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ITA 5352/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8665 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 12-06-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: TDS; Set aside
• Section: 143(3); 13; 22; 263; 12; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: SMC-2 (HEARING THROUGH VIDEO CONFERENCING), NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.5352/DEL./2019 ASSESSMENT YEAR: 2012-13 M/S. TELEKON MEDIA INDIA PVT. LTD., S-316, GROUND FLOOR, PANCHSHEEL ENCLAVE, MALVIYA NAGAR, DELHI VS. ITO, WARD-25(2), NEW DELHI PAN :AABCT5785B (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORD ER DATED 20/03/2019 PASSED BY THE LD. COMMISSIONER OF INCOME -TAX (APPEALS) -27, NEW DELHI [IN SHORT THE LD.CIT(A)] FOR ASSESSMENT YEAR 2012-13 RAISING FOLLOWING GROUNDS: 1. THAT, THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS.6,75,000/- MADE B Y LD. AO, AS CLAIMED BY THE ASSESSEE U/S 24(A) OF THE ACT TREATI NG THE INCOME EARNED FROM PROPERTY ALONG WITH FACILITIES UNDER TH E HEAD OF INCOME FROM OTHER SOURCE. APPELLANT BY SHRI RAJEEV SAXENA, ADV. RESPONDENT BY SHRI R.K. GUPTA, SR.DR DATE OF HEARING 14.07.2020 DATE OF PRONOUNCEMENT 21.07.2020 2 ITA NO.5352/DEL./2019 2. THAT, THE APPELLANT RESERVES THE RIGHT TO ADD, A LTER, AMEND AND DELETE ANY/ALL GROUNDS OF APPEAL EITHER BEFORE OR A T THE TIME OF HEARING OF APPEAL. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSE SSMENT UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (I N SHORT THE ACT) IN THE CASE OF THE ASSESSEE WAS COMPLETED ON 12/12/2014. THE SAID ASSESSMENT ORDER WAS SUBJECTED TO PROCEEDI NGS UNDER SECTION 263 OF THE ACT BY THE COMMISSIONER OF INCOM E-TAX AND IT WAS SET ASIDE BY THE COMMISSIONER OF INCOME TAX VID E ORDER UNDER SECTION 263 OF THE ACT DATED 08/03/2017 HOLDI NG THE ORDER OF THE ASSESSING OFFICER TO BE ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF THE REVENUE ON MULTIPLE ISSUES INCLUDIN G THE ISSUE THAT STANDARD DEDUCTION UNDER SECTION 24(A) OF THE ACT W AS WRONGLY ALLOWED BY THE ASSESSING OFFICER. CONSEQUENTLY, THE ASSESSING OFFICER TAKEN UP THE PROCEEDINGS AND FOUND THAT ASS ESSEE HAS SHOWN RENTAL INCOME FROM FOLLOWING PARTIES UNDER TH E HEAD INCOME FROM HOUSE PROPERTY AS UNDER: 1. RENTAL INCOME OF 2,50,000 PER MONTH/- FROM M/S PROFESSIONAL MANAGEMENT COUNSELTANT LTD. FOR LEASIN G OF 50 WORKSTATIONS, AT THE RATE OF 5000 PER WORKSTATION IN THE BUILDING LOCATED AT W-23, SECTOR 11, NOIDA 2. RENTAL INCOME OF 1,60,000 PER MONTH FROM M/S KEY ELECTRONICS AND SYSTEM PRIVATE LIMITED IN RESPECT O F LEASING OF GROUND AND FIRST FLOOR OF BUILDING LOCAT ED AT W- 