Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (6) TMI 206 - AT - Income TaxPartial denial of deduction under section 80-IB(7A) - Leave and Licence Agreement entered - Held that:- In the facts of the present case, the assessee had entered into a Leave and Licence Agreement with Pantaloon Retail (India) Ltd. on 01.03.2008, copy of which is placed at pages 80 to 93 of the Paper Book. As per the Leave and Licence Agreement, the assessee acknowledged to have constructed a shopping mall on the land owned by it and the same was agreed to be leased out to the lessee for running retail outlet under the name and style of Big Bazaar. The terms of the lease were agreed upon between the parties and the assessee Lessor received lease money from the said party. In addition to the said lease agreement, an asset usage agreement was executed between the parties on 01.03.2008 itself, under which it was agreed that in addition to the lease money received per month, the assessee was to received usage right of ₹ 4,20,000/- per month. The obligation of assets owner was to install and handover the assets to Pantaloon on which it was also to provide the insurance. Further, it was agreed that the owner shall install the nominal upgrades as required by Pantaloon at Pantaloon’s cost. Further, Pantaloon had undertaken the operation and maintenance of the said assets and also exercised the usage rights in terms of usage guidelines. Further, it was agreed that Pantaloon shall promptly inform the owner any damage caused to the assets We are of the view that where the assessee has build and constructed an area with specifications of lessee, who in turn, is to occupy the same for carrying out commercial activities and further, where the assessee has provided certain other facilities as required by the lessee, then it is the case of commercial exploitation of assets by the assessee and such income is assessable as business income in the hands of assessee. It is not the case of mere letting out of asset owned by the assessee, income from which, is assessable under the head ‘Income from property’. It may be kept in mind that the assessee had developed his project for a multiplex theatre, where the basic requirement is not only building, owning and running the cinema but also commercial establishments along with it. Merely because those commercial areas are exploited by leasing out the same to the third party does not mean that the assessee has not commercially exploited the same. In the totality of the above said facts and circumstances, we hold that where the assessee has fulfilled the conditions of building owning and running the requisite number of cinema theatres and commercial shops by way of leasing the same through an integrated activity of leasing not only the premises but also other facilities for which it has received remuneration over and above lease charges, we hold that the assessee having fulfilled the conditions laid down in section 80IB(7A) of the Act read with Rule 18DB of the Rules, the assessee is entitled to claim the deduction under section 80IB(1) of the Act. The CIT(A) has already allowed the deduction under section 80IB of the Act against the running of multiplex cinemas, but the definition of multiplex theatre includes both the activities of running multiplex cinemas and commercial shops. In the absence of either, the assessee is not entitled to claim the deduction under section 80IB of the Act. Merely because the assessee has prepared two separate Profit & Loss Accounts for each of the activity and had later filed consolidated financial statements for the two activities does not distinguish the title of the assessee from claim made by it under section 80IB(1) of the Act. Accordi ngly, we direct the Assessing Officer to allow the claim of assessee. - Decided in favour of assessee Disallowance of cost of improvement on sale of plots which was declared as short term capital gains - Held that:- In the entirety of the above said facts and circumstances, in case expenditure has been incurred by the assessee may be in cash, which in turn, is recorded in the books of account of assessee, then there is some merit in the claim of assessee. Further, the assessee during the course of appellate proceedings has furnished confirmation by way of additional evidence which has not been admitted as these were not filed before the Assessing Officer. Thus we direct the assessee to furnish necessary details and also establish its case by way of entries in the books of account before the Assessing Officer, who shall afford reasonable opportunity of hearing to the assessee and look into the merits of claim of assessee. It may be clarified here that the Assessing Officer in the first round had already allowed 25% as allowable in the hands of assessee and the CIT(A) has further allowed ₹ 3,91,755/-, against which the Revenue is not in appeal. Hence, the same stands explained and allowed in the hands of assessee. In respect of balance, the Assessing Officer shall decide after affording reasonable opportunity of hearing to the assessee. - Decided in favour of assessee for statistical purposes. Revaluation of closing stock by the assessee - Held that:- The perusal of Balance Sheet of Adinath Developers at page 22 of the Paper Book does not reflect any closing stock, but work-in-progress, cash in hand and negative capital account of proprietor had been declared in the Balance Sheet as on 31.03.2009. The plea of the assessee before us was that the work-in-progress is the cost of flats and the same has been re-worked. The opening work-inprogress was ₹ 26,95,000/- and closing work-in-progress was ₹ 3,95,000/- and the assessee had booked business loss of ₹ 23 lakhs. In the entirety of the above said facts and circumstances, where the assessee had exercised the option to rework its business assets, then the said loss is business loss and not capital loss. The assessee has sold the said flats in the succeeding year for sum of ₹ 6,50,000/-. The revaluation is on the basis of scientific method i.e. the report of valuer and the loss booked by the assessee is allowable as business loss in the hands of assessee - Decided in favour of assessee
|