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2021 (6) TMI 538 - AT - Income TaxIncome received from letting of the premises - 'income from other sources' u/s 56 (2) (iii) or 'income from house property' - HELD THAT:- There is no dispute that the lease agreement is a composite lease agreement which included the inbuilt infrastructural facilities provided which included central air conditions with ducting, DG power supply, net work equipments, access control equipments, electrical equipments, VAVs and controllers, smoke detectors and occupancy sensors. The agreement also included other amenities, namely installation of dish antenna/satellite, parking space, repair and maintenance which includes repairs, interior or exterior, electrical and plumbing work, repair and maintenance of common and open areas and facilities provided at the building like compounds, gardens, passage, elevators, lifts, terrace, DG sets etc and also 100% power backup and centralised air conditioning. For similar set of amenities/facilities in the case of Sultan Brothers [1963 (12) TMI 4 - SUPREME COURT] has laid down certain tests which have been followed in the case of Garg Dyeing & Processing Industries [2012 (12) TMI 191 - DELHI HIGH COURT] and later on in the case of Jay Metals [2017 (7) TMI 618 - DELHI HIGH COURT]. We are of the considered view that in light of the facts discussed hereinabove, there can be no doubt that lease deed was composite one and rental receipt thereunder answered the description u/s 56(2)(iii) of the Income tax Act, 1961. Main thrust in rejecting the claim of the assessee by the Assessing Officer is that it is a related party transaction - The undisputed fact is that the assessment was subject to transfer pricing assessment for determination of ALP with AE and no such determination has been done by the TPO. We further find that though the Assessing Officer has discarded the claim of the assessee stating that it is a related party transaction, but the provisions of section 40A(2) of the Act have never been invoked. Assessing Officer himself has extracted the relevant clauses of lease deed himself showing that the lessor has agreed to provide services which have been enumerated hereinabove elsewhere. Therefore, considering the facts of the case in hand, we find that letting is not merely of the building but a composite let out of both the building as well as equipment/furniture etc and thereby section 56(2)(iii) of the Act is attracted. Respectfully following the ratio laiddown by the Hon'ble Supreme Court in the case of Sultan Brothers [supra] and the Hon'ble High Court of Delhi in the case of Jay Metals [supra], we direct the Assessing Officer to treat the income from letting out of the building as income under the head “Income from other sources”. Claim of expenses and depreciation u/s 57 has already been answered by the Hon'ble High Court of Delhi in the case of Jay Metals [supra] as under - Last plea made by the Assessee is that in that event the entire income from the letting is treated as 'income from source sources', it cannot be deprived of the corresponding deduction in terms of Section 57 (iii) of the Act. The Revenue too has not disputed the fact that the Assessee has not claimed depreciation. Accordingly, it is directed that while giving the appeal effect, the AO will grant the Assessee the benefit of Section 57 (iii) of the Act.
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