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TMI Blog2012 (11) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... e has been settled by the Apex Court in favour of the revenue in its landmark judgement rendered in the case of M/s Shambhu Investment Pvt. Ltd. Vs. CIT 263 ITR 143 and East India Housing and Land Development Trust Ltd. 42 ITR 49. 3 In the Cross Objections, the assessee has raised common grounds as under: \\\\\\\\\ 1 On the facts and in the circumstances of the case and in law, the learned C.I.T.(A) erred in bifurcating the receipts from business centre from M/s. I-Flex Solutions Ltd., in respect of the portion of business centre excluding premises taken from M/s. Sanmou Motels Pvt. Ltd., in two parts namely (a) as 40% pertaining to income from business on account of receipt of service charges and (b) 60% on account of lease of property, when the agreement of business centre with M/s. I-Flex Solutions Ltd., did not provide for any separate charges for property and other services provided as a part of business centre by the Respondent. ii) On the facts and in the circumstances of the case and in law, the learned C.l.T.(A) erred in considering the 60% as income from House Property. iii) On the facts and in the circumstances of the case and in law, the learned C.I.T.(A) erred in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has noted the facts that the assessee is not full owner of the property admeasuring 70000 sq.ft which was leased out to M/s I-Flex Solutions Ltd because the same was taken by the assessee on lease from M/s Sanmou Motels Pvt Ltd., and the remaining property admeasuring 25000 sq.ft constructed area was owned by the assessee. Therefore, the Commissioner of Income Tax(Appeals) held that the rental income received from the acquired property admeasuring 25000 sq.ft and the assessee is the owner of the same is to be assessed as income from house property. Since the assessee is also providing services against the service charges, which is in the nature of business income; therefore, the only rental portion of the total receipt in respect of the leased out property, measuring 2500 sq,.ft, is to be assessed as income from house property. The Commissioner of Income Tax (Appeals) has accordingly held that 60% of the gross lease rental shall be treated as income from house property and rest 40% to be on account of services charges which is in the nature of business income. 5 Before us, the ld AR of the assessee has submitted that the assessee has developed the I T Park, which was given to M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the assessee is running a business centre and therefore, the rental income received from M/s I-Flex Solutions Ltd., is to be treated as business income and not as income from house property. Since the assessee is holding the property in question as stock in trade; therefore, the income derived from the stock would be business income and not income from house property. The intention of the assessee was to attract the customers for their proposed I T project as it was far away from the city of Pune and therefore, the assessee has given some part of the project to I-Flex Solutions. He has further submitted that subsequently the business centre was purchased by M/s I-Flex Solutions Ltd., which shows the assessee's intention was not to earn rental income to lease out the property but to promote and develop the I T park and attract the clients by giving part of the project on rent. 5.4 The ld DR on the other hand has submitted that the assessee is a developer and not service provider or in the business of leasing out the premises. This is clear from the fact that the assessee ultimately sold the I T Park. He has relied upon the order of the Assessing Officer and submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e let out premises owned by the assessee is concerned, the issue is settled by the Hon'ble Supreme Court in various decisions and held that the income realized by such owner by way of rental income from a building whether commercial building or residential, is assessable under the head 'income from house property'. The only exceptional case whether the let out building is inseparable from lease out machinery, plant and furniture. In other words, if a business premises or factory is let out by the assessee for a temporary period, then let out of the factory premises become essential for letting out the machinery and plant and furniture of the factory. Only in such an exceptional case, whether the primary purpose and intention was to let out the machinery, plant or furniture and not the building, the rent received for the building is to be assessed as income from other sources as held by the Hon'ble Supreme court in the case of Sultan Brothers vs CIT reported in 51 ITR 353. 8 In the case in hand, the assessee has let out the premises in question and not any plant, machinery or furniture. Though, some other services, amenities and facilities were also provided by the assessee as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditional ground of Cross Objection which is as under: "On the facts and in the circumstances of the case and in law, without prejudice to the aforesaid ground (no.1), the Assessing Officer failed to consider the alternate submission made by the appellant vide letter dated Nil filed on 19.12.2008 to treat the cost of temporary shed as cost of the project carried on by the appellant." 12.1 The ld AR has submitted that the assessee raised the ground, being ground no.2 before the Commissioner of Income Tax(Appeals) which has not been specifically adjudicated by the Commissioner of Income Tax(Appeals) while deciding the ground no.1, the Commissioner of Income Tax(Appeals) stated in para 4.16 of the impugned order that grounds no.1 & 2 are disposed off; whereas ground no.2 raised by the assessee was an alternate ground and regarding cost of temporary shed to be treated as cost of project carried out by the assessee. 12.2 The ld DR has opposed the additional ground raised by the assessee and submitted that the assessee has not raised this round in the original ground of cross objection. 13 We have considered the rival contention as well as the relevant material on record. We find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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