23, SECTOR-11, NOIDA 2.1 ACCORDING TO THE ASSESSING OFFICER, IN CASE OF THE RENTAL INCOME FROM M/S. PROFESSIONAL MANAGEMENT COUNSELTAN T LTD., THE LETTING OF WORKSTATION I.E. MACHINERY, PLANT OR FUR NITURE WAS 3 ITA NO.5352/DEL./2019 INSEPARABLE FROM THE LETTING OF THE BUILDING AND TH EREFORE HE REJECTED THE SUBMISSION OF THE ASSESSEE THAT THE BU SINESS OF THE ASSESSEE WAS CLOSED AND BUILDING WITH FURNITURE WAS LYING VACANT FOR LONG AND SO ASSESSEE GAVE THE SAME ON RENT/LEAS E. THE LEARNED ASSESSING OFFICER REJECTED THE CONTENTION O F THE ASSESSEE THAT LEASING OF PLANT, MACHINERY FURNITURE WAS INCI DENTAL TO THE LETTING OF THE BUILDING IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SULTAN BROTHERS (P) LT D. VERSUS CIT (1964) 51 ITR 353(SC). THE LEARNED ASSESSING OFFICE R ACCORDINGLY DISALLOWED THE STANDARD DEDUCTION CLAIMED UNDER SEC TION 24 (A) OF THE ACT AT THE RATE OF THE 30% I.E. AMOUNTING TO 6,75,000/- FROM THE RENTAL INCOME OF 22,50,000/- AND ASSESSED THE RENTAL INCOME OF RS.22,50,000/-UNDER THE HEAD INCOME FROM OTHER SOURCES AS AGAINST CLAIM OF THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ON FURTHER APPEAL, THE LEARNE D CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER RELYING FURTHER ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF GARG DYEING AND PROCESSING INDUSTRIES VERSUS ACIT(SUPRA) . AGGRIEVED WITH THE FINDING OF THE LEARNED CIT(A) IN THE IMPUG NED ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL RAISING T HE SOLE GROUND OF THE APPEAL OF DENYING THE STANDARD DEDUCTION OF 6,75,000/- WHICH WAS CLAIMED BY THE ASSESSEE UNDER SECTION 24( A) OF THE ACT. 3. BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE APP EARED THROUGH VIDEOCONFERENCING FACILITY AND FILED A PAPE R-BOOK CONTAINING PAGES 1-60. THE PAPER-BOOK CONTAINS COPY OF LEASE AGREEMENTS BETWEEN THE ASSESSEE AND M/S PROFESSIONA L MANAGEMENT COUNSELTANT LTD AVAILABLE ON PAGE 1-13 O F THE PAPER-BOOK. THE LEARNED COUNSEL REFERRED TO THE SAI D AGREEMENT 4 ITA NO.5352/DEL./2019 AND SUBMITTED THAT PRIMARY OBJECT OF THE AGREEMENT WAS TO RENT OUT THE BUILDING CONSISTING OF BASEMENT, GROUND FLO OR, FIRST FLOOR AND SECOND FLOOR WITH TERRACE. HE SUBMITTED THAT IN ADDITION TO THIS ADDITIONAL RIGHTS WERE GIVEN TO TAKE ON 50 WOR KSTATIONS IN THE BUILDING. HE SUBMITTED THAT ANNEXURE-1 OF THE AGREE MENT HAS DESCRIBED PORTION OF THE FURNITURE LYING IN THE BUI LDING AT THE GROUNDFLOOR AND FIRST FLOOR. THE LEARNED COUNSEL FU RTHER SUBMITTED THAT THE INTENTION OF THE ASSESSEE WAS TO RENT OUT THE DEMISED PREMISES AND THE BUILDING I.E. SUPERSTRUCT URE BUT NOT THE FURNITURE. THE LEARNED COUNSEL RELIED ON THE DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF