TMI Blog2020 (4) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... ng year, the claim of the assessee was not accepted by the AO, it cannot be said that the claim of the assessee was not noticed by the AO particularly when as against loss reported by the assessee under the head Income from Business and income declared by the assessee under the head Income from Other Sources , the assessee has declared much higher amount of income under the head Income from House Property , which was converted by the AO to Income from Business in the preceding year i.e. the present year. We respectfully follow the judgment rendered in the case of Raj Dadarkar Associates vs. ACIT [ 2017 (5) TMI 586 - SUPREME COURT] and in turn follow the earlier judgment of Sultan Bros. Pvt. Ltd. [ 1963 (12) TMI 4 - SUPREME COURT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO and CIT (A) has totally disregarded the activities of the assessee firm and the nature of services rendered by the assessee to the lessees. In this regard, he submitted that copies of various lease deeds is available in the paper book. He drawn our attention to lease deed dated 01.03.2010 between the assessee firm and M/s HID India Private Limited available on pages 24 to 44 of the paper book. He pointed out that in Para 13 of this Lease Deed is Lessor s i.e. the present assessee s Covenants and as per the lease deed, it is a letting out simplicitor and no additional service is to be provided by the assessee. He submitted that all other lease deeds are also similar. He placed reliance on the judgment of Hon ble Apex Court rendered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, the assessee collected 20% of monthly rent as service charges because some services such as watch and ward electricity charges etc. were also rendered by the assessee in that case apart from letting out of the property and under these facts in that case, the AO held that the income is assessable as Income from House Property and not as business income and the tribunal confirmed the action of the AO in that case and Hon ble apex court also dismissed the appeal of the assessee in that case and the action of the AO of holding rental income assessable under the head Income from House Property was approved by Hon ble apex court also even after considering its earlier judgment rendered in the case of Chennai Properties and Investment Limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the AO that the rental income is assessable as business income apart from some clauses of the partnership Deed. In partnership deed of a firm and Memorandum of Association of a company, objects are generally very wide so that in course of business, the said firm or company can choose from those objects to conduct its activities and such object clause alone cannot be a basis to determine the head of income under which the income is to be assessed. In the facts of the present case, the judgment of Hon ble Apex Court rendered in the case of Raj Dadarkar Associates vs. ACIT (Supra) is required to be followed because the facts are similar and in this case, Hon ble Apex Court has duly considered its earlier judgment rendered in the case of Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y , which was converted by the AO to Income from Business in the preceding year i.e. the present year. In View of principle of consistency also, this action of the AO in the present year is not sustainable. In view of above discussion, we respectfully follow the judgment of Hon ble Apex Court rendered in the case of Raj Dadarkar Associates vs. ACIT (Supra) and in turn follow the earlier judgment of the Constitution Bench of Hon ble Apex Court rendered in the case of Sultan Bros. Pvt. Ltd. (Supra) and decide the issue in favour of the assessee and hold that the rental income is taxable under the head Income from House Property as claimed by the assessee in the return of income. 5. In the result, the appeal of the assessee is allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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