S.P. Property Pvt. Ltd., Ahmedabad V. The Deputy Commissioner of Income Tax, Central Circle-2(1), Ahmedabad

ITSSA 53/AHD/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8696 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-01-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 09-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BIREN SHAH
• Keywords: Business income; Depreciation; Initiation of penalty proceedings; Set aside; CHAPTER IV
• Section: 143(3); 153A; 234B

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER () ./ I.T(SS).A. NOS. 53 TO 56/AHD/2017 ( ASSESSMENT YEAR : 2010-11 TO 2013-14) S. P. PROPERTY PVT. LTD. DEV ARCADE, ISCON CROSS ROAD, S. G. HIGHWAY, SATELLITE, AHMEDABAD / VS. DCIT CENTRAL CIRCLE 2(1), 309, 3 RD FLOOR, AAYKAR BHAVAN, ASHRAM ROAD, AHMEDABAD ./ ./ PAN/GIR NO. : AAKCS9135M ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI BIREN SHAH, A.R. / RESPONDENT BY : SHRI SAMIR TEKRIWAL, CIT DR !' DATE OF HEARING 08/01/2020 #$%& !' / DATE OF PRONOUNCEMENT 17/01/2020 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEALS DIRECTED AT THE INSTANCE OF C APTIONED ASSESSEE ARISE FROM THE RESPECTIVE ORDERS OF THE CO MMISSIONER OF INCOME TAX (APPEALS) (CIT(A)) FOR DIFFERENT ASSES SMENT YEARS AS TABULATED BELOW: IT(SS)A NOS. NAME OF ASSESSEE AY CIT(A)S ORDER DATED AOS ORDER DATED AOS ORDER UNDER SECTION 53/AHD/17 S. P. PROPERTY 2010-11 22.11.16 27.02.15 143(3) R.W.S. 153A OF THE IT(SS)A NO.53 TO 56/AHD/17 [S. P. PROPERTY PVT. LTD. VS. DCIT] A.Y. 2010-11 - 2 - PVT. LTD. INCOME TAX ACT (IN SHORT THE ACT) 54/AHD/17 -DO- 2011-12 -DO- -DO- -DO- 55/AHD/17 -DO- 2012-13 -DO- -DO- -DO- 56/AHD/17 -DO- 2013-14 -DO- -DO- 143(3) OF THE ACT ALL THE CAPTIONED APPEALS OF THE ASSESSEE HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY COMMON ORDER. 2. FOR THE SAKE OF CONVENIENCE AND TO BEGIN WITH WE SHALL FIRST TAKE UP THE APPEAL CONCERNING AY 2010-11 IN IT(SS)A NO. 53/AHD/2017 FOR APPRECIATION OF FACTS AND ADJUDICATION OF THE COMMO N ISSUES INVOLVED. IT(SS)A NO. 53/AHD/2017 AY 2010-11 3. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF TH E APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOL DING THE ASSESSMENT OF INCOME OF RS.65,000 UNDER THE HEAD 'I NCOME FROM HOUSE PROPERTY' AS AGAINST INCOME UNDER THE HE AD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' AS CL AIMED BY THE APPELLANT. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN DISMI SSING GROUND NO. 3 OF THE APPELLANT'S APPEAL BEFORE HIM O N THE GROUND THAT LEVY OF INTEREST U/S. 234A, 234B 234C A ND 234D WAS MANDATORY. HE OUGHT TO HAVE APPRECIATED, INTER ALIA , THAT EVEN AS THE LEVY MAY BE MANDATORY, IT WAS NOT UNIVE RSAL AND THAT THE APPELLANT HAD CHALLENGED THE VERY LEVY OF INTEREST UNDER THOSE PROVISIONS AND, IN THE PECULIAR FACTS A ND CIRCUMSTANCES OF ITS CASE, THE RATIO OF THE DECISIO N OF THE GUJARAT HIGH COURT IN BHARAT MACHINERY AND HARDWARE MART'S CASE (136 ITR 875) WAS ATTRACTED AND THE LEVY DESER VED TO BE CANCELLED. 