M/S SHAMBHU IN VESTMENT PRIVATE LIMITED VERSUS CIT 263 ITR 143 (SC) AND SUB MITTED THAT ONLY INTENTION AND PRIVACY OBJECT IS REQUIRED TO BE LOOKED INTO. ACCORDING TO HIM THE PRESENT CASE THE PRIME OBJECT WAS TO LET OUT THE BUILDING AND NOT TO EXPLOIT THE PROPERTY FOR CO MMERCIAL BUSINESS ACTIVITIES, AND THEREFORE THE RENTAL INCOM E RECEIVED FROM M/S. PROFESSIONAL MANAGEMENT CONSULTANT LTD MUST BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND THE DEDUCTION UNDER SECTION 24(A) SHOULD BE ALLOWED TO THE ASSESS EE. 4. ON THE CONTRARY, LEARNED DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND SUBMITTED THAT INTENTION OF THE ASS ESSEE WAS OF LEASING OF WORKSTATION ONLY, WHICH IS EVIDENT FROM VARIOUS CLAUSES OF THE AGREEMENT PLACED ON PAGES 1 TO 13 OF THE PAP ER-BOOK OF THE ASSESSEE AND THEREFORE, LEARNED CIT(A) HAS CORRECTL Y UPHELD THE ACTION OF THE ASSESSING OFFICER. 5. WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES ADVA NCED THROUGH VIDEOCONFERENCING AND PERUSED RELEVANT MATE RIAL AVAILABLE ON RECORD. 5 ITA NO.5352/DEL./2019 5.1 AS PER SECTION 22 OF THE ACT, ANY ANNUAL VALUE (RE NTAL INCOME FROM LEASING) OF BUILDING OR LANDS APPURTENA NT THERETO IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPER TY AND DURING RELEVANT PERIOD, DEDUCTION AGAINST SUCH INCO ME UNDER SECTION 24(A) OF THE ACT IS ALLOWABLE FOR A SUM EQU AL TO 30% OF THE ANNUAL VALUE. FURTHER, THE SECTION 56(2)(III) PROVI DES THAT WHERE AN ASSESSEE LETS ON HIRE MACHINERY, PLANT OF FURNIT URE BELONGING TO HIM AND ALSO THE BUILDING, AND THE LETTING OF TH E BUILDING IS INSEPARABLE FROM THE LETTING OF THE SAID MACHINERY, PLANT OF FURNITURE, THE INCOME FROM SUCH A LETTING, IF IT IS NOT CHARGEABLE UNDER THE HEADPROFIT IN GAINS OF BUSINESS OR PROFE SSION, THEN IT SHALL BE CHARGEABLE TO THE HEAD INCOME FROM OTHER SOURCES. 5.2 IN THE CASE OF SULTAN BROTHERS P. LTD (SUPRA), UND ER SIMILAR PROVISIONS OF THE 1922 ACT, THE HONBLE SUPREME COU RT HELD THAT WHEN A BUILDING AND PLANT, MACHINERY OR FURNITURE A RE INSEPARABLY LET, THE ACT CONTEMPLATES THE RENT FROM THE BUILDING AS A RESIDUARY HEAD OF INCOME. THE HONBLE COURT TH EN ANALYSED THE MEANING OF THE WORD INSEPARABLE LETTING AS UN DER: WHAT, THEN, IS INSEPARABLE LETTING? IT WAS SUGGESTE D ON BEHALF OF THE RESPONDENT COMMISSIONER THAT THE SUB-SECTION CO NTEMPLATES A CASE WHERE THE MACHINERY, PLANT OR FURNITURE ARE BY THEIR NATURE INSEPARABLE FROM A BUILDING SO THAT IF THE MACHINER Y, PLANT OR FURNITURE ARE LET, THE BUILDING HAS ALSO NECESSARIL Y TO BE LET ALONG WITH IT. THERE ARE TWO OBJECTIONS TO THIS ARGUMENT. IN THE FIRST PLACE, IF THIS WAS THE INTENTION, THE SECTION MIGHT WELL HAVE