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2021 (2) TMI 421 - AT - Income TaxCharacterization of income - License fees received for licensing a hotel to another company for running and maintenance - assessable under the head ‘income from business or profession’ OR ‘income from house property’ - HELD THAT:- Case of the assessee is squarely covered by the decision in the case of M/s.Palmshore Hotels (P) Ltd vs. CIT [2017 (11) TMI 1086 - KERALA HIGH COURT] has reversed the decision of ITAT, Cochin, which was heavily relied upon by the AO to justify his conclusion to tax license fee under the head ‘income from house property’. The Hon’ble High Court held that license fee received by an assessee for giving its hotel with furniture and fixture to a company for running a hotel for a specified period was assessable under the head ‘income from business’ and not under the head ‘income from house property’ We are of the considered view that, license fee received by the assessee for licensing a fully furnished hotel along with license to run the hotel is a business receipt, which is assessable under the head ‘income from business or profession’ but not a rental income, which is assessable under the head ‘income from house property’. AO as well as the CIT(A) were grossly erred in assessing license fee under the head ‘income from house property’ and hence, we reverse the findings of the CIT(A) and direct the AO to assess license fee under the head ‘income from business or profession’ as claimed by the assessee. - Decided in favour of assessee.
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