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN DISMI SSING GROUND NO. 4 OF THE APPELLANT'S APPEAL BEFORE HIM C HALLENGING THE INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C ), ON THE GROUND THAT AN APPEAL DID NOT LIE AGAINST MERE INIT IATION OF PENALTY PROCEEDINGS. HE OUGHT TO HAVE APPRECIATED, INTER ALIA, THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THERE BEING ABSOLUTELY NO WARRANT/JUSTIFICATION FOR IT(SS)A NO.53 TO 56/AHD/17 [S. P. PROPERTY PVT. LTD. VS. DCIT] A.Y. 2010-11 - 3 - INITIATING THE PENALTY PROCEEDINGS, THEY DESERVED T O BE DROPPED, THEREBY SAVING BOTH THE APPELLANT AND THE DEPARTMENT FROM LONG DRAWN UNNECESSARY LITIGATION. 4. THE ASSESSEE HAS ALSO MOVED ADDITIONAL GROUNDS RAISING LEGAL OBJECTION WHICH ARE ALSO RECORDED AS UNDER: 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD ASSESSING OFFICER HAS ERRED IN MAKING ADDITION OF RS 200/- WH EN THE ADDITION IS NOT AT ALL BASED ON ANY INCRIMINATING MATERIAL FOUN D DURING THE SEARCH. THESE ADDITION IS BEYOND THE SCOPE OF ASSES SMENT FRAMED U/S 153A OF THE IT ACT, 1961AND HENCE DESERVED TO BE DE LETED. ' 5. THE PRAYER FOR ADMISSION OF ADDITIONAL GROUNDS N OTED ABOVE, WHICH ARE NOT SET FORTH IN MEMORANDUM OF APPEAL ARE BEING ADMITTED FOR ADJUDICATION IN TERMS OF RULE 11 OF INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 OWING TO THE FACT THAT LEGAL OBJECTIONS RAISED IN ADDITION GROUNDS ARE LEGAL IN NATURE FOR WHICH RELE VANT FACTS ARE STATED TO BE EMANATING FROM EXISTING RECORDS. A REFERENCE TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NTPC VS. CIT 229 ITR 33 (SC) IS REFERRED TO IN THIS REGARD. 6. TURNING TO THE FACTS, A SEARCH ACTION UNDER S.13 2 OF THE ACT WAS CARRIED OUT IN DEV GROUP CASES ON 03.01.2013 AND PA NCHNAMA WAS FINALLY DRAWN ON 22.02.2013. CONSEQUENTLY, NOTICE UNDER S.153A OF THE ACT WAS ISSUED FOR THE RESPECTIVE ASSESSMENT YE ARS IN APPEAL. THE ASSESSEE FILED RETURN OF INCOME UNDER S.153A OF THE ACT PURSUANT TO SUCH NOTICE ISSUED. THE ASSESSEE HAD EARLIER FURNI SHED A RETURN OF INCOME IN REGULAR COURSE PRIOR TO SEARCH UNDER S.13 9 OF THE ACT ON 26.02.2011 FOR THE AY 2010-11 & ON 02.06.2011 FOR C ONCERNING AY 2011-12 (RELEVANT TO IT(SS)A NO. 54/AHD/2017). THE ASSESSMENT WAS COMPLETED UNDER S.143(3) R.W.S. 153A OF THE ACT FOR ALL THE CAPTIONED APPEALS OF DIFFERENT ASSESSMENT YEARS CONSEQUENT UP ON RETURN FILED UNDER S.153A OF THE ACT. WHILE FRAMING ASSESSMENT, THE AO NOTICED THAT THE ASSESSEE HAS DECLARED RENT INCOME FROM THR EE SHOPS SITUATED AT SWAMINARAYAN AVENUE, VASNA, AHMEDABAD, LET OUT TO A COOPERATIVE IT(SS)A NO.53 TO 56/AHD/17 [S. P. PROPERTY PVT. LTD. VS. DCIT] A.Y. 2010-11 - 4 - BANK. THE AO TREATED THE INCOME DERIVED FROM LET O UT OF PROPERTY TO BE TAXABLE UNDER THE HEAD INCOME FROM HOUSE PROPER TY INSTEAD OF BUSINESS INCOME REFLECTED BY THE ASSESSEE IN ITS RETURN OF INCOME. 