Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Forum Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database More...
Extracts
Home List
← Previous Next →

M/s. Jyoti Limited Versus Asstt. Commr. of Income tax And Vice-Versa

Rental/licence fee received in respect of property given on lease to BHL - acquiring and leasing properties in the State of Jammu & Kashmir - liable to be assessed as business income and not as income from house property - Held that:- ‘Chennai Properties And Investment Limited’ (2015 (5) TMI 46 - SUPREME COURT), is directly and squarely applicable on this point. It holds that since the main object of the assessee was to acquire and let out properties, from which letting out, income was earned, s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

putedly, the main object of the assessee happened to be acquiring land and buildings in the State of J & K and letting out the same. This is exactly the same object as was that of the assessee in ‘Chennai Properties And Investment Limited’ (supra). Therefore, in accordance with ‘Chennai Properties And Investment Limited’ (supra), we hold that the assessee is correct in contending by way of the additional ground taken that the rental/licence fee received by the assessee in respect of the subject .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

IN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER Appellant by: S/Sh. Ajay Vohra, Sr.Adv.alongwith Gaurav Jain, Krishan Kumar & Satish Sachdeva Respondent by: Sh.Umesh Takkyar, DR ORDER Per A. D. Jain, JM These are the cross appeals - eight by the assessee and eight by the Department filed against different orders of the ld. CIT(A), Jammu for different assessment years, as mentioned in the caption of this order. As the issues involved in these appeals are almost similar, they are be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ond jurisdiction, bad in law and void ab initio. 1.1 That the CIT(A) erred on facts and in law in holding that the reasons to believe recorded by the AO had a direct nexus with the income escaping assessment. 1.2 That the CIT(A) erred on facts and in law in upholding that the revisionary order dated 02.01.2012 passed under section 263 for assessment year 2008-09, constituted fresh material for the AO to re-open the concluded assessment for the impugned assessment year under section 147 of the Ac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hstanding the amount of rent agreed for a fixed period at the time of entering into a legally binding rental contract on the basis of the market conditions prevalent at the time of entering into the license agreement. 2.2 That the CIT(A) erred on facts and in law in holding that subsequent enhancement of license fee by both the parties lead to the conclusion that the agreed annual license fee was not the fair rental value of the property for the year under consideration. Further without prejudic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and in the circumstances of the case, the rental/license fee of ₹ 5 Lacs received by the appellant in respect of subject property, given on lease to Bharat Hotels Ltd., is liable to be assessed as business income, instead of income from house property assessed by the lower authorities. 3. The Revenue has raised the following grounds of appeal in ITA No.443(Asr)/2015, for the assessment year 2006-07, which are identical in all other appeals: 1. That on the facts and circumstances of the cas .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the fair mental value of the property and allowed relief to the assessee. 3. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in adopting his own method to work out the ALV of the property without appreciating the correct method adopted by the Assessing Officer to determine the ALV. 4. The appellant craves to amend, alter or add any ground of the appeal before the appeal is heard. 4. As per application filed by the assessee for admission of additional ground, in Chennai .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

itional ground, being entirely a legal ground, is admissible. 5. The above position is patent on record. In Chennai Properties And Investment Limited (supra), the Hon ble Supreme Court has held where in terms of memorandum of association of a company, the main object of such company is to acquire properties and earn income by letting out the same, such income is taxable as business income and not as income from house property . In the case of the assessee also, the main object of the assessee is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

iring and leasing properties in the State of Jammu & Kashmir and for further letting out the same. In pursuance of this main object, the assessee took on lease land measuring 222 kanals and 19 marlas under and adjoining Gulab Bhawan Palace for a period of 40 years, vide lease deed, dated 21.03.1973 at an annual rent of ₹ 22,897/- from Shri Vikramaditya Singh. This lease was renewed for a period of 99 years vide lease deed, dated 22.11.1997. The said Gulab Bhawan Palace, i.e., building/ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2006 declaring income of ₹ 28,76,910/- including license fee of ₹ 5 lacs. received from BHL, under the head of business income. This was accepted under section 143(1) of the I.T.Act, 1961 and the return of income was not selected for scrutiny u/s 143(3). However, a notice under section 148 of the Act was issued on 21.03.2013 for the reason escapement of income. The assessee, vide letter dated 25.03.2013, in response to the said notice, the assessee filed a revised return and the rent .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

/- was made on account of alleged notional annual letting value of the property in question under sections 22, 23(1) and 24(a) of the Act. By virtue of order, dated 29.05.2015, the ld. CIT(A) confirmed the initiation of assessment proceedings under section 147 of the Act. On merits, the action of the AO in computing total notional annual letting values under section 23(1) of the Act was upheld by the ld. CIT(A). However, the method of determination of ALV, as adopted by the AO, was rejected. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ire properties and to earn income by letting out the same, such income is taxable as business income and not as income from house property. The assessee covers that this ratio handed down by the Hon ble Supreme Court, is directly and squarely applicable to the facts of the present case, since the assessee too was incorporated with the main object of, inter-alia, acquiring and leasing out the properties in the State of J & K, which main object was the object which was carried out by the asses .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

