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TMI Blog2016 (11) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... as "business income" of the assessee. The Tribunal, after considering the relevant submissions of the parties, vide order dated 14.08.13 held that the rental income earned by the assessee from sublease of the premises was to be assessed as income from 'house property'. However, the Tribunal had accepted the contention of the assessee that the income in relation to any services provided by the assessee was to be assessed as 'income from other sources'. 2. Now through the present miscellaneous petitions, the assessee has come with the pleading that in the light of the decision of the Hon'ble Supreme Court in the case of "Chennai Properties & Investments Ltd." (civil appeal No.4494 of 2004 & others) decided vide order dated April 9, 2015; the rental income earned by the assessee from sublease of the property is required to be assessed as 'business income' of the assessee. It is the say of the Ld. Counsel for the assessee that in the subsequent decision of the Hon'ble Supreme Court in the case of "Chennai Properties & Investments Ltd." (supra), the correct legal position has been stated and that the decision of the Hon'ble Supreme Court is the law of the land. Therefore a mistake has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding this Tribunal. We, further, find that the Hon'ble Supreme Court in the case of "Chennai Properties & Investments Ltd." (supra) has held that from the facts and circumstances of the case before them, an irresistible conclusion was that the letting of the property was in fact the business of the assessee. However, we find that the facts in the case of "Chennai Properties & Investments Ltd." (supra) were entirely different as that of the case of the assessee. In case of "Chennai Properties & Investments Ltd." (supra) in the memorandum of association of the appellant company, it was mentioned that the main object of the appellant company was to acquire and hold the property known as "Chennai house" and "Firhavin Estate" and to let out those properties as well as make advance upon the securities and lands and buildings or other properties or any interest therein. The Hon'ble Supreme Court emphasized that holding the aforesaid properties and earning income by letting out those properties was the main objective of the company. The Hon'ble Supreme Court also relied upon its earlier decision in the case of "Karanpura Development Company Ltd. vs. CIT" 44 ITR 362 (SC) wherein the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome 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 properties. The Hon'ble Supreme Court further observed that in the case of "Sultan Brothers (P) Ltd. the Constitutional Bench of the Supreme Court has clarified that merely an entry in the object clause showing a particular object would not be the determinative factor to arrive at an conclusion whether the income is to be treated as income from business and such a question would depend upon the circumstances of each case, viz., whether a particular letting is business or not. This has been so stated in the following words: - "We think each case has to be looked at from a businessman's point of view to find out whether the letting was the doing of a business or the exploitation of his property by an owner. We do not further think that a thing can by its very nature be a commercial asset. A commercial asset is only an asset used in a business and nothing else, and business may be carried on with practically all things. Therefore, it is not possible to say that a particular activity is business because it is concerned with an asset with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Tribunal has well considered the proposition of law that if an income is earned from the business activity of letting out of the properties or the commercial exploitation of the property by way of organized activities of taking properties on lease and letting out etc. then the income is to be assessed as business income of the assessee as held subsequently by the Hon'ble Supreme Court in the case of "Chennai Properties & Investments Ltd." (supra). It is pertinent to mention here that the Hon'ble Supreme Court in the case of "Chennai Properties & Investments Ltd." (supra) has relied upon another decision of the Tribunal of the Hon'ble Supreme Court in the case of "Karanpura Development Company Ltd." (supra) which was well considered by the Tribunal while passing the impugned order dated 14.08.13. Hence, the proposition of law as laid down subsequently by the Hon'ble Supreme Court in the case of "Chennai Properties & Investments Ltd." (supra) and further in the case of "M/s. Rayala Corporation Pvt. Ltd." (supra) has already been taken into consideration while passing the impugned order by the Tribunal because in the subsequent decision of the Hon'ble Supreme Court, the earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue that rent should be the main source of income or the purpose for which the company is incorporated should be to earn income from rent so as to make the rental income to be taxed under the head profits and gains of business or profession. The Hon'ble Supreme Court rejected the above contention and held that since the assessee company had stopped all other activities except the business activity of leasing its property or earning rent there from and therefore the business of the company was to lease its property and to earn rent and therefore the income so earned should be treated as its business income. The distinguishable fact in the case of "M/s. Rayala Corporation Pvt. Ltd." (supra) was that as per memorandum of association of that company, one of the objects was to earn income by way of rent by leasing or renting the properties belonging to the assessee company. The Hon'ble Supreme Court, thus, held that renting of the property was part of the business activity of the assessee. However, in the case in hand, the Tribunal after appreciation of facts has held that the sub leasing of the property was not part of the business activity of the assessee. The Tribunal, as the fa ..... 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