7. AGGRIEVED BY THE AFORESAID ACTION OF THE AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) WITHOUT ANY SUCC ESS. 8. FURTHER AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 9. THE LEARNED AR FOR THE ASSESSEE SUBMITTED AT THE OUTSET THAT THE RETURN FILED IN REGULAR COURSE PRIOR TO SEARCH STOO D CONCLUDED AT THE TIME OF INITIATION OF SEARCH ON EXPIRY OF LIMITATIO N PERIOD OF ISSUANCE OF NOTICE UNDER S.143(2) OF THE ACT IN SO FAR AS AY S. 2010-11 & 2011- 12 ARE CONCERNED. THE LEARNED AR SUBMITTED THAT WH ERE THE ASSESSMENT OF AYS. 2010-11 & 2011-12 STOOD CONCLUDE D BY OPERATION OF LAW PRIOR TO SEARCH AND WERE NOT PENDING AT THE TIME OF SEARCH, THE ASSESSMENT FRAMED UNDER S.153A OF THE ACT AFTER SEA RCH COULD BE DONE ONLY IN RESPECT OF INCOME BEARING A REFERENCE TO TH E INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH. THE LEARNE D AR POINTED OUT THAT THE AO HAS MERELY RE-APPRECIATED THE NATURE OF INCOME AND REALIGNED THE TAXABILITY FROM ONE HEAD TO ANOTHER W ITHOUT ANY REFERENCE TO THE INCRIMINATING MATERIAL FOUND IN TH E COURSE OF SEARCH IN THIS REGARD. THE LEARNED AR SUBMITTED THAT SUCH AC TION OF THE AO IS NOT PERMISSIBLE IN RESPECT OF UNABATED ASSESSMENTS HAVING REGARD TO SCHEMATIC INTERPRETATION OF PROVISIONS OF SECTION 1 53A OF THE ACT RENDERED BY THE HONBLE GUJARAT HIGH COURT AS WELL AS MANY OTHER HIGH COURTS. THE LEARNED AR PLACED RELIANCE UPON T HE DECISION OF PR.CIT VS. SAUMYA CONSTRUCTIONS PVT. LTD. (2016) 38 7 ITR 529 (GUJ) TO PROPOUND ITS LEGAL PLEA. THE LEARNED AR ACCORDI NGLY SUBMITTED THAT IN VIEW OF THE SCOPE AND AMBIT OF SECTION 153A OF T HE ACT EXPLAINED IN THE JUDGMENT REFERRED ABOVE, THE UNABATED ASSESS MENTS FOR AYS. 2010-11 & 2011-12 COULD NOT BE DISTURBED. THE LEAR NED AR HOWEVER IT(SS)A NO.53 TO 56/AHD/17 [S. P. PROPERTY PVT. LTD. VS. DCIT] A.Y. 2010-11 - 5 - FAIRLY SUBMITTED THAT PRINCIPLES LAID DOWN IN THE J UDGMENTS DO NOT APPLY TO THE PENDING ASSESSMENTS AT THE TIME OF SEA RCH AND ACCORDINGLY THE ADDITIONAL GROUND RAISED IN RESPECT OF PENDING ASSESSMENTS FOR AY 2012-13 AND 2013-14 IS NOT PRESSED FOR ADJUDICATION . 