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2015 (8) TMI 460 - AT - Income TaxTreating the income from house property as business income - Held that:- Merely because income is attached to a property it cannot be a sole factor for assessing such income as income from house property and it has to be seen that whether it was the primary objective of the assessee to exploit the property in a simple manner or to exploit it commercially i.e. to exploit it by way of complex commercial activities to arrive at the generation of income that could be taxed under the head income from house property or as income from business. If it is found that main intention is to simply let out property or any part of it, resultant income must be assured assessed as income from house property but if main intention is found to be exploitation of property by way of commercial activities, then resultant income must be held as business income. Where assessee company has developed shopping malls/business centres on properties owned by it and let out same by providing host of services/facilities/amenities in the said mall/business centres, it can be said that basic intention of assessee was commercial exploitation of its properties by developing them as shopping malls/business centres, therefore, income derived therefrom is assessable as business income. In the instant case before us there is no dispute that as per memorandum of Association of the company it is the main object of the company to purchase and/or acquire property and to give on lease and/or on license basis along with complex commercial activities and that is how the company has declared its income from such property as their business income. Even the agreement executed with the lessee of the impugned property does not mention the word “tenant”, therefore there is no simple landlord and tenant relationship between the assessee company and the lessee. Since, there is no change of the party in the lease agreement i.e. M/s Shopper Stop Ltd. and since there is no fresh agreement also for the same even after acquiring the property, it is clear that the intention of the assessee has not gone for a change and it remains the earlier one only i.e. to exploit commercially by way of complex commercial activities generating the business income as part and parcel of the assessee’s business activity only. A perusal of the agreements entered by assessee would show that the activities involved in providing the various services/facilities/amenities meet all the aforesaid four requirements laid down by Hon’ble Supreme Court in the case of Karnani Properties Ltd. v. CIT, (1971 (8) TMI 18 - SUPREME Court) to qualify as business activities. Hence, we do not find any reason to deviate from the findings recorded by the CIT(A). Accordingly, we uphold the order of the CIT(A) and dismiss the appeals of the Revenue and allow the appeal of the assessee on the issue of treatment of income declared by assessee as income from business. - Decided in favour of assessee.
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