ITO 8(2)-4, MUMBAI V. NISHA MALL MANAGEMENT CO. P. LTD, MUMBAI

ITA 5882/MUM/2010

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2547 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 05-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 23-07-2010
• Court: TRIBUNAL
• Department Lawyers: M RAJAN
• Keywords: Business income

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI , . . , BEFORE SHRI JOGINDER SINGH, JM & SHRI R.C.SHARMA, AM ./ ITA NO. 5882 / MUM/201 0 ( / ASSESSMENT YEAR : 200 6 - 20 0 7 ) ITO - 8(2)(4), MUMBAI VS. M/S NISHTA MALL MANAGEMENT CO. PVT. LTD., KNOWLEDGE HOUSE, SHYAM NAGAR, OFF. JOGESHWARI - VIKHROLI LINK ROAD, JOGESHWARI (E), MUMBAI - 400060 ./ ./ PAN/GIR NO. : A A ECM 0705 H ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI M. RAJAN /ASSESSEE BY : SHRI NISHIT GANDHI / DATE OF HEARING : 5 TH AUGUST , 201 5 / DATE OF PRONOUNCEMENT 30 - 10 - 2015 / O R D E R PER R.C.SHARMA, AM TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) , MUMBAI, DATED 13 - 4 - 2010 , FOR THE ASSESSMENT YEAR 200 6 - 0 7 , IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE I.T.ACT, WHER EIN FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE : - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT BUSINESS CENTRE SERVICE CHARGES OF RS.52,89,000/ - SHOULD BE TREATED AS BUSINESS INCOME INSTEAD OF INCOME FROM HOUSE PROPERTY WITHOUT APPRECIATING THE FACTS OF THE CASE. ITA NO. 5882/2010 2 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY WAS INCORPORATED IN 16.08.2004 WITH THE MAIN OBJECT TO ACQUIRE, DEVELOP, IMPROVE , BUILD, SELL, LEASE, MANAGE, COMMERCIALLY EXPLOIT AND/OR OTHERWISE DEAL IN REAL ESTATE, BUILDING RELATING TO SHOPPING MALLS AND COMMERCIAL COMPLEX. INCOME DERIVED ACCORDING TO THE OBJECT CLAUSE WAS TO BE TREATED AS BUSINESS INCOME. THE INCOME FROM BUSINE SS CENTRE WAS OFFERED BY THE ASSESSEE AS INCOME FROM BUSINESS AND PROFESSION, HOWEVER, THE AO DID NOT ACCEPT ASSESSEES CONTENTION AND TREATED THE SAME AS INCOME FROM HOUSE PROPERTY. 3. BY THE IMPUGNED ORDER THE CIT(A) ACCEPTED THE CONTENTION OF ASSESSEE T HAT THE INCOME SO RECEIVED BY THE ASSESSEE WAS INCOME FROM BUSINESS AFTER HAVING THE FOLLOWING OBSERVATIONS : - 3.7 THE SUBMISSION HAS BEEN CONSIDERED. THE ASSESSING OFFICER HAS GIVEN IMPORTANCE TO THE WORDS USED IN DOCUMENTS FURNISHED TO BANK TO CONCLUD E THAT THE RECEIPTS WERE RENT. THE APPELLANTS SUBMISSION THAT THIS CANNOT BE THE SOLE CRITERION IS ACCEPTED. WHERE A RECEIPT IS A BUSINESS RECEIPT OR A RECEIPT FROM MERE LETTING OUT OF AN IMMOVABLE PROPERTY WOULD DEPEND ON FACTS OF THE CASE. APPLYING THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF SHAMBHU INVESTMENT PRIVATE LIMITED, 263 ITR 143(SC), IF PROPERTY IS LET OUT WITH THE INTENTION TO HAVE RENTAL INCOME IT WOULD BE ASSESSABLE AS INCOME FROM HOUSE PROPERTY. ON THE OTHER HAND IF THE PRIMARY OBJECTION IS TO