10. ON MERITS, THE LEARNED AR FOR THE ASSESSEE SUBM ITTED THAT THE ASSESSEE COMPANY HAS BEEN INCORPORATED WITH ITS MAI N OBJECT CLAUSE WHICH INTER ALIA INCLUDES LETTING AND SUB-LETTING OF IMMOVABLE PROPERTIES. THE LEARNED AR POINTED OUT THAT IN VIE W OF THE SPECIFIC MAIN OBJECT, THE RENTAL INCOME DERIVED FROM LETTING OUT OF SHOPS BELONGING TO THE ASSESSEE COMPANY IS REQUIRED TO BE TAXED UNDER THE HEAD BUSINESS INCOME. THE DECISION RENDERED BY T HE HONBLE SUPREME COURT IN THE CASE OF RAYALA CORPORATION (P.) LTD. VS. ACIT [2016] 386 ITR 500 (SC) AND CHENNAI PROPERTIES & INVESTMENTS LTD. VS. CIT [2015] 373 ITR 673 (SC) WAS REFERRED FOR THIS PURPOSE. 11. THE LEARNED DR FOR THE REVENUE, ON THE OTHER HA ND, RELIED UPON THE ORDER OF THE CIT(A) AND FURTHER POINTED OUT THA T THE ASSESSEE HIMSELF HAS RECOGNIZED THE RENTAL INCOME IN ITS BOO K UNDER THE HEAD OTHER INCOME AND NOT THE MAIN BUSINESS INCOME. T HE LEARNED DR THEREAFTER REFERRED TO THE VARIOUS BALANCE SHEETS E NDING MARCH 2010 TO MARCH 2013 TO PROVIDE ELUCIDATION ON THE INTENTION OF THE ASSESSEE TO TREAT THE INCOME DERIVED FROM RENTAL INCOME TO BE S TREAM OF INCOME OTHER THAN BUSINESS ACTIVITY. THE LEARNED DR ALSO REFERRED TO THE BALANCE SHEET OF MARCH 2010 AND ADVERTED TO THE ACC OUNTING POLICIES ADOPTED BY THE ASSESSEE COMPANY. IT WAS POINTED OU T THAT RENT INCOME AS PER THE POLICY AS TO BE RECOGNIZED ON THE BASIS OF ACTUAL RECEIPT INSTEAD OF MERCANTILE SYSTEM APPLICABLE TO INCOME DERIVED FROM BUSINESS ACTIVITY. THE LEARNED DR POINTED OUT TH AT ALL THE THREE SHOPS HAVE BEEN COMBINED AND BUNDELED TOGETHER AND GIVEN TO THE BANK AS ONE CONTRACT TO DERIVE SOME PREDETERMINED R ENTAL INCOME PASSIVELY. IN CONTRAST TO A BUSINESS ACTIVITY, THE ASSESSEE IS NOT ENGAGED IN ANY SYSTEMATIC ACTIVITY FOR EARNING RENT AL INCOME. THE IT(SS)A NO.53 TO 56/AHD/17 [S. P. PROPERTY PVT. LTD. VS. DCIT] A.Y. 2010-11 - 6 - P&L ACCOUNT ALSO SIMPLY CLAIMS DEPRECIATION ALLOWAN CE AND A TOKEN SALARY EXPENSE AS EXPENDITURE AGAINST RENTAL INCOME . THUS, NO CONCERTED EFFORTS FOR DERIVING RENTAL INCOME OR BUS INESS RISKS ASSOCIATED WITH BUSINESS VENTURE CAN BE INFERRED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IN THE INSTANT CASE, TWO FOLD CONTROVERSIES ARE MARKED FOR ADJUDICATION NAMELY; (I) WHETHER WHILE MAKING ASSESSMENT PURSUAN CE TO SEARCH UNDER S.153A OF THE ACT, THE REVENUE IS ENTITLED TO INTERFERE WITH ALREADY CONCLUDED (AND NOT ABATED) ASSESSMENT PASSE D EITHER UNDER S.143(1) OR UNDER S.143(3) OF THE ACT AND NOT PENDI NG AT THE TIME OF SEARCH IN THE ABSENCE OF ANY INCRIMINATING MATERIAL UNEARTHED AS A RESULT OF SEARCH OR NOT ? & (II) RENTAL INCOME FROM LETTING OUT OF SOME ADJOINING SHOPS BY THE ASSESSEE COMPANY TO ONE PERS ON IS CHARGEABLE TO TAX UNDER S.22 OF THE ACT UNDER THE HEAD INCOME FROM HOUSE PROPERTY OR IS CAPABLE OF BEING TREATED AS BUSINES S INCOME CHARGEABLE UNDER S.28 OF THE ACT IN THE FACTS AND CIRCUMSTANCE S OF THE CASE. 13. ADVERTING TO THE LEGAL OBJECTION RAISED BY THE ADDITIONAL GROUNDS SUMMARIZED AS FIRST PART OF THE CONTROVERSY ABOVE, WE STRAIGHTWAY OBSERVE THAT THE CASE