9911796707
TMI Blog2016 (3) TMI 409X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 1,04,13,240/ - is taxable under the head 'Income from Other Sources' as the said rent was received from the letting out of Industrial Plot alongwith Building thereon. 1.(iii) On the facts and in the circumstances of the case as well as in law, the Ld. CIT(A) erred in not appreciating the fact that the assessee company did not carry out any business activity during the year and only exploited the commercial assets for earning huge rents which is taxable under the head 'Income from Other Sources. 2. The appellant craves leave to add , amend , vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of appeal. 3. The appellant prays that the order of CIT(A) on the above ground be set aside and that of the assessing officer be restored'. 3. The brief facts of the case are that the assessee company's case for the impugned assessment year was selected for scrutiny by Revenue to frame assessment u/s 143(3) of the Income Tax Act,1961(Hereinafter called "the Act") . It was observed by the learned assessing officer (Hereinafter called "the AO") that the assessee company has offered income from house property at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions of the assessee company. The A.O. after careful perusal of the assessee company's submission held the same are not acceptable. The A.O. observed that as per para 3(m) of the agreement of lease between Shri Narandas Amratlal Sejpal and MIDC(later on assigned to the assessee company), it is stipulated that "the licensee will not directly or indirectly transfer, assign, sell, encumber or part with his interest under or the benefit of this agreement or any part thereof in any manner whatsoever without the previous consent in writing of the Chief Executive Officer". Thus as per the AO, it is clear that the assessee company is not the owner of the property and thus not entitled to even sublet the property to third party. The use and occupation of the leased property is based on the contract between the lessee and lessor and the AO observed that right of occupation is co-terminus with the lease agreement. The AO observed that the objective of the MIDC to allocate the plot on lease for a specific purpose as stated in the lease deed and the same is for the purpose of promotion/ development of industries/ factory building and manufacture/ production of articles/goods by the person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the plot is, not acquired on leave and license basis, but it is actually acquired on a long term lease basis (i.e. 95 years). Moreover for the purpose of taxation of property income, under the head "income from house property', owners are defined under Sec 27(iiib) of the Act whereby it is stipulated that a person who acquires any rights (excluding any rights by way of a lease from month to month or for a period not exceeding one year) in or with respect to any building or part thereof, by virtue of any such transaction as is referred to in clause (f) of section 269UA of the Act, shall be deemed to be the owner of that building or part thereof and clause (f) of section 269UA of the Act states that in relation to any immovable property referred to in sub-clause (i) of clause (d), means transfer of such property by way of sale or exchange or lease for a term of not less than twelve years & includes allowing the possession of such property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882). The assessee company submitted that it has taken the immovable property (plot) on lease for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 27 of the Act which, inter-alia, stipulates that a person who acquires any rights in or with respect to any building or part thereof, for a period of 12 years or more by virtue of any transaction referred to u/s 269UA(f) of the Act shall be deemed to be the owner of that building or part thereof. In the light of these clauses, the CIT(A) held that the lease of land is for 95 years and since it exceeds 12 years, the assessee company can be treated as the deemed owner of the land. From the balance sheet of the assessee company, the CIT(A) noticed that the opening value of the building as on 1-4-2007 was shown as Rs. 40,97,816/- and after making additions, the value as on 31-03-2008 was Rs. 79,15,607/- and subsequently there were no addition made during assessment years 2009-10 and 2010-11. Thus, there is no doubt that the assessee company is owner of the building. The CIT(A) accordingly vide orders dated 21.10.2013 held that assessee company is the owner of the factory building and it is also a deemed owner of the land and the rent received has to be assessed as 'income from house property' and not under the head 'income from other sources'. 6. Aggrieved by the orders dated 21.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis to Omnitech Infosolutions Pvt. Ltd. by the assessee company vide leave and license agreement 10.12.2007. The assessee company has placed on record the copy of Leave and License Agreement dated 10-12-2007 entered into between the assessee company and M/s Omnitech Infosolutions Ltd. whereby it was agreed by the licensee to pay license fee per month for taking on the said premises on leave and license basis which is placed in paper book pages 66 to 96. The ld. Counsel submitted that the assessee company acquired the plot of land for a long period i.e. 95 years from the MIDC and the assessee company is the deemed owner of this plot by virtue of section 27(iiib) of the Act. Ld. Counsel for the assessee company submitted that the assessee company is the owner of the factory building and it is also a deemed owner of the land and the rent received has to be assessed under the head 'income from house property' and not income under the head 'income from other sources'. The Ld. Counsel of the assessee company submitted that this leave and license agreement dated 10.12.2007 is merely an agreement to give the right to use and occupy on leave and license basis the said premises to the licen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 38-39. The building thereon the said plot along with the Plot is duly reflected in the books of accounts of the assessee company and the audited Balance Sheet filed with the Revenue and also filed in the paper book filed before us, which is placed at paper book page 1-7, whereby the Fixed Assets consisting of land and building along with electrical installations, and lift is appearing at Gross value of Rs. 1,00,07,574/- as at 31.03.2010 while there are no additions in fixed assets during financial year 2009-10 and no depreciation is claimed by the assessee company as it is stated that there are no business user of the said assets during the previous year relevant to the assessment year apart from giving on leave and license basis to Omnitech Infosolutions Ltd.(licensee). The said premises consisting of land and building was given on leave and license basis by the assessee company (licensor ) to Omnitech Infosolutions Ltd.(licensee ). The assessee company has placed on record the copy of Leave and License Agreement dated 10-12-2007 entered into between the assessee company and M/s Omnitech Infosolutions Ltd. whereby it was agreed by the licensee to pay license fee per month to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