EXPLOIT THE PROPERTY BY COMPLEX COMMERCIAL ACTIVITIES, THE INCOME FROM THE SAME SHOULD BE CONSIDERED AS BUSINESS INCOME. THE BUSINESS CONDUCTING AGREEMENT DATED 18.02.2005 BETWEEN THE APPELLANT AND PRIL IS OPERATIVE FOR A PERIOD OF 9 YEARS. DURING THIS PERIOD THE CONDUCTOR IS GRANTED PE RMISSIVE USE OF THE SERVICES AND FACILITIES PROVIDED IN THE PREMISES BY THE ASSESSEE. THE CONDUCTOR HAS NO RIGHT OF OCCUPANCY, BUT ONLY LIMITED ACCESS FOR THE PURPOSES OF BUSINESS ACTIVITIES DURING HO URS OF DAY FIXED IN THE AGREEMENT. T HE PREMISES ARE IN THE CONTROL OF THE APPELLANT . THE APPELLANT HAD TO PROVIDE SERVICES AS PER THE AGREEMENT FOR WHICH PERSONNEL ON PERMANENT BASIS WERE TO BE EMPLOYED. HENCE, MANAGEMENT AND ADMINISTRATION OF THE MALL VES TED WITH THE APPELLANT. THUS, THE APPELLANT WAS A PROPERTY MANAGER RATHER THAN A PASSIVE OWNER. THE PROPERTY WAS TREATED AS A BUSINESS ASSET WHICH WAS EXPLOITED BY RENDERING COMMERCIAL SERVICES IN A SYSTEMATIC AND ORGANIZED ITA NO. 5882/2010 3 MANNER. FOLLOWING DECISIONS IN P FH MALL & RETAIL MANAGEMENT LTD. VS. ITO[110 ITD 337] (KOL), GESCO CORPORATION LTD. VS. ACIT [31 SOT 131] (MUM), HARVINDARPAL MEHTA (HUF) VS. DCIT [122 TTJ 163] (MUM) IT IS HELD THAT THE BUSINESS CENTRE RECEIPTS OF RS.52,89,000/ - HAS TO BE TREATED AS BUSIN ESS INCOME. 4. AGAINST THE ABOVE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND FROM THE RECORD THAT THE BUSINESS ASSET WAS USED BY THE ASSESSEE IN ITS BUSINESS OF LETTING OUT AS PER ITS PRIMARY OBJECT TO EXPLOIT THE PROPERTY BY COMPLEX COMMERCIAL ACTIVITY. AFTER CONSIDERING THE BUSINESS CONDUCTING AGREEMENT BETWEEN THE ASSESSEE AND PRIL , THE CIT(A) RECORDED FINDING THAT THE ASSESSEE HAS GRANTED PERMISSIVE USE OF THE SERVICES AND FACILITIES PROVID ED IN THE PREMISES BY THE ASSESSEE. THE CONDUCTOR HAS NO RIGHT OF OCCUPANCY, BUT ONLY LIMITED ACCESS FOR THE PURPOSES OF BUSINESS ACTIVITIES DURING HOURS OF DAY FIXED IN THE AGREEMENT. WE ALSO FOUND THAT THE PREMISES ARE IN THE CONTROL OF THE ASSESSEE AND THE ASSESSEE IS REQUIRED TO PROVIDE SERVICES AS PER THE AGREEMENT FOR WHICH PERSONNEL ON PERMANENT BASIS WERE TO BE EMPLOYED. THUS, THE MANAGEMENT AND ADMINISTRATION OF THE MALL VESTED WITH THE ASSESSEE. THE DETAILED FINDING RECORDED BY THE CIT(A) HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY , WE DO NOT FIND ANY MERIT TO INTERFERE IN THE ORDER OF CIT(A). WE FURTHER FOUND THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES AND INVESTMENT LTD., 373 ITR 673 IN FAVOUR OF THE ITA NO. 5882/2010 4 ASSESSEE FOR HOLDING THAT SUCH COMMERCIAL EXPLOITATION RENDERS INCOME FROM BUSINESS RATHER THAN INCOME FROM HOUSE PROPERTY. 6 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 /10 /2015 . 30 /10 /2015 SD/ - SD/ - ( ) ( JOGINDER SINGH ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 30 /10 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//