PROVIDED THAT WHERE MACHINERY, PLANT OR FURNITURE A RE INSEPARABLE FROM A BUILDING AND BOTH ARE LET ETC. ETC. THE LANG UAGE HOWEVER IS NOT THAT THE TWO MUST BE INSEPARABLY CONNECTED WHEN LET BUT THAT THE LETTING OF ONE IS TO BE INSEPARABLE FROM THE LE TTING OF THE OTHER. THE NEXT OBJECTION IS THAT THERE CAN BE NO CASE IN WHICH ONE CANNOT BE SEPARATED FROM THE OTHER. IN EVERY CASE T HAT WE CAN CONCEIVE OF, IT MAY BE POSSIBLE TO DISMANTLE THE MA CHINERY OR PLANT OR FIXTURES FROM WHERE IT WAS IMPLANTED OR FI XED AND SET IT UP IN A NEW BUILDING. AS REGARDS FURNITURE, OF COUR SE, THEY SIMPLY 6 ITA NO.5352/DEL./2019 REST ON THE FLOOR OF THE BUILDING IT,. WHICH IT LIE S AND THE TWO INDEED ARE ALWAYS SEPARABLE. ARE UNABLE, THEREFORE, TO ACCEPT THE CONTENTION THAT INSEPARABLE IN THE SUB-SECTION MEAN S THAT THE PLANT, MACHINERY OR FURNITURE ARE AFFIXED TO A BUIL DING. IT SEEMS TO US THAT THE INSEPARABILITY REFERRED TO IN SUB-S. (4 ) IS AN INSEPARABILITY ARISING FROM THE INTENTION OF THE PA RTIES. THAT INTENTION MAY BE ASCERTAINED BY FRAMING THE FOLLOWI NG QUESTIONS: WAS IT THE INTENTION IN MAKING THE LEASE-AND IT MAT TERS NOT WHETHER THERE IS ONE LEASE OR TWO, THAT IS, SEPARAT E LEASES IN RESPECT OF THE FURNITURE AND THE BUILDING-THAT THE TWO SHOULD BE ENJOYED TOGETHER? WAS IT THE INTENTION TO MAKE THE LETTING OF THE TWO PRACTICALLY ONE LETTING? WOULD ONE HAVE BEEN LE T ALONE A LEASE OF IT ACCEPTED WITHOUT THE OTHER? IF THE ANSWERS TO THE FIRST TWO QUESTIONS ARE IN THE AFFIRMATIVE, AND THE LAST IN T HE NEGATIVE THEN, IN OUR VIEW, IT HAS TO BE HELD THAT IT WAS INTENDED THAT THE LETTINGS WOULD BE INSEPARABLE. THIS VIEW ALSO PROVIDES A JUS TIFICATION FOR TAKING THE CASE OF THE INCOME FROM THE LEASE OF A B UILDING OUT OF S. 9 AND PUTTING IT UNDER S. 12 AS A RESIDUARY HEAD OF INCOME IT THEN BECOMES A NEW KIND OF INCOME, NOT COVERED BY S. 9 , THAT IS, INCOME NOT FROM THE OWNERSHIP OF THE BUILDING ALONE BUT AN INCOME WHICH THOUGH ARISING FROM A BUILDING WOULD N OT HAVE ARISEN IF THE PLANT, MACHINERY AND FURNITURE HAD NO T ALSO BEEN LET ALONG WITH IT. 5.3 IN VIEW OF ABOVE TEST OF INSEPARABLE LETTING, THE HONBLE COURT EXAMINED THE LEASE AGREEMENT AND DECIDED THE ISSUE OF TAXABILITY OF LEASING INCOME AS UNDER: THAT TAKES US TO THE QUESTION, WAS THE LETTING IN T HE PRESENT CASE OF THE BUILDING AND THE FURNITURE AND FIXTURES INSE PARABLE IN THE SENSE CONTEMPLATED IN THE SUB-SECTION AS WE HAVE FO UND THAT SENSE TO BE ? IT IS TRUE THAT THE RENT FOR THE BUILDING AND THE H IRE FOR THE FURNITURE WERE SEPARATELY RESERVED IN THE LEASE BUT THAT DOES NOT, IN OUR VIEW, MAKE THE TWO LETTINGS SEPARABLE. WE MA Y POINT OUT THAT THE TRIBUNAL HAS TAKEN THE SAME