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TMI Blog2016 (7) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year 2005-06. It was admitted by this court vide order dated November 23, 2010 to consider the following substantial question of law : "Whether the Income-tax Appellate Tribunal was justified in reversing the order of the Commissioner of Income-tax (Appeals) and upholding the order of the Assessing Officer, while treating the lease income out of leasing out commercial property to concern engaged in parallel business activities as income from house property and not income from business when the appellant has to provide various basic facilities as that to the franchisee ?" 2. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The appellant-assessee is a company engaged in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod, to gain edge in business and to exploit the business opportunity in the best possible way. After examining the matter, the Assessing Officer held the income from lease of commercial property declared as business income as income from house property vide order dated December 28, 2007, annexure A.3. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income-tax (Appeals) (CIT(A)). Vide order dated November 18, 2008, annexure A.2, the Commissioner of Income-tax (Appeals) partly allowed the appeal and decided the issue in favour of the assessee. Not satisfied with the order, the Revenue filed appeal before the Tribunal. Vide order dated May 15, 2009, annexure A.1, the Tribunal partly allowed the appeal and decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the assessee and the lessee, i.e., M/s Pizza Hut showed that the property in question was given for use for a period of 12 years which was renewable for a further period of 12 years. It was nowhere shown that the intention to let out was only for a temporary period. Thus, the Commissioner of Income-tax (Appeals) was not held to be justified in concluding that the letting out was to be taken as commercial exploitation of the property. The intention of the assessee was to enjoy rental income from the letting out of the property which was rightly treated as income from house property by the Assessing Officer. The relevant findings recorded by the Tribunal while reversing the order of the Commissioner of Income-tax (Appeals) on this is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pizza Hut. The claim of the assessee is that such renting was done for a temporary period as the premises were vacated after two years and therefore, such let ting out of the asset has to be viewed as commercial exploitation of the assets. In this regard, we have attempted to cull out the intention of the assessee while letting out the property in question. The asses see has placed on record a copy of the memorandum of understand ing dated August 27, 2002 with the lessee. It is evident from perusal of the same that the property in question was given over for use for a period of 12 years which was renewable for a further period of 12 years as mutually agreed upon by both the parties. From such an arrangement, it does not show that the intent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plastics P. Limited's case (supra), the factory premises of the assessee consisted of three portions-the main building, a front shed and a rear shed. In order to curtail the losses, production was reduced with the result that the rear shed became surplus. The said portion was leased out with a view to reduce the losses. After examining the matter, it was recorded by this court that in order to determine whether rent is assessable as income from property or business income, what has to be seen is whether the asset is being exploited commercially by the letting out or whether it is being let out for the purpose of enjoying the rent. It was held that the portion of the property was leased out temporarily as a commercial asset. Thus, the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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