DR has contended that Chennai Properties And Investments Limited (supra), is not at all applicable to the facts of the present case and, therefore, the same has wrongly been sought to be relied on by the assessee. In that case, as per the ld. DR, the assessee had also made claim under one head of income and the AO had applied another. The ld. DR contends that this is not so in the present case. 8. We have heard the rival cntentions on this issue and have perused the material available on record .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he Act vide order dated 08.12.2010 for the assessment year 2008-09. In the reassessment, the income was assessed as income from house property. 9. The decision in Chennai Properties And Investments Limited (supra), rendered on 09.04.2015, has prompted the assessee to seek to revert to its original stand of contending that the income revert to its original stand of contending that income is to be treated as business income and not as income from house property. Let us examine Chennai Property &am .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

treated the income as income from house property. The ld. CIT(A) reversed the AO s action and directed the income to be treated as business income. The ITAT dismissed the appeal filed by the Department. The Hon ble High Court, reversed the Tribunal order, holding that the income derived by letting out the property would not be income from business, but, it could be assessed only as income from house property. The question before the Hon ble Supreme Court, therefore, was as to whether the income .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

out was the main object of the company. In the return filed, the entire income accrued was from letting out the property. The Hon ble High Court, while holding the income to be income from house property, had relied on East India Housing and Land Development Trust Limited vs. CIT , 42 ITR 49 (SC). While discussing East India Housing and Land Development Trust Limited , (supra), the Hon ble Supreme Court observed that that was a case where the company had been incorporated with the object of buy .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Hon ble Supreme Court rested its decision on the context of the main objective of the company and had taken note of the fact that letting out of the property was not the object of the company at all; and that the Hon ble Supreme Court was, therefore, of the opinion that the character of that income, which was from the house property, had not altered, because it was received by the company formed with the object of developing and setting up of properties. Discussing the decision of the Hon ble Su .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o lease out the coal fields to the collieries and other companies; that the income received from letting out of those mining leases was shown as business income; and that the Department took the position that it was to be treated as income from house property. Recapitulating Karanpura Development Co. Ltd. (supra), it was observed that before income, profits and gains can be brought to computation, they have to be assigned to one or the other head of income; that these heads are inclusive of one .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

re the letting out is part of a trading operation; that the dividing line is difficult to find, but in the case of a company with its professed objects and the manner of its activities and the nature of its dealings with the property, it is possible to say on which side the operation falls and to what head the income is to be assigned; and that in Karanpura Development Co. Ltd. (supra), applying these principles to the facts of the case it had been concluded that the income had to be treated as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ase vide perpetual lease deed dated 22.11.1997. It was further let out for a period of 99 years. The assessee retained the right to use, upgrade, renovate and reconstruct Gulab Bhawan Palace and other adjoining structures for the purposes of commissioning. The 5-Star Hotel, had an annual licence fee/rent of ₹ 5 lacs. The assessee offered the said receipt as business income. 12. The argument might be raised that since the assessee had itself earlier offer the income from letting out the pro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n Vs. CIT , 192 CTR 50 (J&K) iv) S.R. Koshti vs. CIT , 276 ITR 16 (Guj.) v) DCIT vs. Sanmukhdas Wadhwani , 85 ITD 734 (Nag.) vi) Jyotsana Holding (P) ltd. vs. ITO , 37 ITD 430 (Del.) vii) Indo Java & Co. vs. IAC , 30 ITD 161 (Delhi SB) viii) ITO vs. GE Hawn , 21 ITD 553 (All.) ix) HCL Technologies , 278 CTR 9Del.) 345 13. Now, as to whether the position originally taken by the assessee is wrong or right stands well answered by our fore-going discussion, wherein we have respectfully follo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessee or income from house property. Chennai Properties And Investment Limited (supra), is directly and squarely applicable on this point. It holds that since the main object of the assessee was to acquire and let out properties, from which letting out, income was earned, such income is to be treated as business income. The ratio laid down by the Hon ble Apex Court is that the nature of the activity of the assessee and the nature of the operation in relation to the leasing out of land, which .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     Latest Happenings     ↓  

Highlight: Notification regarding GST rate for branded cereal, pulses and flour

News: Notification regarding GST rate for branded cereal, pulses and flour

Highlight: Anti-dumping duty on import of bus/truck tyres from China

Highlight: Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan

Highlight: Non-payment of service tax - maintenance and repair charges - appellants had knowingly and deliberately shown the repair charges as job work charges to mislead about their taxability - demand confirmed.

Highlight: BAS - execution of the project of smart card for vehicle registration – implementing the SOC-VRC project - The fact that the Government has outsourced some part of the work and paid certain consideration for such outsourced work, does not make the activity subject to service tax.