RECORDS MAKE IT ABUNDANTLY CL EAR THAT THE ASSESSMENT PERTAINING TO AYS. 2010-11 & 2011-12 STO OD CONCLUDED AND WERE NOT PENDING AT THE TIME OF INITIATION OF S EARCH IN THE INSTANT CASE. THIS MATTER OF FACT HAS REMAINED UNDISPUTED ON BEHALF OF THE REVENUE. THE CAPTIONED APPEALS CONCERNING AYS. 202 0-11 & 2011-12 WHERE THE ASSESSMENT IN REGULAR COURSE STOOD CONCLU DED EITHER UNDER S.143(1) OR UNDER S.143(3) OF THE ACT AND NOT PENDI NG AT THE TIME OF SEARCH, THE SCOPE OF ASSESSMENT UNDER S.153A OF THE ACT IS NARROWER IN ITS SWEEP AS HELD IN LONG LINE OF JUDICIAL PRECEDEN TS OF DIFFERENT JURISDICTIONS. THE HONBLE GUJARAT HIGH COURT IN SAUMYA CONSTRUCTIONS (SUPRA) AND HOST OF OTHER CASES, SUCH AS, PR.CIT VS. DEEPAK J PANCHAL (2017) 397 ITR 0153 (GUJ) AND THE HONBLE DELHI IT(SS)A NO.53 TO 56/AHD/17 [S. P. PROPERTY PVT. LTD. VS. DCIT] A.Y. 2010-11 - 7 - HIGH COURT IN CIT VS. KABUL CHAWLA (2016) 380 ITR 573 (DEL) HAVE CLEARLY LAID DOWN THAT ADDITIONS/DISALLOWANCES UNDER S.153A OF THE ACT ARE NOT PERMISSIBLE IN THE ABSENCE OF INCRIMINATING MATERIA L FOUND DURING THE COURSE OF SEARCH QUA THE ASSESSMENT ORDER IN QUESTION. WE ARE GOVERNED BY THE SCHEMATIC INTERPRETATION GIVEN TO T HE PROVISION OF SECTION 153A OF THE ACT BY THE JURISDICTIONAL HIGH COURT AND ALSO SEVERAL OTHER HONBLE COURTS IN ONE VOICE. IN THE LIGHT OF JUDICIAL FIAT READING DOWN THE SCOPE AND SPECTRUM OF JURISDICTION UNDER S.153A OF THE ACT IN A NARROWER COMPASS, THE POSITION OF LAW IS EXPLICITLY CLEAR. IN THE ABSENCE OF ANY CONNECTION WITH THE INCRIMINA TING MATERIAL UNEARTHED IN SEARCH PROCEEDINGS OF THE ASSESSEE, ADDITIONS/DISALLOWANCES/REALIGNMENT OF INCOME ALREA DY DECLARED IN THE REGULAR COURSE IN RESPECT OF CONCLUDED STATEMENTS I .E. AYS. 2010-11 & 2011-12 IN THE INSTANT APPEALS, ARE NOT PERMISSIBLE IN LAW. IN THE PRESENT APPEALS, THE AO HAS MERELY ATTEMPTED TO REA LIGN THE TAXABILITY OF INCOME FROM ONE HEAD TO ANOTHER I.E. FROM BUSINE SS INCOME TO INCOME FROM HOUSE PROPERTY. APPARENTLY, THE AO HAS MERELY SOUGHT TO REVISIT THE CHARGEABILITY OF INCOME ALREADY DECLARE D PRIOR TO SEARCH WITHOUT ANY DISCOVERY OF INCRIMINATING MATERIAL WHI LE MAKING ASSESSMENT POST SEARCH UNDER S.143(3) R.W.S. 153A O F THE ACT. THIS COURSE ADOPTED BY THE AO DOES NOT RESONATE WITH THE JUDICIAL INTERPRETATIONS AVAILABLE IN THIS REGARD. HENCE, T HE ACTION OF THE AO FOR REALIGNMENT OF INCOME FOR AYS. 2010-11 & 2011-1 2 IS BAD IN LAW AND CANNOT BE COUNTENANCED. CONSEQUENTLY, THE ORDER OF THE CIT(A) FOR AY 2010-11 & 2011-12 IS SET ASIDE ON THIS LEGAL GROUND ALONE. THE REVENUE IS THUS OUSTED FROM MAKING SUCH ADJUSTM ENTS UNDER S.153A OF THE ACT IN RESPECT OF CONCLUDED ASSESSMEN TS. 14. IN THE RESULT, APPEALS OF THE ASSESSEE IN IT(SS )A NOS. 53 & 53/AHD/2017 FOR AYS. 2010-11 & 2011-12 ARE ALLOWED. 