TMI Blog2020 (9) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... and hiring of the equipment. Equipment may be inseparable from the building, but the Revenue cannot force the assessee to provide any services or to hire the equipment along with letting out the property. It is always open for the assessee not to provide the services or not to hire the equipment, while letting out the demised premises. Whether or not such services could be provided or the equipment could be hired independently, is the prerogative of the assessee and the lessee. When it is possible for the assessee to provide or not the services and to hire or not the equipment, then it is equally the prerogative of the assessee to provide them at a separate cost. Revenue cannot force the assessee to enter into any agreement in any particular form, but at the best, the Revenue can probe into the genuineness of the transaction or the correctness of the quantum of expenditure. Revenue cannot prevent the assessee from entering into separate agreements. At best Revenue can verify the quantum of expenditure claimed by the assessee in respect of the services provided or the expenditure related to the hired equipment. When the assessee had chosen to bifurcate the transaction and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 2008- 09 the assessee was receiving the composite rent towards the rent of property and services provided and hiring the equipment and income was assessed as business income. However, after the expiry of the initial period of three years, the assessee claims to have entered into supplementary agreement from the assessment year 2010-11 for letting out the property separately from the provision of services and hiring the equipment. 4. For the assessment year 2010-11 the assessee filed the return of income on 30/9/2010 declaring an income of ₹ 1,25,90,862/-. The assessee had declared the gross receipts under the business and profession to the tune of ₹ 2,35,75,004/-and in the P L Account there was a claim for various expenses. Learned Assessing Officer observed that the company had no Plant and Machinery other than the DG set, electrical panel, electrical transformer, lifts and air conditioning plant installed on the building declared in the schedule of fixed assets, and apart from this the assessee had not carried any other business activity. Original assessment was completed under section 143(3) of the Income Tax Act, 1961 (for short the Act ). 5. Subsequently, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a to go for composite receipts for letting out the demised premises and also the service provided coupled with hiring of the equipment, and in the alternative to go for separate agreements one for letting out the demised premises and the other for the hiring of equipment and providing certain services. Merely because on earlier occasion the assessee opted to go for the composite remuneration, it does not prevent the assessee forever not to let out the premises separately from hiring the equipment and providing services on a separate remuneration. He submitted that the Revenue cannot dictate the way in which the assessee had to conduct its business, but the Revenue can only probe into the income and expenditure declared by the assessee. 9. Per contra, it is the submission of the Ld. DR that originally the assessee claimed the entire receipts towards the income from business whereas for the assessment year 2007-08 and 2008-09 the learned Assessing Officer treated the same as income from house property, and thereby disallowed the assessee s claim of various expenses against the business income, but on appeal, Ld. CIT(A) accepted the contentions of the assessee and treated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. It is not in dispute that the learned Assessing Officer made the addition only on the basis of the grounds which formed the part of the reasons recorded. It is only on merits the Ld. CIT(A) held that the income of the assessee is chargeable to tax under the head business income. It is, therefore, clear that at threshold the learned Assessing Officer is justified in reopening the assessment and subsequently on merits the Ld. CIT(A) reached a different conclusion that the income falls under the head income from business . Now it falls for our consideration as to whether the Ld. CIT(A) is justified in refusing to take cognizance of the bifurcations of the lease and services by way of a supplementary agreement. We therefore, hold that the reopening of the assessment under section 147 is beyond challenge. 12. Now the question is whether the assessee is free to arrange their business and to enter into an agreement separately one for letting out the demised premises and another for the services and hiring of the equipment. Equipment may be inseparable from the building, but the Revenue cannot force the assessee to provide any services or to hire the equipment along with letting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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