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2016 (3) TMI 1016 - ITAT VISAKHAPATNAM

2016 (3) TMI 1016 - ITAT VISAKHAPATNAM - TMI - Rental Income - “Income from business” or “Income from house property” - nature of income - Held that:- In the present case, the assessee has acquired the land on lease basis in various places i.e. Mumbai, Kolkata, Bangalore, Chennai and constructed commercial complexes and leased out the same to the commercial entrepreneurs such as Standard Chartered Bank, Bata India Limited, EDS Electronic Data Systems India (P) Ltd. and Spencers for a higher rent .....

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o the facts of the case and we hold that the income earned by the assessee is “Income from business” and not “Income from house 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 .....

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sessee 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, Mumbai 2. Bata India Limited, Calcutta. 3. EDS Electronic Data Systems India (P) Limited, Bangalore 4. Food World Super Market (Spencer) Limited 3. Though the nature of the business of the assessee is shown in t .....

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usiness or profession . He further noted that the assessee has constructed the building on the lands taken on lease belonging to the partners and deriving the rental income and paying leased rental to the partners. Therefore, he is of the opinion that the assessee is the owner of the property and called the explanations from the assessee why the income shown by you i.e. income from business should be treated as Income from house property . In response to the show cause notice issued by the asses .....

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also carried on the business in tobacco. The intention of the assessee firm is letting out the property is only to earn a considerable amount of rent much like an ordinary prudent business man. The nature of the assessee s business is letting out properties on commercial basis. Ownership of the property and leasing it out may be done as a part of the business or may be done as per the land owner. In the assessee s case, the properties leased out are only with business motive and not as a land o .....

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reated 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 CI .....

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ce space admeasuring 1973 Sq.ft. at No.4 of the First Floor of the Building Steeple Reach situated at No.25, Cathedral Road, Chennai leased out to M/s. EDS Electronic data Systems (India) Pvt. Ltd., at ₹ 1,12,089 per month upto 30.6.2007 and ₹ 1,18,814 per month thereafter. (iii)(b) Office space admeasuring 2029 Sq.ft. at No.6 of the First Floor of the Building Steeple Reach situated at No.25, Cathedral Road, Chennai leased out to M/s. EDS Electronic Data Systems (India) Pvt. Ltd., a .....

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at No.25, Cathedral Road, Chennai leased out to M/s. EDS Electronic Data Systems (India) Pvt. Ltd., at ₹ 1,15,270 per month upto 30.6.2007 and ₹ 1,22,186 per month thereafter. (iv)(a) Building with 12,250 Sq.ft. at Seevaram (V), Near Adyar, Chennai leased out for a monthly rent of ₹ 77,542 upto 31.10.2007 and thereafter ₹ 89,180 per month to M/s. Food World Super Markets Limited. (iv)(b) Building with 53,000 Sq.ft. super builtup area at Seevaram (V), Near Adyar Chennai le .....

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e s own case for assessment years 2003-04 to 2007-08, he has held that the income earned by the assessee is income from business and appeal filed by the assessee was allowed. 7. On being aggrieved, 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 .....

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ystematic 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 Properties and Investments Ltd., Chennai Civil Appeal No.4494/2004 dated 9.4.2015. So far as the decision o .....

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ted by virtue of partnership deed dated 21.1.2000. As per the partnership deed, the object of the firm is the nature of business is to construct godowns or residential or commercial buildings or flats or commercial shops, etc. on lands owned by the firm or by taking land on long lease basis from others, as mutually agreed upon from time to time, and lease out the same to others . It is also mutually agreed that any other business also may be carried with the mutual consent of all the partners if .....

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ndia (P) Limited and fourth to Food World Super Market (Spencer) Limited, though the nature of the business of the assessee is as per the partnership deed to construct the godowns or residential or commercial buildings or flats or commercial shops on land owned by the firm by taking land on lease basis from others, leased out or sale to others, besides conducting the tobacco business , came to a conclusion that the income received by the assessee is an income from house property and not a busine .....

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ase 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 .....

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ent Trust Ltd. Vs. CIT (supra) and also the judgement of the Hon ble Supreme Court in the case of Sultan Brothers Pvt. Ltd. (supra) has held that letting out of the properties is in fact the business of the assessee, assessee therefore rightly disclosed the income under head Income from business it cannot be treated as an Income from house property and appeal filed by the assessee is allowed. 12. In the present case, the assessee has acquired the land on lease basis in various places i.e. Mumbai .....

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