15. THE LEGAL GROUND RAISED BY WAY OF ADDITIONAL GR OUND IN AYS. 2010-11 & 2011-12 WHICH STOOD CONCLUDED AT THE TIME OF SEARCH IS NOT IT(SS)A NO.53 TO 56/AHD/17 [S. P. PROPERTY PVT. LTD. VS. DCIT] A.Y. 2010-11 - 8 - AVAILABLE TO THE PENDING ASSESSMENTS IN AYS. 2012-1 3 & 2013-14 WHERE THE AO WOULD BE WITHOUT ANY FETTERS TO MAKE A LL ADJUSTMENTS AS MAY BE PERMISSIBLE IN LAW. HENCE, WE ADVERT TO EXA MINE THE MERITS OF THE ACTION OF THE AO FOR REALIGNMENT OF THE INCOME CONCERNING AY 2012-13 & 2013-14. AS NOTED EARLIER, THE AO HAS DI SPUTED THE CLAIM OF THE ASSESSEE THAT RENTAL INCOME DERIVED FROM LET OUT OF IMMOVABLE PROPERTIES (SHOPS) TO THE COOPERATIVE BANK IS CHARG EABLE UNDER THE HEAD BUSINESS INCOME. IT IS THE CASE OF THE REVE NUE THAT HAVING REGARD TO THE ATTENDANT FACTS AND CIRCUMSTANCES OF THE CASE, THE RENTAL INCOME IS CHARGEABLE UNDER S.22 OF THE ACT UNDER TH E HEAD INCOME FROM HOUSE PROPERTY. WE DO NOT SEE ANY PERVERSITY IN THE ACTION OF THE REVENUE IN THIS REGARD. THE ASSESSEE IN THE IN STANT CASE HAS MERELY LET OUT THREE ADJACENT AND ADJOINING SHOPS T O A COOPERATIVE BANK AND DERIVED A PRE-DETERMINED RENTAL INCOME THE REFROM IN A PASSIVE MANNER WITHOUT ANYTHING MORE. THE LEASE AG REEMENT ENTERED INTO WITH BANK HAS NOT BEEN PLACED ON RECORD DESPIT E SPECIFIC QUERY IN THIS REGARD. THE ASSESSEE CLAIMS TO HAVE INCURRED CERTAIN EXPENDITURE IN THE SHOPS TO MAKE IT SUITABLE FOR THE BANKING OP ERATIONS OF THE LESSEE. SUCH ACTION HAS BEEN CONSTRUED AS PART OF CAPITAL INVESTMENT BY THE ASSESSEE. NOTHING HAS BEEN BROUGHT ON RECOR D TO SHOW THAT ANY ORGANIZED OR SYSTEMATIC ACTIVITY OF PROVIDING SOME SERVICES TO OCCUPIERS OF THE PROPERTY HAS BEEN CARRIED OUT. NE EDLESS TO SAY, WHETHER SUCH INCOME WOULD FALL UNDER THE HEAD BUSI NESS INCOME OR INCOME FROM HOUSE PROPERTY HAS TO BE DECIDED ON C ASE TO CASE BASIS DEPENDING UPON THE QUESTION AS TO WHETHER TRANSACTI ON INVOLVED BUSINESS ACTIVITY OR MERELY DERIVING RENTAL INCOME PASSIVELY. THE RENTING OF SHOP IN THE INSTANT CASE IS AN ISOLATED TRANSACTION TO EARN PROPERTY INCOME. IN THE ABSENCE OF ANY INCIDENTAL SERVICES RENDERED APART FROM LET OUT FROM PREMISES, THE STATUTORY SCH EME CODIFIED IN CHAPTER IVC OF THE ACT CANNOT BE BYPASSED. THE AFO RESAID VIEW IS SUPPORTED BY THE DECISION OF THE HONBLE SUPREME CO URT IN THE CASE OF RAJ DADARKAR & ASSOCIATES VS. ACIT [2017] 394 ITR 5 92 (SC). THE RELIANCE PLACED ON BEHALF OF THE ASSESSEE ON THE DE CISION OF HONBLE IT(SS)A NO.53 TO 56/AHD/17 [S. P. PROPERTY PVT. LTD. VS. DCIT] A.Y. 2010-11 - 9 - SUPREME COURT IN RAYALA CORPORATION (P.) LTD. (SUPRA) AND CHENNAI PROPERTIES & INVESTMENTS LTD. (SUPRA) IS MISPLACED. THE DECISION OF THE HONBLE SUPREME COURT PROCEEDS ON THE PREMISE T HAT YIELD BY WAY OF RENT