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TMI Blog2017 (1) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... obacco trade and also let out commercial properties on rental basis. The assessee has filed its return of income for the assessment year 2010-11 on 24.9.2010 admitting total income of Rs. 1,33,42,850/-. The case was selected for scrutiny and notices u/s 143(2) & 142(1) of the Income Tax Act, 1961 (hereinafter called as 'the Act') were issued. In response to notices, the authorized representative of the assessee appeared and furnished the information called for. During the course of assessment proceedings, the A.O. noticed that the assessee has considered income from rental receipts under the head "income from business". After considering the details furnished by the assessee and analyzing the provisions, held that income from lease ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidering the preamble of the Partnership Deed since it is the basic edifice on which the Partnership Firm has come into Vogue. 5. The learned CIT(A) is not justified in confirming the addition without Considering the appellant's ground that its main intention of floating the firm by its partners is to lease out commercial properties strictly in a commercial sense as a prudent businessman yielding good amount of profits In several occasions the courts have also felt that where company or a firm acquire property which it sells or leases it out with a view to be dealt with in the same manner, the company or a firm is not treating them as property to be enjoyed in the shape of rent which they yield but as a kind of circulating capital le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered rental receipts under the head "income from business". The A.O. assessed rental receipts under the head income from house property. The Ld. A.R. for the assessee at the time of hearing submitted that the issue has been covered by the assessee's own case for the assessment year 2008-09 in ITA No.275/Vizag/2012 dated 19.2.2016. We find that the coordinate bench of this Tribunal, under similar circumstances held that rental income from letting out commercial properties is assessable under the head "income from profits and gains of business or profession" but not under the head "income from house property". The relevant portion of the order is extracted hereunder: "10. We have heard both the parties, perused the materials available on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business", came to a conclusion that the income received by the assessee is an income from house property and not a business income by following certain judicial precedents. 11. We find that the assessee firm has undertaken a systematic activity i.e. to take a property on lease or purchase and construct a building and lease out the same to a third party on commercial basis. According to the assessee, the activity is a business activity and therefore the income derived from the business activity has to be treated as a business income not income from house property. In this context, the Hon'ble Supreme Court in the case of Chennai Properties (supra) has observed that "the Memorandum of Association of the assessee company, which is placed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urs such as Standard Chartered Bank, Bata India Limited, EDS Electronic Data Systems India (P) Ltd. and Spencers for a higher rental amount. The intention of the assessee is very clear from the date on which it is existed is to carry out the business activity such as to construct the godowns or residential or commercial buildings or commercial shops, etc. the lands owned by firm or by taking land on long lease from others is the activity of the assessee. In our opinion, the judgement of the Hon'ble Supreme Court squarely applies to 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". 13. So far as the order of the ITAT in the assessee's own case (supra) is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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