TMI Blog2016 (3) TMI 409X X X X Extracts X X X X X X X X Extracts X X X X ..... under the head ‘Income from House Property’. In our considered view, the CIT(A) has rightly held that income from license fee arising from leave and license agreement entered into by the assessee company with Omnitech Infosolutions Limited dated 10.12.2007 is chargeable to tax as income under the head “income from house property” and not under the head ‘Income from other sources’ - Decided in favour of assessee - I.T.A. No. 7656/Mum/2013 - - - Dated:- 1-2-2016 - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Revenue : Shri B.S. Bist For The Assessee : Shri Shailesh N. Doshi ORDER PER RAMIT KOCHAR, A.M. This appeal, filed by the Revenue, being ITA No. 7656/Mum/2013, is directed against the order dated 21-10-2013 passed by the learned Commissioner of Income Tax (Appeals)- 22, Mumbai (Hereinafter called the CIT(A) ), for the assessment year 2010-11. 2. The grounds raised by the Revenue in the memo of appeal filed with the Tribunal read as under:- 1(i). On the facts and in the circumstances of the case as well as in law, the Ld. CIT(A) erred in holding that the income from subletting/ leasing of property to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the assessee company with the AO. The amount of rent received after deduction of TDS was also reflected in the bank statements submitted by the assessee company before the AO. The assessee company also submitted that it has not carried out any business activities during the year and hence there is no income other than income from house property as stated above. Since there was no business activities carried on by the assessee company during the previous year relevant to the assessment year , the assessee company submitted that it has not claimed depreciation on its fixed assets. Due to this, the assets including Building asset , are disclosed in the balance sheet at gross acquisition value and no depreciation is claimed on the said assets. The assessee company submitted that the assessee company was registered on 23.02.2006 and the relevant plot was purchased by one of the Directors of the company namely Mr Narandas Amritlal Sejpal in his capacity as the director of the proposed company in the year 2004 i.e. prior to incorporation of the assessee company. The plot and building constructed thereto was transferred to the assessee company by Sh Narandas Amritlal Sejpal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction of standard deduction @30% u/s 24(a) was denied to the assessee company by the AO vide orders dated 29.12.2012 passed u/s 143(3) of the Act . 4. Aggrieved by the orders dated 29.12.2012 passed u/s 143(3) of the Act by the AO, the assessee company carried the matter in appeal before the CIT(A). 5. Before the CIT(A), the assessee company submitted that assessee company had taken a plot on lease from MIDC for a period of 95 years which is clearly evident from the agreement to lease dated 26.02.2004 and Lease Deed dated 11.10.2007 , both executed by MIDC. A building is constructed on this plot by the assessee company on its expense. The plot along with building is clearly reflected in the books of accounts of the assessee company as its asset and was later on rented out to the third party. However, the A O. has contended that since the assessee company has acquired plot of land from MIDC on leave and license basis, the assessee company is not the owner of the plot and hence rent income received for the same should be taxed under the head income from other sources and not under the head income from house property . The assessee company submitted that the A.O. has total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee company is shown the lessee and the promoter-director of the assessee company , Mr Narandas Amratlal Sejpal is shown as the confirming party. Thus, the assessee company contended that the all the rights in respect of the plot of land is transferred in favour of the assessee company. The documents submitted clearly reveals that the assessee company is the owner of the plot of land and the building thereon. The CIT(A) after carefully considered the submission of the assessee company and the assessment order held that one of the promoter director of the company Shri Narandas Amratlal Sejpal had acquired a plot of land from MIDC on leave and license basis vide agreement dated 26-02-2004 for 95 years even before the assessee company was incorporated. However, subsequent to the incorporation of the assessee company, a fresh lease agreement was entered into in the name of the assessee company with MIDC on 11-10-2007. The assessee company had constructed a factory building on the above leasehold plot of land allotted. The A.O. s contention was that the assessee company was not the owner of the land and hence income arising out of letting out of the building could not be treated u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny after its incorporation vide lease agreement dated 11.10.2007 between MIDC and the assessee company whereby the promoter-director of the assessee company Mr. Narandas Amratlal Sejpal was the confirming party, the said agreements are placed in paper book filed with the Tribunal at page 12-37 and 42-65. The lease is now granted by MIDC in favour of the assessee company who is lessee of the said plot for a period of 95 years vide lease agreement dated 11-10-2007 which is placed at paper book, page 42-65. The assignment of interest of the promoter-director of the assessee company namely Mr. Narandas Amratlal Sejpal in favour of the assessee company was approved by MIDC vide approval dated 22.3.2007 which is also placed in paper book filed with the Tribunal page 38-39. The building there-on the said plot was constructed by the assessee company and the said plot along with building there-on is duly reflected in the books of accounts of the assessee company and the audited accounts filed with the Revenue , our attention was drawn to the audited Balance Sheet of the assessee company which is placed at paper book page 1-7, whereby the Fixed Assets consisting of land and building along wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014] 50 taxmann.com 422 3. Madras Tribunal decision in the case of ACIT v. Smt. Farida Begum Tazudeen, [1997] 63 ITD 298 (Mad) 9. We have considered the rival contentions and also perused the material available on record including case laws relied upon. We have observed that the plot of land bearing No. A-812, in the Trans Thane Creek Industrial Area within the village limit of Borivali and within the limits of Navi Mumbai Municipal Corporation , Thane District was acquired from MIDC on license basis by the promoter-director of the assessee company Mr Narandas Amratlal Sejpal as being promoter of proposed company , vide agreement dated 26.02.2004 for a term of 95 years with MIDC which was later on assigned to the assessee company after its incorporation vide lease agreement dated 11.10.2007 between MIDC and the assessee company whereby the promoter-director of the assessee company Mr. Narandas Amratlal Sejpal was the confirming party, the said agreements are placed in paper book filed with the Tribunal at page 12-37 and 42-65. The lease is thereafter granted by MIDC in favour of the assessee company who is lessee of the said plot for a period of 95 years vide lease agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company is the deemed owner of this plot by virtue of section 27(iiib) of the Act read with Section 269UA(f) of the Act. The assessee company is the owner of the factory building and it is also a deemed owner of the land and the licensee fee income received has to be assessed under the head income from house property and not under the head income from other sources . With respect to the lifts and electrical installations in the factory building given on leave and license along with the premises consisting of land and building , the lift and electrical installations are amenities , which are necessary for the use and enjoyment of the building and hence part of the building and cannot be separately assessed and charged to tax under the head Income from other sources rather the same is also chargeable to tax under the head Income from House Property . In our considered view, the CIT(A) has rightly held that income from license fee arising from leave and license agreement entered into by the assessee company with Omnitech Infosolutions Limited dated 10.12.2007 is chargeable to tax as income under the head income from house property and not under the head Income fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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