TMI Blog2015 (6) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not ‘Income from House Property’ as held by the authorities below - Decided in favour of assesse. Interest under Section 234A and 234B - Held that:- The charging of interest is consequential and mandatory and the Assessing Officer has no discretion in the matter. This proposition has been upheld in the case of Anjum H Ghaswala (2001 (10) TMI 4 - SUPREME Court) and we, therefore, uphold the action of the Assessing Officer in charging the said interest. - Decided against assessee. - I.T.A. Nos.1642 & 1643/Bang/2014 - - - Dated:- 29-5-2015 - SHRI N.V. VASUDEVAN AND SHRI JASON P. BOAZ, JJ. For the Appellant : Shri Zain Ahmed Khan, C.A. For the Respondent : Dr.P.K. Srihari, Addl. CIT (D.R.) ORDER Per Shri Jason P. Boaz, A.M. : These appeals by the assessee are directed against the orders of the CIT (Appeals) III, Bangalore dt.30.10.2014 for Assessment Years 2010-11 and 2011-12. These two appeals being heard together are being disposed off by way of this common order. 2. The facts of the case, briefly, are as under :- 2.1 The assessee is a company engaged in the business of software development, testing and renting of property. For Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uj) (ii) East India Housing Land Development Trust V CIT (1962) 42 ITR 49 (SC) (iii) Mahesh Investments V ACIT [ 55(1) ITCL 0086 (Kar)] 3. Aggrieved with the orders of the CIT (Appeals) III, Bangalore for Assessment Years 2010-11 and 2011-12 dt.30.10.2014, the assessee has preferred these appeals before the Tribunal raising the following identical grounds :- 1. The order of the learned CIT (A) is opposed to law, facts and circumstances of the case. 2. The Ld. AO has erred in holding that the income earned by the Appellant is to be taxed under the head Income from House Property and not under Profits and gains from Business or Profession and the Ld. CIT (A) erred in confirming the same. 3. The Ld. AO and CIT(A) ought to have appreciated the fact that the activities carried on by the Appellant constitute a complex commercial activity. 4. The Ld. CIT(A) ought to have appreciated that the income earned by the Assessee is on account of active business and not passive investments. 5. The Ld. AO ought to have taxed the maintenance charges received by the Appellant under the head Profits and gains from Business or Profession and not under Income from Hous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty as held by the authorities below. 6.3 Per contra, the learned Departmental Representative supported the impugned order of the learned CIT (Appeals) and prayed that the assessee's appeals be dismissed. 6.4.1 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial decisions cited and placed reliance upon by both parties. Before us, it was submitted that the assessee is engaged in the business of letting out its commercial spaces on fully furnished plug and play basis wherein the assessee, apart from providing space to operate from, is also providing appropriate, adequate and sophisticated infrastructure which would enable the occupants to commence their commercial operations right from day one; thereby obviating the occupants from the necessity of incurring capital expenditure for setting up of infrastructure and retaining the responsibility of maintenance and security of the premises with the assessee. Inviting reference to Schedule II of the Lease Agreements, placed at pages 14,29,45, etc of the assessee's paper book, it was submitted that the assessee is providing the following additional ameni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustomized to enable the user of the buildings to commence its specialized business. In this regard reliance was placed on the decision of the Hon'ble Apex Court in the case of CIT V National Storage Pvt. Ltd. ( 66 ITR 596 ) wherein the Hon'ble Apex Court while distinguishing the significance of merely letting out of a bare building and a building braced up with various amenities had held as under :- In our view, the High Court was right in holding that the assessee was carrying on an adventure or concern in the nature of trade. The assessee not only constructed vaults of special design and special doors and electric fittings, but it also rendere4d other services to the vault-holders. It installed fire alarm and was incurring expenditure for the maintenance of fire alarm by paying charges to the municipality. Two railway booking offices were opened in the premises for the dispatch and receipt of film parcels. This, it appears to us, is a valuable service. It also maintained a regular staff consisting of a secretary, a peon, a watchman and a sweeper, and apart form that it paid for the entire staff of the Indian Motion Picture Distributors Association an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en responsibility of periodical maintenance of the building while also ensuring maintenance upkeep of common areas such as basement, terrace, car park areas, lobby, corridors, staircases, compounds landscape. For this very purpose, the Appellant has appointed a housekeeping agency. Reference is drawn to Schedule III of the Agreements enclosed in pages 16, 31, 46 etc. of the paper book as also Clause 4 of the Agreements dealing with Maintenance. f. Responsibility of housekeeping g. Provision maintenance of landscape h. Provision of parking facilities to the lessees and engaging services of parking attendants The Appellant has also allotted earmarked parking spaces to its Lessees and undertaken the responsibility of Parking Management in terms of the Agreement while also catering to additional requirements of car park spaces. i. Responsibility of providing plumbing janitor services Attention is drawn to Para 4.3 9.4 of the Agreements enclosed in the paper book wherein the Appellant has underta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he systems. In effect, the plug play functionality is provided. In our view, it is evident from the details of the above table that there is very little to distinguish between the services rendered and facilities provided by the assessee with those provided in the case of Velankani Information Systems Pvt. Ltd. (supra). 6.4.6 In the case of Velankani Information Systems Pvt. Ltd. (supra), the coordinate bench referred to a similar matter that had come up for consideration before another co-ordinate bench of the Tribunal in the case of Global Tech Park Pvt. Ltd. (2008) 119 TTJ (Bang) 421, wherein following the decision of the Hon'ble Apex Court in the case of National Storage Pvt. Ltd. (supra) it was held that providing ward and watch, maintenance of common area, maintenance of light in the common area, supply of water, providing lift, installation of electric transformer, power to the lessees, providing generator, over-head water tanks, maintenance of drainage, etc. clearly establishes that the entire activity is structured in an organized manner to earn profit out of investment made by the assessee as a commercial venture and held that the rental inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Term Loan which result in the assessee losing the premises. According to the assessee, in the course of operations, it faces unforeseen impediments in the form of power cuts, water shortage, break down of amenities, tenants vacating the premises before expiry of lease period which need to be catered to immediately. It is contended that in the case on hand, there is risk, uncertainty and unforeseen hurdles which have been laid down as essential requirements of a business by the Hon'ble High Court of Gujarat in the case of Smt. Minal Rameshchandra (supra). 6.4.9 The learned CIT (Appeals) was of the view that the decision of the Hon'ble Apex Court in the case of East India Housing Land Development Trust Ltd. (supra) is applicable to the facts of the case on hand. The cited case was one where the company was incorporated with the object of buying and developing land and properties and promoting and developing markets. Thus, the main objective was to develop landed properties into markets. It so happened that some shops and stalls, which were developed by the company, had been rented out and income was derived from the renting out of the said shops and stalls. In those fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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