TMI Blog2016 (3) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... e property”. - Decided in favour of assessee - I.T.A.No.275/Vizag/2012, I.T.A.No.78/Vizag/2013 - - - Dated:- 19-2-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shri G. Guruswamy, DR For The Respondent : Shri G.V.N. Hari, AR ORDER PER V. DURGA RAO, Judicial Member: These appeals filed by the revenue are directed against the order of CIT(A), Guntur dated 18.8.2011 15.10.2012 for the assessment years 2008-09 2009-10 respectively. ITA No.275/Vizag/2012: 2. The assessee firm mainly receiving rental income and also income from trade of tobacco. It had filed a return of income by declaring total income of ₹ 22,74,280/-. In the assessment order, the A.O. has noted that during the year under consideration, the assessee s sales of tobacco amounted to ₹ 3,40,24,250/-. In addition to the sales, assessee also received rents of ₹ 3,27,98,587/- as admitted in the Trading and Profit Loss account, filed along with the revised return of income. The rental income was received by the assessee firm mainly from the following concerns during the year. 1. Standard Chartered Bank, Mumba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted buildings to various tenants on lease basis in a commercial line and submitted that the whole activity carried by the assessee has to be viewed from the stand point of an ordinary prudent business man and submitted that the income derived by the assessee by letting out the properties on commercial expediency has to be treated as an Income from business . 4. After considering the above explanation of the assessee, the A.O. has noted as follows (i)(a) Building with 11,560 sq.ft. builtup area at Raheja Towers, M.G. Road, Bangalore leased out for a monthly rent of ₹ 6,66,000 per month upto Nov, 2007 and from Dec.2007 to Nov.2010 for a monthly rent of ₹ 7,99,200 to Standard Chartered Bank. (i)(b) Building with 1786 Sq.ft. area in basement of the building Raheja Towers, M.G. Road, Bangalore for use of CIT(A), Rajahmundry parking and other amenities leased out for a monthly rent of ₹ 4,94,400/- per month upto 30/11/2007 and thereafter ₹ 5,93,280 per month to Standard Chartered Bank. (ii) Super builtup area admeasuring 35400 Sq.ft. on the ground floor and 1800 Sq.ft. on the mezzanine floor situated on the land comprised in S.No.1314/1, Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , revenue is in appeal before the Tribunal. 8. The Ld. D.R. has submitted that the income received by the assessee as an income from house property and not a business income. He also submitted that for assessment years 2003-04, 2004-05 2005- 06 in assessee s own case, the Hon ble ITAT in ITA No.67/Vizag/2007 by order dated 7.12.2010 has held that income received by the assessee is an income from house property and not a business income. He also relied on the decision in the case of East India Housing Land Development Trust Ltd. Vs. CIT 42 ITR 49(SC). He further relied on the judgement of the Hon ble Supreme Court in the case of Sultan Brothers Pvt. Ltd. Vs. CIT 51 ITR 353. 9. On the other hand, the Ld. Counsel for the assessee has submitted that the assessee firm had undertaken a systematic business activity i.e. to acquire a land on lease and construct a building, leased out the same to commercial agencies for a higher rent as per the objects of the assessee firm. Therefore, the income of the assessee has to be treated as a business income and submitted that the assessee s case squarely covers by the decision of the Hon ble Supreme Court in the case of M/s. Chennai Prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivity is a business activity and therefore the income derived from the business activity has to be treated as a business income not income from house property. In this context, the Hon ble Supreme Court in the case of Chennai Properties (supra) has observed that the Memorandum of Association of the assessee company, which is placed on record mentions main objects as well as incidental or ancilliary objects in clause III(A) and (B) respectively. The main object of the appellant company is to acquire and hold the properties known as Chennai House and Firhavin Estate both in Chennai and to let out those properties as well as make advances upon the security of lands and buildings or other properties or any interest therein. What we emphasise is that holding the aforesaid properties and earning income by letting out those properties is the main objective of the company. It may further be recorded that in the return that was filed, the entire income which accrued and was assessed the said return was from letting out of these properties. It is also recorded and accepted by the assessing officer himself in his order . The Hon ble Supreme Court by considering the East India Housing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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