VIEW AND THE H IGH COURT HAS NOT DISSENTED FROM IT. IN SPITE OF THE SUMS PAY ABLE FOR THE ENJOYMENT OF TWO THINGS BEING FIXED SEPARATELY, THE INTENTION MAY STILL BE THAT THE, TWO SHALL BE ENJOYED TOGETHER. W E WILL NOW REFER TO THE PROVISIONS IN THE LEASE TO SEE WHETHER THE P ARTIES INTENDED THAT THE FURNITURE, FIXTURES AND THE BUILDING SHALL ALL BE ENJOYED TOGETHER. CLAUSE 1 OF THE LESSEE'S COVENANT, IN OUR OPINION, PUTS THE MATTER BEYOND DOUBT AND IT IS AS FOLLOWS:- 7 ITA NO.5352/DEL./2019 1. (A) TO USE THE DEMISED PREMISES AND THE SAID FUR NITURE AND FIXTURES FOR THE PURPOSE OF RUNNING HOTEL, BOARDING AND LODGING HOUSE, RESTAURANT, CONFECTIONARY AND SUCH OTHER ANC ILLARY BUSINESSES AS ARE USUALLY OR OTHERWISE CAN BE CONVE NIENTLY CARRIED ON WITH THE SAID BUSINESS IN THE SAID PREMI SES SUCH AS PROVIDING SHOW-CASES SHOW WINDOWS, NEWSPAPER STALL, DANCING AND OTHER EXHIBITION OF ARTS, MEETING ROOMS ETC., A ND NOT FOR ANY OTHER PURPOSE WITHOUT THE PREVIOUS PERMISSION IN WR ITING OF THE LESSORS. IT IS CLEAR FROM THIS CLAUSE THAT THE BUILDING AND THE FIXTURES AND FURNITURE WERE TO BE USED FOR ONE PURPOSE, NAMELY, FOR THE PURPOSE OF RUNNING A HOTEL WITH THEM ALL TOGETHER. AGAIN CL. 1(H) OF THE LESSEE'S COVENANT PROVIDED THAT THE LESSEE IS N OT TO REMOVE ANY ARTICLE OR THING FROM THE PREMISES EXCEPT FOR T HE PURPOSES OF AND IN THE COURSE OF THE HOTEL BUSINESS WHICH LATTE R WOULD BE FOR EFFECTING REPAIRS TO THEM OR FOR REPLACING THEM WHE RE IT WAS THE DUTY OF THE LESSEE TO DO SO UNDER THE LEASE. WE THI NK, THEREFORE, THAT THE LEASE CLEARLY ESTABLISHES THAT IT WAS THE INTENTION OF THE PARTIES TO IT THAT THE FURNITURE AND FIXTURE AND TH E BUILDING SHOULD BE ENJOYED ALL TOGETHER AND NOT ONE SEPARATELY FROM THE OTHER. BEFORE WE CONCLUDE WE THINK WE SHOULD REFER TO TWO OTHER COVENANTS. FIRST, THERE IS A LESSOR'S COVENANT NO. 11 (B) TO RENEW THE LEASE OF THE DEMISED PREMISES WHICH TERM, IT MA Y BE CONCEDED, MEANS THE BUILDING ONLY, FOR A FURTHER TE RM OF SIX YEARS. THIS CLAUSE SAYS NOTHING ABOUT THE RENEWAL OF ANY L EASE IN RESPECT OF FURNITURE OR FIXTURES. LIKEWISE, CL. III (2) PROVIDES THAT IF THE DEMISED PREMISES, THAT IS TO SAY,THE BUILDING, BE DESTROYED OR DAMAGED BY FIRE IT SHALL BE THE OPTION OF THE LESSE E TO DETERMINE THE LEASE AND IN ANY EVENT THE RENT SHALL BE SUSPEN DED UNTIL THE PREMISES SHALL AGAIN BE RENDERED FIT FOR OCCUPATION AND USE. HERE ALSO THERE IS NO MENTION OF THE FURNITURE. IT WAS S AID ON BEHALF OF THE RESPONDENT THAT THESE TWO CLAUSES INDICATE THAT THE BUILDING AND THE FURNITURE WERE BEING TREATED SEPARATELY AND THERE- FORE THE LETTINGS OF THEM WERE NOT INSEPARABLE. WE ARE U NABLE TO ACCEPT THIS CONTENTION. AS