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2016 (9) TMI 511 - AT - Income TaxRental/licence fee received in respect of property given on lease to BHL - acquiring and leasing properties in the State of Jammu & Kashmir - liable to be assessed as business income and not as income from house property - Held that:- ‘Chennai Properties And Investment Limited’ (2015 (5) TMI 46 - SUPREME COURT), is directly and squarely applicable on this point. It holds that since the main object of the assessee was to acquire and let out properties, from which letting out, income was earned, such income is to be treated as business income. The ratio laid down by the Hon’ble Apex Court is that the nature of the activity of the assessee and the nature of the operation in relation to the leasing out of land, which is the deciding factor as to under which head the profits and gains earned from leasing out are to be assigned. Their lordships have held that so as to interpret such activities, the objects of the company must also be kept in view. Now, as observed, in the present case, undisputedly, the main object of the assessee happened to be acquiring land and buildings in the State of J & K and letting out the same. This is exactly the same object as was that of the assessee in ‘Chennai Properties And Investment Limited’ (supra). Therefore, in accordance with ‘Chennai Properties And Investment Limited’ (supra), we hold that the assessee is correct in contending by way of the additional ground taken that the rental/licence fee received by the assessee in respect of the subject property given on lease to BHL is liable to be assessed as business income and not as income from house property, as the assessed by the Taxing Authorities. The additional ground taken by the assessee is thus, accepted.
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