TMI Blog2012 (4) TMI 565X X X X Extracts X X X X X X X X Extracts X X X X ..... the circle rate for land was ₹ 65,400/- per sq. mt. and the cost of construction was ₹ 7,600/- per sq. mt. under D category. The assessee was requested to work out the consideration as per circle rate. In reply dated 16.12.2010, the assessee worked out the value of land at ₹ 29,68,637/- and the cost of construction at ₹ 13,79,904/-. Thus, the total value was worked out at ₹ 43,48,541/-. While working out this value, the proportionate area of the plot of land was taken at 226.96 sq. mts., i.e., 2443 sq. ft. It may be mentioned that the area sold was shown at 2443 sq. ft. However, the AO worked out the value at ₹ 55,37,240/-. He took the value of land at ₹ 37,80,120/- and the cost of construction at ₹ 17,57,120/-. This lead to an addition of ₹ 11,63,440/- to the income returned by the assessee. 1.2 Various submissions were made before the CIT(Appeals)-XVI, New Delhi. She perused the details filed before the AO and before him. She also checked the calculation. It was found that the AO presumed that the assessee sold the entire floor of the building admeasuring 3,110 sq. ft. (289 sq. mts.). However, the copy of the possessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er which rent received on hiring of terrace of various buildings is taxable. It is mentioned that the value of the terrace has been reflected as stock-in-trade, therefore, income derived by way of rent has a direct nexus with the business of the assessee. 2.1 In this connection, it is mentioned in the assessment order that the assessee received rent in respect of Vikram Tower amounting to ₹ 25,68,576/- and rent in respect of terrace space and antenna amounting to ₹ 38,23,281/-. This property has been shown in the accounts as fixed asset but the terrace space has been shown as stock-in-trade . It was submitted that the stock-in-trade in the balance-sheet has been shown as income under the head house property (sic). The AO considered this explanation. He referred to the decision in the case of Shambhu Investment (P) Ltd. vs. CIT (2003) 129 Taxman 70, in which it has been held that the relevant consideration for taxing an income under the head property income is the primary object regarding exploitation of the property. If the letting of the property or any portion thereof is the main intention, then rent can be taxed as income from property. However, if the main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come. The income is assessable as property income and rule of consistency is in favour of the assessee. 2.5 We have considered the facts of the case and submissions made before us. The facts of the case are that the assessee has let out space of terraces on various buildings owned by it for installation of antennae. There are some constructions on Vikram Tower, Vishwa Sadan and Vishwadeep but there is no such construction in Vaishali. The assets have been shown as stock-in-trade. The question is-whether, rentals received are liable to be taxed u/s 22 as house property income or under the head profits and gains of business? 2.6 In order to answer the aforesaid question, it is necessary to find out the true nature of the asset as to whether it is a fixed asset or stock-intrade. The admitted facts in this connection are that the assessee has been renting the space and small rooms constructed on terraces for the last 9 years. Thus, the intention is not to sell the space on the terrace as stockin- trade but hold on to it as a fixed asset. Therefore, it is held that the asset has been wrongly classified in accounts and for the purpose of law it should be taken as a fixed asset. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken as income from house property. Thus, it was a case of receiving rentals from hording and not from space on the terrace. The ld. counsel has relied on the decision in the case of East India Housing Land Development Trust Ltd. Vs. CIT (1961) 42 ITR 49 (SC). In this case, it was held that income derived by the company from shops and stalls was income from the property and was assessable to tax u/s 9 of the 1922 Act. The facts of this case are also distinguishable because the assessee has not derived income from letting out of shops and stalls owned by it. The income is derived from letting out the space on the terraces which also has small rooms. As mentioned earlier, the essence of the letting out is to make available open space for installing antennae and instruments and such space cannot be termed as building and land appurtenant thereto. Therefore, it is held that the income is rightly assessable either as business income or income from other sources and not as property income. From the facts brought on record, it transpires that the letting out is for three years but extendable up to 9 years on the option of the parties. Therefore, it is not a case where systematic ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical incomes under the aforesaid heads. The assessee had suo motu disallowed a sum of ₹ 25,000/- u/s 14-A. However, the AO made a further disallowance of ₹ 50,221/-. The ld. CIT(Appeals) considered the facts of the case and submissions made before her. It is mentioned that the first and foremost requirement for invoking these provisions is that the AO is not satisfied with the correctness of the claim of the expenditure disallowed by the assessee. It is only thereafter that the mechanism of disallowance provided under Rule 8D comes into operation. The AO has not recorded as to how the disallowance made by the assessee was not correct. Since the AO has not recorded any reason about correctness of the calculation of the assessee, she was not debarred from going into correctness of the claim. The submissions of the assessee are that the investments are passive investments and very little managerial effort is involved in making or disposing of the investments. These investments yield not only tax-free income but also taxable income by way of STCG. The taxable income amounted to ₹ 10,63,833/- and tax-free income amounted to ₹ 18,97,201/-. Thus, they were in the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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