Forum: Input tax credit

Forum: Cess paid instead of SGST

Forum: Excise duty credit on finished stock at additional place of business.

Circular: Amendments in Hand Book of Procedures 2015-20 –reg.

News: Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan

Highlight: Constitution of National Anti-profiteering Authority (NAA) under GST-reg. - Trade Notice

Highlight: Amendments in Hand Book of Procedures 2015-20 –reg. - Various amendments are made in Chapter-4 of Hand Book of Procedures 2015-2020.

Forum: GST rates on mobile recharge business

Circular: Constitution of National Anti-profiteering Authority (NAA) under GST-reg.

Forum: import purchase

Highlight: Sharing of expenses - BAS - promotion of business of group companies - sharing of expenditure for common facilities cannot be treated as service by one to another in such arrangement.

News: RBI Reference Rate for US $

Forum: 3B mistake

Article: Credit of unsold stock [Section 140(3)] - Actual Credit as well as Notional Credit - Part-I - GST Transitional provisions

Circular: Certain Clarifications sought on Construction Services provided in the Real Estate Sector – reg.

News: Anti-dumping duty on import of bus/truck tyres from China

News: Fast-track GST refund, else ₹ 65K cr may be stuck: Exporters

Highlight: It is open to the Settlement Commission to use best judgment in arrival of the figure. Nonetheless it has to explain the manner in which the best judgment figure has been arrived at by the Settlement Commission - HC

Highlight: Deemed dividend u/s 2(22)(e) - advances given to societies - in the absence of legal right of the assessee in the said society the amount advanced cannot be treated as deemed income.

Highlight: When electrical installations are treated as plant and machinery the depreciation has to be allowed @ 25% as per provisions contained u/s 32

TMI Note: Capital Gain - transfer of right in the land or transfer of land itself - addition u/s 50C - Harassment to the honest tax payers

Highlight: Option to avail composition scheme under GST by electronically filing an intimation in FORM GST CMP-02 and FORM GST ITC-03 upto 30-9-2017 - See Rule 3(3A)

TMI Note: Does ICDS apply for the purposes of computing exemption u/s 11 to 13.

Highlight: Voluntary Reporting of Estimated Current Income and Advance Tax Liability - CBDT issues draft notification

TMI Note: Certain ICDS provisions are inconsistent with judicial precedents. Whether these judicial precedents would prevail over ICDS.

Highlight: Provisions of ICDS shall prevail w.e.f. AY 2017-18 to the transactional issues dealt therein over earlier judicial pronouncements.

Notification: Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

News: Voluntary Reporting of Estimated Current Income and Advance Tax Liability

TMI Note: In case of conflict between ICDS and other specific provisions of the Income-tax rules, 1962 governing taxation of income like rules 9A, 9B etc. of the Rules, which provisions shall prevail.

TMI Note: Does ICDS apply to computation of Minimum Alternate Tax (MAT) u/s 115JB of the Act or Alternate Minimum Tax (AMT) u/s 115JC of the Act.

TMI Note: Where a term has not been defined under ICDS, nor under the Act, but has different interpretations given to it by the courts in tax cases, and in ICAI Accounting Standards, which interpretation would prevail while interpreting ICDS.

TMI Note: Whether the provisions of ICDS apply to a non-resident who claims the benefit of a double taxation avoidance agreement (DTAA).

TMI Note: In case any of the ICDS provisions is contrary to a circular or press release issued by the CBDT, which would prevail over the other.

TMI Note: ICDS-I requires disclosure of significant accounting policies and other ICDS requires specific disclosures. Where is the taxpayer required to make such disclosures specified in ICDS.

Notification: Income Computation and Disclosure Standards (ICDS) - New ICDS to be effective from AY 2017-18

News: RBI Reference Rate for US $

Highlight: GST - Detention of goods under transport - discrepancy in documents - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication - HC

Highlight: Reassessment - first few paragraphs of the assessment order dealt with objections and disposed of accordingly - Unfortunately, the manner in which the AO has decided the issue is wholly unsustainable in law - HC

Highlight: Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by law - cannot be disallowed - HC

Highlight: Valuation - inclusion of reimbursement of expenses - managing participation of clients in certain mela, fairs, promotional activities etc. - They are liable to service tax on the gross amount received - They cannot restrict their tax liability to only agency commission

Highlight: TDS liability - ITAT confirmed the liability - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by single paragraph conclusion - HC

Highlight: Reopening of assessment - sufficiency of material available with the AO to form a belief that income chargeable to tax had escaped assessment - bogus purchases - seller refused to respond - notice would not be interfered with - HC

Highlight: Exemption u/s 11 - education activities - transport and hostel facilities surplus cannot be considered as business income of the assessee society

News: Draft Notification for insertion of new rule 39A in the Income-tax Rules, 1962 – comments and suggestions-reg.



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version