REGARDS RENEWAL OF THE LEASE OF THE BUILDING, THERE IS CL. (II)D MAKING SUBSTANTIALLY A SIMILAR P ROVISION IN RESPECT OF THE FURNITURE AND FIXTURES. IT REQUIRES THE LESS OR TO PROVIDE AT ALL TIMES DURING THE CONTINUANCE OF THE LEASE AND THE R ENEWAL THEREOF, THE FURNITURE AND FIXTURES MENTIONED IN TH E LEASE. THEREFORE, THOUGH THE RENEWAL CLAUSE IN CL. 11(B) D OES NOT MENTION THE LEASE OF FURNITURE OR FIXTURES BEING RENEWED, C L. II(D) MAKES IT INCUMBENT ON THE LESSOR TO SUPPLY AND MAINTAIN THEM DURING THE RENEWED TERM OF THE LEASE OF THE BUILDING. CLAUSE I I(D) WOULD ALSO COVER A CASE WHERE BY FIRE THE FURNITURE WAS DESTRO YED. IN SUCH A 8 ITA NO.5352/DEL./2019 CASE THE LESSEE COULD UNDER THAT CLAUSE REQUIRE THE LESSOR TO PROVIDE AND IF NECESSARY TO REPLACE, THE DESTROYED FURNITURE. TO THE SAME EFFECT IS CL. 1(E) WHICH SAYS THAT THE MAJ OR REPAIR TO OR REPLACEMENT OF THE FURNITURE, SHALL BE MADE BY THE LESSOR. SUCH REPAIR OR REPLACEMENT MAY, OF COURSE, BE NECESSITAT ED IN A CASE WHERE THE FURNITURE OR FIXTURES ARE DAMAGED BY FIRE . WE, THEREFORE, THINK THAT THE CLAUSES IN THE LEASE ON WHICH THE RE SPONDENT RELIES DO NOT INDICATE THAT THE LETTING OF THE BUILDING WA S SEPARABLE FROM THE LETTING OF THE FURNITURE AND FIXTURES. WE THINK THAT THE LEASE SATISFIES ALL THE CONDITIONS FOR THE APPLICABILITY OF S. 12(4) AND IS COVERED BY IT. IN THE RESULT WE ANSWER THE QUESTION FRAMED THUS: T HE RENT FROM THE BUILDING WILL BE COMPUTED SEPARATELY FROM THE I NCOME FROM THE FURNITURE AND FIXTURES AND IN THE CASE OF RENT FROM THE BUILDING THE APPELLANT WILL BE ENTITLED TO THE ALLOWANCES MENTIO NED IN SUB-SEC. (4) OF S. 12 AND IN THE CASE OF INCOME FROM THE FURNITURE AND FIXTURES, TO THOSE MENTIONED IN SUB-S (3), AND THAT NO PART OF THE INCOME CAN BE ASSESSED UNDER S. 9 OR UNDER S. 10 . THE JUDGMENT OF THE HIGH COURT IS SET ASIDE. THE APPELLANT WILL BE ENTITLED TO THE COSTS HERE AND BELOW. 5.4 IN THE CASE OF CIT VS. SHAMBHU INVESTMENT PVT. LTDS CASE (249 ITR 7), WHICH WAS APPROVED BY HONBLE SUPREME COURT IN JUDGMENT REPORTED AT 263 ITR AT PAGE 143, THEIR LOR DSHIPS CONCLUDED AS FOLLOWS: TAKING A SUM TOTAL OF AFORESAID DISCUSSIONS, IT CL EARLY APPEARS THAT MERELY BECAUSE INCOME IS ATTACHED TO ANY IMMOVABLE PROPERTY CANNOT BE THE SOLE FACTOR FOR ASSESSMENT OF SUCH IN COME AS INCOME FROM PROPERTY; WHAT HAS TO BE SEEN IS WHAT WAS THE PRIMARY OBJECT OF THE ASSESSEE WHILE EXPLOITING THE PROPERTY. IF I T IS FOUND, APPLYING SUCH TEST, THAT MAIN INTENTION IS FOR LETTING OUT T HE PROPERTY, OR ANY PART THEREOF, THE SAME MUST BE CONSIDERED AS RENTAL INCOME OR INCOME FROM PROPERTY. IN CASE, IT IS FOUND THAT THE MAIN INTENTION IS TO EXPLOIT THE IMMOVABLE PROPERTY BY WAY OF COMPLEX COMMERCIAL ACTIVITIES, IN THAT EVENT, IT MUST BE HELD AS BUSIN ESS INCOME. 