE INCOME RECEIVED IS NOT FROM THE BARE LETTING OUT THE PROPERTY BUT ON ACCOUNT OF THE FACILITIES AND SERVICES RENDERED, THE OPERATIONS INVOLVED IN SUCH LETTING O UT IS IN THE NATURE OF BUSINESS AND THE INCOME DERIVED THEREFROM HAS TO BE TREATED AS BUSINESS INCOME AND NOT INCOME FROM PROPERTY. THE INCOME DER IVED BY THE ASSESSEE CANNOT BE REGARDED AS SIMPLY FROM THE EXERCISE OF P ROPERTY RIGHT. WHERE THE ASSESSEE COMPANY HAS DEVELOPED THE SHOPPING MALL AN D LET OUT THE SAME BY PROVIDING A VARIETY OF SERVICES, FACILITIES AND AME NITIES IN THE MALL, IT CAN BE FOUND THAT THE PRIMARY INTENTION OF THE ASSESSEE WA S COMMERCIAL EXPLOITATION OF THE PROPERTY AND WHERE IT HAS DERIVED SUBSTANTIA L PART OF ITS INCOME BY SUCH ACTIVITY, WHICH CONSTITUTES ITS MAIN BUSINESS, THE INCOME SO DERIVED WOULD BE BUSINESS INCOME OF THE ASSESSEE. WE, THEREFORE, AGR EE WITH THE VIEW OF THE TRIBUNAL THAT THE INCOME DERIVED BY THE ASSESSEE BY LETTING OUT THE SHOPS IN THE MALL HAS TO BE ASSESSED AS INCOME FROM BUSINESS AND NOT AS INCOME FROM HOUSE PROPERTY. 28. ON THE BASIS OF THE DISCUSSION ABOVE, WE FIND T HAT THE AMOUNT RECEIVED BY THE ASSESSEE COMPANY ON LETTING OUT THE SHOP ROOMS IN THE MALL CONSTRUCTED BY IT HAS TO BE TREATED AS BUSINESS INCOME AND IT H AS TO BE ASSESSED TO TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS' AND NOT UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY'. THE SUBSTANTIAL QUEST ION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 9. IN VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARIN G IN MIND ENTIRETY OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE AUTHORITIES BELOW WERE INDEED IN ERROR IN TREATING THE CONSIDERATION RECEIVED BY THE ASSESSEE FOR COMMERCIAL SPACE GIVEN IN ITA NOS. 3559 & 3560/AHD/2015 GULMOHAR PARK MALL PVT LTD VS. DCIT ASSESSMENT YEAR: 2010-11 & 2011-12 PAGE 8 OF 8 THE MALL TO VARIOUS PERSONS AS INCOME FROM HOUSE PR OPERTY. WE VACATE THE ACTION OF THE AUTHORITIES BELOW AND DIRECT THAT THE SAID INCO ME BE TREATED AS PROFITS AND GAINS FROM BUSINESS OR PROFESSION. AS THIS CORE ISSUE HA S BEEN DECIDED BY US IN FAVOUR OF THE ASSESSEE, ALL OTHER ISSUES ARE RENDERED ACADEMI C AND INFRUCTUOUS. THE APPEAL OF THE ASSESSEE IS THUS ALLOWED. 10. NOW WE TAKE-UP APPEAL NO. 3560/AHD/2015 FOR ASS ESSMENT YEAR 2011-12. LEARNED REPRESENTATIVES FAIRLY AGREE THAT IDENTICAL ISSUE HAS COME UP FOR ADJUDICATION BEFORE US IN THE IMMEDIATELY PRECEDING ASSESSMENT Y EAR, I.E. 2010-11, AND WHATEVER WE DECIDE IN THAT ASSESSMENT YEAR WILL APPLY MUTATIS MUTANDIS TO THIS ASSESSMENT YEAR AS WELL. AS WE HAVE DECIDED THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2010-11 IN FAVOUR OF THE ASSESSEE, AS DISCUSSED IN THE FOREGOING PARAS, WE ALLOW THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2011-12 AS WELL. 11. IN THE RESULT, BOTH APPEALS ARE ALLOWED AS INDI CATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 27 TH AUGUST, 2019. SD/- SD/- JUSTICE P P BHATT PRAMOD KUMAR (PRESIDENT) (VICE PRESIDENT) AHMEDABAD, DATED THE 27 TH DAY OF AUGUST, 2019 BT* COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF TAKING DICTATION: ....27.09.2019....... ......... 2. DATE OF TYPING & DRAFT ORDER PLACED BEFORE THE DI CTATING MEMBER: ..... 27.09.2019.............. . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S.: ..... 27.09.2019............... 4. DT. ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT: ...... 27.09.2 019... 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: . ..... 27.09.2019.................. 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: ..... 7. THE DT. ON WHICH THE FILE GOES TO THE ASTT. REGISTR AR FOR SIGNATURE ON THE ORDER: .................. ....... 8. DATE OF DESPATCH OF THE ORDER: .................... ....