TMI Blog2018 (7) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... rs do not enjoy any tenancy right as per the agreement. We also find that the assessee is responsible for payment of maintenance charges, municipal and other taxes, rates and as well as other such related outgoings We find that the assessee had provided various arrangements on a daily basis to the user, to ensure smooth and efficient running of the retail outlet/ showroom which reflect a clear manifestation of an organized activity carried out by the assessee for a set purpose of earning profits out of commercial exploitation of the property owned by it. In consideration of rendering the services as per the agreement, the assessee is compensated in the form of commission calculated at 10% of gross sales in the said retail outlet /showroo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to treat the receipt from M/s Pantaloon Retail (India) Ltd as Business income , in the facts and circumstances of the case. 4. The brief facts of this issue are that the assessee is a non-banking financial company (NBFC) registered with Reserve Bank of India (RBI) carrying on financing business apart from engaging in the agency / venture business at the premises owned by it. The return of income for the Asst Year 2012-13 was filed on 26.9.2012 declaring total income of ₹ 1,58,81,810/-. The assessee showed agency commission income of ₹ 3,57,08,634/- vide agreement dated 14.9.2011 , the quantum of which is dependent on the sale percentage at the premises owned by the company at 49/1, Leela Roy Sarani, Kolkata - 700019 in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its property located at 49/1, Leela Roy Sarani, (Gariahat Road), Kolkata 700019 , which also represents retail outlet of PRIL. The assessee pursuant to an agreement with PRIL had agreed for commercial utilization of the immovable property owned by it for operating as a showroom. The assessee pursuant to the agreement had also agreed to provide various services and incur expenses for the purpose of maintaining, managing and assisting PRIL to put up and use the said property as a showroom. As against this business proposal of providing of the aforesaid services, the assessee earns 10% of the gross sales from the showroom as commission, which is offered to tax by the assessee as income from business. During the year under consideration, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties Ltd vs CIT reported in 82 ITR 547 (SC). 5.1. In addition to the above, it was pleaded that rental income pre-supposes existence of an owner tenant relationship between the receiver and the payer of the rent. One of the principal characteristics of such relationship is that the tenant must enjoy tenancy rights, which he acquires the moment he becomes a tenant. Section 55(2)(a) of the act even speaks of the cost of acquisition of such tenancy rights for the purpose of computation of capital gains on transfer thereof. However, in the agreement that the assessee company entered into with PRIL, it has been specifically provided that the user of the services provided by the owner shall not have any tenancy rights. 5.2. The assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot income from house property :- a) Hon ble Supreme Court in the case of Chennai Properties Investments Ltd vs CIT reported in (2015) 373 ITR 673 (SC). b) Co-ordinate bench decision of this tribunal in the case of PFH Mall and Retail Management ltd vs ITO reported in (2008) 298 ITR (A.T.) 371 (ITAT Kolkata) . The revenue s appeal before the Hon ble Calcutta High Court and Hon ble Supreme Court against this tribunal order has been dismissed. c) Hon ble Calcutta High Court in the case of Everest Hotels Ltd vs CIT reported in (1978) 114 ITR 779 (Cal). d) Hon ble Gujarat High Court in the case of ACIT vs Saptarishi Services Ltd reported in (2004) 265 ITR 379 (Guj). e) Hon ble Bombay High Court in the case of CIT vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is compensated in the form of commission calculated at 10% of gross sales in the said retail outlet /showroom. Moreover, the Hon ble Calcutta High Court in the context of writ proceedings on the levy of higher property tax for the subject mentioned property, had held supra that PRIL does not possess any tenancy rights and the agreement entered into by the assessee with PRIL is only a mere business arrangement. In this background, there is no need to take a different view on the nature of the agreement entered into by the assessee with PRIL. Hence it could be safely concluded that the said receipt of agency commission would squarely fall under the ken of business income and to be assessed accordingly. Moreover, we also find that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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