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Soham Trading and Investments Private Limited Versus Assistant Commissioner of Income Tax-7 (2) , Mumbai

2016 (11) TMI 1248 - ITAT MUMBAI

Profits and Gains from Business or Profession - assessment of income - business activity - claim of depreciation on assets - Held that:- The assessee in our considered view is involved in a systematic activity of exploiting its asset, which in turn it had taken on lease , is thus involved in carrying on business activity. Thus, the income arising there from such business activity is to be assessed to tax in the hands of the assessee under the head ‘Profits and Gains from Business or Profession’ .....

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s well maintenance charges as income from business to be brought to tax as ‘Profit and Gains of Business or Profession’ and also allowed the claim of depreciation on assets except on building which was leased by the tax-payer in that case , as the facts in the instant case are similar. - Treatment to loss - sale of securities under ‘Portfolio Management Services’ - Business loss or short term capital loss - assessee is aggrieved that the learned CIT(A) enhanced assessment without affording o .....

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set aside and restored to the file of the learned CIT(A) to de-novo adjudicate the issue on merits after affording opportunity of being heard to the assessee. Needless to say that proper and sufficient opportunity of being heard shall be provided by learned CIT(A) to the assessee in accordance with principles of natural justice in accordance with law. - I .T.A. No.4579/Mum/2012 - Dated:- 7-10-2016 - SHRI C. N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : S .....

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er , 2010 passed by the learned Assessing Officer (hereinafter called the AO ) u/s 143(3) of the Income Tax Act,1961 (Hereinafter called the Act ). 2. The grounds of appeal raised by the assessee company in the memo of appeal filed with the Income Tax Appellate Tribunal, Mumbai (hereinafter called the Tribunal ) read as under:- 1. Under the facts and circumstances of the case and in law, the learned Commissioner(Appeals) [ for short Ld. CIT(A) ] has erred in confirming the action of Learned Asse .....

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er. 3. Under the facts and circumstances of the case and in law, the Learned CIT(A) has erred in enhancing assessment by disallowing Depreciation allowed by Learned Assessing Officer ( for short Ld. AO) of ₹ 1,71,006/- without affording real opportunity of being heard in the matter. 3. The brief facts of the case are that the assessee is engaged in the business of premises service provider on leave and license basis. It also provides amenities. The filing of this appeal is delayed by 11 da .....

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observed by the AO that the assessee has taken on lease premises owned by M/s Mahalaxmi Engineering Company Private Limited and subITA leased the same property to M/s G E Countrywide Consumers and Financial Services Limited and received income in the form of maintenance charges of ₹ 46,51,200/- and leave and license fees of ₹ 72,38,430/-from the sublease and shown under the head profit and gains from business and profession . The AO show caused the assessee as to why the same should .....

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e of lifts, uninterrupted supply of water, maintenance of staircases and common areas, watch and ward facilities which constitute complex business activities. The accounts are audited under the provisions of Section 44AB of the Act whereby the auditors have treated the entire activity as business operations. The assessee submitted that it incurred salary , telephone, electricity and other expenses such as audit fees, legal fees , bank charges, ROC fees etc. which reflects that the assessee is pr .....

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the specific head of income relying on the decision in the case of Nalinikant Mody v. Narayan Row 61 ITR 428(SC) , CIT v. New India 201 ITR 208, Gopi v. CIT 225 ITR 320. The AO rejected the contentions of the assessee as it was held by the AO that the income from sub-leased assets does not come within the purview of business income as an act of taking a single property on lease from a related concern and giving the same on sub-lease cannot be termed as a business activity. It was observed by th .....

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l with the learned CIT(A), which appeal was dismissed by the learned CIT(A) as the assessee did not had any evidence to show that it is in the business of letting out premises on commercial basis, vide appellate order dated 27-12-2011 passed by learned CIT(A). The learned CIT(A) also disallowed depreciation on assets to the tune of ₹ 1,71,006/- since the rental income and maintenance income has been assessed to tax as income from other sources , no depreciation is allowable u/s 57(2) of th .....

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/Mum/2012 for the assessment years 2006-07 and 2008-09 vide orders dated 17-06-2015. The assessee also relied upon the decision of Hon ble Supreme Court in the case of Chennai Properties and Investment Limited v. CIT in (2015) 373 ITR 0631(SC) and decision of Mumbai Tribunal in the case of ITO v. Rasiklal & Co. reported in (2009) 119 ITD 61(Mum. Trib). 7. The learned DR relied upon the orders of the learned CIT(A). 8. We have considered the rival contentions and perused the material on recor .....

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l Services Limited and received income in the form of maintenance charges of ₹ 46,51,200/- and leave and license fees of ₹ 72,38,430/- from the sub-lease. The assessee has also claimed to be premises service provider which interalia included the services of providing electricity, use of lifts, uninterrupted water supply, maintenance of staircases and common areas, watch and ward facilities . The assessee having received maintenance and amenity charges for providing additional service .....

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tivity and since the assessee is not the owner of premises and hence the same cannot be assessed to tax under the head Income from House Property . Since it did not fell under any of the other specified head of income, the Revenue brought to tax the said income as Income from other sources which is a residuary head of income . The said assessment order of the AO was upheld by the learned CIT(A) on the grounds that there is no evidence to show that the assessee is in business of letting out of th .....

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leased by it is clear from activities carried on by the assessee from the perusal of its audited financial statements (pb-I/page 31-65) . The assessee in our considered view is involved in a systematic activity of exploiting its asset, which in turn it had taken on lease , is thus involved in carrying on business activity. Thus, the income arising there from such business activity is to be assessed to tax in the hands of the assessee under the head Profits and Gains from Business or Profession a .....

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aid income from leave and license fee as well maintenance charges as income from business to be brought to tax as Profit and Gains of Business or Profession and also allowed the claim of depreciation on assets except on building which was leased by the tax-payer in that case , as the facts in the instant case are similar. Thus the ground no. 1 and 3 are allowed. We order accordingly. 9. The next ground being ground no 2 raised by the assessee in the memo of appeal filed with the Tribunal is with .....

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