5.5 IN BACKGROUND OF THE LEGISLATIVE AND JUDICIAL POSI TION, ON EXAMINATION OF FACTS OF THE INSTANT CASE, WE FIND T HAT IN THE LEASE AGREEMENT BETWEEN THE PARTIES, THE DEMISED PREMISES HAVE BEEN 9 ITA NO.5352/DEL./2019 MENTIONED AS WORKSTATIONS IN THE BUILDING. THE RE LEVANT CLAUSES OF THE AGREEMENT ARE REPRODUCED AS UNDER: A. THE LESSOR IS ABSOLUTE, LEGAL OWNER AND IN PHYS ICAL POSSESSION OF LEASEHOLD RIGHTS OF INDUSTRIAL PLOT N O. W-23 SECTOR-11 NOIDA, MEASURING 800 SQ.MTR ALONG WITH SUPERSTRUCTURE STANDING THEREUPON COMPRISING OF BAS EMENT, GROUND FLOOR, FIRST FLOOR AND SECOND FLOOR WITH TER RACE, (HEREINAFTER REFERRED TO AS THE BUILDING). B. THE LESSEE HAS NOW APPROACHED THE LESSOR TO TAKE ON 50 WORKSTATIONS ON LEASE IN THE BUILDING (HEREINAFTER REFERRED TO AS THE DEMISED PREMISES), AND ON REQUEST OF LESSE E THE LESSOR HAS AGREED TO GRANT ON LEASE THE DEMISED PRE MISES ON AS IS WHERE IS BASIS WITH EASEMENTS AND RIGHTS WH ICH THE LESSOR HAS IN COMMON AREAS, FOR USE BY THE LESSEE F OR CARRYING OUT ITS BUSINESS OF IT ENABLED SERVICES, ( SERVICES) ON THE MUTUALLY ACCEPTED TERMS AND CONDITIONS, AS H EREINAFTER RECORDED. 5.6 FROM THE ABOVE, IT IS EVIDENT THAT CLAUSE A HAS ON LY REFERENCE OF THE INDUSTRIAL PLOT IN THE BUILDING. I N CLAUSE B, THE DEMISED PREMISES HAVE BEEN MENTIONED AS 50 WORKSTAT IONS AS IS WHERE IS BASIS ALONG WITH EASEMENTS AND RIGHTS WHI CH THE LESSOR HAS IN THE COMMON AREAS. THUS, BY WAY OF THE AGREEM ENT INTEREST HAS BEEN CREATED IN WORKSTATIONS AS PROPERTY ONLY A ND NOT IN THE BUILDING. THE ASSESSEE HAS ALSO PROVIDED CERTAIN AM ENITIES AND FACILITIES FOR EXPLOITATION OF THE DEMISED PREMISES AS SPECIFIED IN CLAUSE 3 OF THE TERM OF THE LEASE AS UNDER: 3. THE LESSOR HAS ALSO PROVIDED .CERTAIN, AMENITIE S AND FACILITIES/FIXTURES/FITTINGS .A- (IN SHORT AMENITI ES & FACILITIES) IN THE DEMISED PREMISES TO THE LESSEE UNDER THE LEASE AS DETAILS/SPECIFIED IN THE ANNEXURE I, WHICH THE LESS EE CONFIRMS AND ACKNOWLEDGES. 5.7 A LIST OF SUCH OTHER AMENITIES HAS BEEN PROVIDED I N ANNEXURE-I (AVAILABLE ON PAGE 29 TO 34 OF THE PAPER BOOK), INCLUDES RECEPTION DESK IN THE RECEPTION AREA, EXEC UTIVE CHAIRS IN 10 ITA NO.5352/DEL./2019 DIRECTORS ROOM, CHAIRS AND TABLES IN HALLS, ON THE GROUND FLOOR. SIMILAR FACILITIES AND AMENITIES INCLUDING CONFEREN CE ROOM, MANAGERS ROOM AND SERVER ROOM ON FIRST FLOOR HAVE B EEN PROVIDED TO THE SECOND PARTY. 