TMI Blog2013 (8) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... 26) Mumbai dated 10.12.2011. Since issues are common, these appeals are heard together and decided by this common order. 2. The issue in these appeals is whether income earned by the assessee by letting out the property on leave and license basis along with separate agreement from amenities is to be assessed under the head income from house property or as business income. 3. Briefly stated, the assessee is a partnership firm constituted for development and construction of commercial premise named Gardenia in Bandra Kurla Complex of Mumbai. The assessee gave this commercial premises on leave and license basis to Centrum Group of concerns on 10, December,2007 for a period of 5(five) years, with an option to renew for a further period of 4(four) years. The assessee entered into agreement for lease of premises on leave and license basis at a monthly rent of Rs.13,15,700/- for the first year, with an option to increase every year as stated in para 5.2 of the agreement. Along with this agreement assessee also entered into separate agreement for amenities on a monthly rent of Rs.6,57,900/- in the first year, with an option to increase for every one year later as detailed in para 2B of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court in the case of National Storage Pvt. Ltd., relied on by the Ld. AO, to submit that on the facts the entire income is to be treated income from house property. 5. The Ld. DR however, referred to the order of the AO to submit that the assessee is providing services to the tenants and, therefore, the income is to be treated as income from business only. He relied on the following four cases in support of the contentions; (i) Kenton Leisure Services (P.) Ltd. vs. DCIT 135 ITD 10(COCH.) (ii) ITO vs. Information Technology Park Ltd. 49 SOT 491. (iii) Narayan Market Complex vs. ITO 51 SOT 387 (Cuttack). (iv) ACIT vs. Vijay S. Mallya 52 SOT 197. 6. Ld. Counsel in reply distinguished the above decisions to submit that the assessee was not providing any service, therefore, the entire receipt has to be taxed as income from house property as offered by the assessee. 7. We have considered the issue and the rival contentions. The issue whether a particular let out is business or rental income by the owner of the premises has to be decided on the facts and circumstances of each case. So for as, the rental income of letting out the premises, earned by the assessee is concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the form of security, transport, maintenance or any other activities which can be treated as services to the tenants. In fact, assessee is not even bearing the municipal tax and building maintenance, and all charges are being borne by the tenants. Entire receipts are shown as income, whereas the assessee was claiming the only expenditure towards interest which is major component, along with administrative expenditure of only Rs.3,96,413 for the year ending march 2008 and Rs.1,63,362/- for the year ending March, 2009. There are no other expenditures, even salary for any employee. The Amenities Agreement is also concurrent with the Leave and license agreement for the period also. Not only that the TDS was deducted, both on rent and amenities, as rent only by the tenants. It was further provided by Clause 11 of the license agreement that tenants shall be entitled to maintain common arrears of the building, either by itself or by Complex Management Agency and shall be entitled to proportionate re-imbursement of maintenance charge from other occupants of the building. Assessee is not connected either to the maintenance of the building or providing any service to the tenants, except ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Ministry of Commerce, therefore, the finding was that income has to be assessed as business income. In the present assessee's case assessee only constructed a commercial building to let out along with amenities, therefore, the facts and circumstances of the above case are different and the principles laid down therein does not apply. 12. Ld. DR also relied on the decision of Narayan Market Complex wherein the rent was received on market complex along with other incidental services like electrician, plumber, sweeper, etc. In the present case there are no such services rendered not even collection of any electricity bills etc., therefore, the facts in the above case does not apply to the assessee. 13. Coming to the last case relied on by the Ld. CIT DR in the case of ACIT vs. Vijay S. Mallya 52 SOT 197, the decision is also distinguishable on facts. There assessee was not owner of the entire premises and let out building along with facilities and amenities including, transport facilities in the business complex developed by assessee. Since, assessee business was to let out to flex Solution Ltd, the Ld. CIT (A) segregated the receipts of 40 % of services as business income, 60 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in additional services such as heating, cleaning, lighting or sanitation, which are relatively insignificant and only incidental to the use and occupation of the tenements. 6. In cases where the income received is not from the bare letting of the tenement or from the letting accompanied by incidental services or facilities, but the subject hired out is a complex one and the income obtained is not so much because of the bare letting of the tenement but because of the facilities and services rendered, the operations involved in such letting of the property may be of the nature of business or trading operations and the income derived may be income not from exercise of property rights properly so called so as to fall under section 9 but income from operations of a trading nature falling under section 10 of the Act; and 7. In cases where the letting is only incidental and subservient to the main business of the assessee, the income derived from the letting will not be the income from property falling under section 9 and the exception to section 9 may also come into operation in such cases." The respectively following principles laid down, particularly principles set out in para 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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