HAS BEEN DERIVED BY WAY OF BUSINESS AND LET TING OR SUB-LETTING WAS PART OF TRADING OPERATIONS. IN THE INSTANT CAS E, THE ASSESSEE HIMSELF HAS DECLARED THE RENTAL INCOME TO BE MERELY ON OTHER INCOME SOURCE. AS A COROLLARY, THE RENTAL INCOME WAS NOT REGARDED AS PART OF THE TRADING OPERATIONS OF THE ASSESSEE. THUS, MERE LY BECAUSE ONE OF THE MAIN OBJECT OF THE ASSESSEE IS TO LET OUT PROPE RTY AND DERIVE RENT THEREON BY ITSELF CANNOT BE VIEWED AS A SOLE CRITER IA FOR TREATMENT OF INCOME DERIVED UNDER THE HEAD BUSINESS INCOME. T HE ATTENDANT CIRCUMSTANCES AND EXPRESS STATUTORY SCHEME OF ACT C ANNOT BE IGNORED WHILE EVALUATING THE NATURE OF INCOME. SIGNIFICANTL Y, A PERUSAL OF THE MEMORANDUM OF ASSOCIATION PLACED ON RECORD SHOWS TH AT ONE OF THE CLAUSES OF THE MEMORANDUM UNDER CATEGORY, OTHER OB JECTS OF THE ASSESSEE IS TO LET OUT IMMOVABLE PROPERTIES. WE HA VE ALSO PERUSED THE MAIN OBJECT FOR WHICH THE ASSESSEE COMPANY HAS BEEN INCORPORATED. A CLOSE READING OF THE MAIN OBJECT SHOWS THAT THE COM PANY WAS INCORPORATED TO ESSENTIALLY CARRY ON BUSINESS AS DE VELOPERS OF LAND, BUILDING, IMMOVABLE PROPERTIES ETC. BY CONSTRUCTING AND MAINTAINING SUCH BUILDINGS/SHOPS ETC. THE LEASING OF SHOPS AND OTHER PROPERTY CONSTRUCTED IN THE COURSE OF SUCH BUSINESS AS DEVEL OPER COULD HOWEVER BE ALSO LEASED OUT AS MAIN OBJECT. IT HAS NOT BEEN SHOWN THAT A SINGLE PLUNGE TO LET OUT ADJOINING SHOPS/GALAS TO THE BANK RESULTED IN THE COURSE OF CARRYING ON BUSINESS AS DEVELOPER ETC. A N INDEPENDENT LET OUT OF PROPERTY THUS COULD BE POSSIBLY REGARDED AS BUSINESS INCOME ONLY WHERE SOME ELEMENTS/CHARACTERS OF BUSINESS IS PRESENT. DOMINANT INTENTION TO LET OUT PROPERTY AS BUSINESS ACTIVITY IS ALSO NOT SHOWN TO EXIST. WE THUS SEE NO MERIT IN THE PLEA OF THE ASS ESSEE IN TAKING SHELTER OF THE DECISIONS RENDERED BY THE HONBLE SU PREME COURT IN DIFFERENT SET OF FACTS. IT(SS)A NO.53 TO 56/AHD/17 [S. P. PROPERTY PVT. LTD. VS. DCIT] A.Y. 2010-11 - 10 - 16. WE THUS SEE NO ERROR IN THE CONCLUSION DRAWN BY THE LOWER AUTHORITIES. HENCE, WE DECLINE TO INTERFERE. 17. IN THE RESULT, APPEALS OF THE ASSESSEE IN IT(SS )A NOS. 55 & 56/AHD/2017 ARE DISMISSED. 18. IN THE COMBINED RESULT, THE APPEALS FILED BY TH E ASSESSEE IN IT(SS)A NOS. 53 & 54/AHD/2017 FOR AY 2010-11 & 2011 -12 ARE ALLOWED WHEREAS IT(SS)A NOS. 55 & 56/AHD/2017 FOR A Y 2012-13 & 2013-14 ARE DISMISSED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMAR KE DIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 17/01/2020 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- ). / REVENUE 2. / ASSESSEE +. ,-.! /! / CONCERNED CIT 4. /!- / CIT (A) 2. 345 6!6-.7 ' -.&7 89, / DR, ITAT, AHMEDABAD :. 5;< = / GUARD FILE. BY ORDER / 7 /8 ' -.&7 89, THIS ORDER PRONOUNCED IN OPEN COURT ON 17/01/202 0