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2014 (4) TMI 1085 - AT - Income TaxValidity of claim for deduction/exemption u/s. 54F as well as Long Term Capital Gain (LTCG) - denial of claim by treating the gain, returned by the assessee(s) as LTCG, as unexplained cash credit u/s 68. - Held that:- both the purchase and sale transactions in shares have been executed off market, without in fact even fulfilling the reporting requirements in respect thereof under the regulatory framework.The Revenue’s findings and decision are thus completely endorsed and upheld, confirming the additions The fringe services provided merely facilitate the assessee’s principal business of making available office space to others for carrying on their businesses, at least in so far and the extent as could be carried out from within the confines of a cabin. It is stated that even tea, snacks are provided for a charge. Whether, however, the assesse has employed staff, incurring expenditure on their preparation, toward which we find no contention, much less material. All it has done, as it would appear, is make available peon for serving tea or even snacks, as bought-outs, as would be the case in any office setting. In fact, tea could be prepared in-house, or even through a vending machine, with little or no impact on the essential character of the ‘services’ being provided. Why, a landlord may provide services of a lift, security services, even a caretaker to take care of the needs of the tenants of different flats residing in his building. That, however, would not though make it any less an arrangement to exploit the inherent rental capacity or potential of the property. Further, what is the furniture and fixture, also let, and if it is inseparable from the letting the building and, further, not a part of the cabin itself, remains to be clarified. The assessee has referred to a hotel, implying perhaps that while the said industry falls in the hospitality sector, it operates in the business sector. The argument is flawed, and the comparison ends before it begins. We have already noted absence of any economic activity of merit, which alone would enable the assessee’s business being categorized under a particular sector or even be termed as an industry. While a hotel would fall in the hospitality sector, which business segment signifies the assessee’s business it fails to convey. No separate charge for the electricity consumed or the equipment used, viz. TV and other equipments, installed therein, being part of the hospitability services being provided, is made in the case of a hotel. An analogy thereto, if at all, could be of a taxi operator or a photocopier, who for a charge make available, through user their equipments, furnishing the required service, viz. the transport service or the copying service, as the case may be. In fact, even in the case of hotel, where there is a continuing arrangement, as in the instant case, the charge for the space provided would only be a measure of the AV of the property. As such, where the contract/s for stay is to subsist for any significant length of time, the same under certain cases would assume the nature of rent, and not a license, even as clarified by the CBDT per its circular in the context of section 194I of the Act. We may, however, add that on the same basis and premises as the telephone and electricity charges, the assesse, at its option, is entitled to segregate the charges, if any, toward receipt for internet, fax, etc. collected by it, and claim expenditure there-against u/s. 37(1) or any other applicable provision. We say so as, as it appears, these may also be provided on a continuous, systematic basis, so as to constitute a separate source of income. Subject to this modification, we find little merit in the assessee’s case and endorse the findings of the Revenue authorities. We decide accordingly, partly allowing the assessee’s ground.
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