5.8 WE FURTHER FIND THAT RENT OF THE DEMISED PREMISES HAS ALSO BEEN FIXED IN TERMS OF THE WORKSTATION AND NOT AS A REA OF THE BUILDING. THE RELEVANT CLAUSE OF THE LEASE AGREEMEN T IS REPRODUCED AS UNDER: 1. IN CONSIDERATION OF THE LESSOR LEASING THE DE MISED PREMISES TO TIRE LESSEE, THE LESSEE SHALL PAY TO THE LESSOR MON THLY RENT OF RS. 2,50,000/- (RUPEES TWO LAKHS AND FIFTY THOUSAND ONL Y) FOR 50 WORKSTATIONS @ RS. 5,000/- PER WORKSTATION, PLUS SE RVICE TAX & CESS AMOUNT AS MAY BE APPLICABLE ON RENT FROM TIME TO TIME AS PER PREVAILING ACT FROM TIME TO TIME IN THAT REGARD, SU BJECT TO DEDUCTION OF TAX AT SOURCE (TDS), AS APPLICABLE, PAYABLE BY T HE LESSEE MONTHLY ON OR BEFORE THE 7'' DAY OF EACH MONTH. 5.9 ON ANALYZING VARIOUS TERMS OF THE LEASE AGREEMENT, WE FIND THAT USE OF THE BUILDING IS INCIDENTAL TO THE MAIN OBJECT OF LEASING OF WORKSTATION BY THE ASSESSEE. WE HAVE ALSO NOTED FROM THE BRIEF FACTS OF THE CASE THAT THE ASSESSEE HAS GIVEN GROUN D AND FIRST FLOOR OF THE BUILDING ON THE RENT TO ANOTHER PARTY SEPARA TELY AND INCOME FROM WHICH HAS BEEN OFFERED BY THE ASSESSEE UNDER THE HEAD INCOME FROM THE HOUSE PROPERTY AND WHICH HAS NOT BEEN DISTURBED BY THE ASSESSING OFFICER. THUS, IN THE IN STANT LEASE UNDER REFERENCE, THE PRIME OBJECTIVE IS EXPLOITATIO N OF ASSET IN THE FORM OF WORKSTATIONS INSTALLED BY THE ASSESSEE AND NOT THE BUILDING OR ANY PART THEREOF. THE USE OF EASEMENT A ND COMMON AREAS BY THE SECOND PARTY IS INCIDENTAL TO THE LEAS E OF EXPLOITATION OF WORKSTATION. THE WORKSTATION IN THE FORM OF PLAN T AND MACHINERY ARE INSEPARABLE FROM THE BUILDING AND FOR EXPLOITATION OR USE OF THE WORKSTATION, THE USE OF THE BUILDING IS INCIDENTAL. WE 11 ITA NO.5352/DEL./2019 FIND THAT LD. CIT(A) HAS ALSO RELIED ON THE DECISIO N OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF GARG DYEIN G AND PROCESSING INDUSTRIES VERSUS ACIT(SUPRA). IN THE SA ID DECISION ALSO THE HONBLE HIGH COURT HAS HELD THAT WHERE THE LETTING WAS INSEPARABLE, SECTION 56(2)(III) WAS RIGHTLY INVOKED . IN THE CASE OF SHAMBHU INVESTMENT (SUPRA) THE ISSUE OF TAXABILITY OF THE RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY VIS--VIS INCOME UNDER THE HEAD PROFIT AND GAINS OF BUSINESS AND PROFESSION, WHEREAS IN THE PRESENT CASE DISPUTE BE TWEEN THE PARTIES REGARDING THE LEASE RENTAL INCOME SHOULD BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY OR UNDER THE HEAD INCOME FROM OTHER SOURCES. 5.10 IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND A NY ERROR IN THE FINDING OF THE LEARNED CIT(A) ON THE ISSUE IN D ISPUTE AND ACCORDINGLY WE UPHOLD THE SAME. THE SOLE GROUND RAI SED BY THE ASSESSEE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JULY, 2020. SD/- SD/- (BHAVNESH SAINI) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21 ST JULY, 2020. RK/- (D.T.D.S.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI