TMI Blog2017 (5) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire income or substantial income was from letting out of the property which was the principal business activity of the appellant. No such effort was made. Tribunal was correct in holding that the appellant was owner of the shopping centre within the meaning of Section 22 read with Section 27 of the Income Tax Act, 1961 - Decided against assessee. - CIVIL APPEAL NOS. 6455-6460 OF 2017, (ARISING OUT OF SLP(C) NO(S). 17277-17282 OF 2015) - - - Dated:- 9-5-2017 - Mr. A. K. Sikri And Mr Ashok Bhushan For the Petitioner : Mr. Bhargava V. Desai, Adv. For the Respondent : Mrs. Anil Katiyar, Adv. JUDGMENT A.K. SIKRI, J. The substantial questions of law which have been raised by the appellant in these appeals, which were also the questions before the High Court on which High Court has rendered the impugned judgment, are the following: (1) Whether in the facts and circumstances of the case, and in law, the Tribunal erred in holding that the appellant was owner of the shopping centre within the meaning of Section 22 read with Section 27 of the Income Tax Act, 1961? (2) Whether in the facts and circumstances of the case, and in law, the Tribunal was right i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er taking possession of the premises, the appellant spent substantial amount on additions/alternations of the entire premises, including demolishing the existing platform and, thereafter, reconstructing the same according to the new plan sanctioned by the MCGB. [Rs. 1,83,61,488/- spent from Financial Year 1993-1994 to 2001-2002] The appellant constructed 95 shops and 30 stalls of different carpet areas on the premises under the market name Saibaba Shopping Centre . The appellant also obtained, in terms of the conditions of the auction, necessary registration certificate for running a business under the Shop and Establishment Act and other licenses/permissions from MCGB and other Government and semi-Government bodies for carrying on trading activities on the said premises. The appellant firm was responsible for day-to-day maintenance, cleanliness and upkeep of the market premises. The appellant also had to incur/pay water charges, electricity charges, taxes and repair charges. Essentially, the appellant collected the following types of receipt from the sub-licensees: (a) Compensation from sub-licensees [same rate of stallage charges and on the same terms and condition as give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the High Court. The High Court, by the impugned order dated 19.09.2014, dismissed the appeal filed by the appellant. 6) It is this judgment of the High Court against which present appeals, via Special Leave to Appeal, have been filed. 7) The learned counsel for the appellant submitted that the High Court, or for that matter the ITAT, committed grave error in approaching the entire matter from an erroneous angle. Referring to the discussion contained in the impugned judgment, the learned counsel pointed out that the High Court confined its discussion only on one aspect viz. as to whether the appellant was deemed owner of the properties in question within the meaning of Section 27(iiib) of the Act and after holding it to be so, it treated the income as income from house property . The learned counsel argued that the entire focus of the High Court was on the aforesaid aspect and, in the process, it was totally ignored that the main business of the appellant was to take the premises on rent and to sub-let those premises. Thus, sub-letting the premises was the business of the appellant firm and income earned, as a result, was the business income. 8) In order to support th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 27(iiib) of the Act. We may point out that the High Court took note of the provisions of Section 27(iiib) as well as Section 269UA(f) of the Act which reads as under: Section 27(iiib) - a person who acquires any rights (excluding any rights by way of a lease from month to month or for a period not exceeding one year) in or with respect to any building or part thereof, by virtue of any such transaction as is referred to in clause (f) of section 269UA, shall be deemed to be the owner of that building or part thereof; Section 269UA(f) - transfer ,- (i) in relation to any immovable property referred to in sub-clause ( i ) of clause ( d ), means transfer of such property by way of sale or exchange or lease for a term of not less than twelve years, and includes allowing the possession of such property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882). Explanation. -For the purposes of this sub-clause, a lease which provides for the extension of the term thereof by a further term or terms shall be deemed to be a lease for a term of not less than twelve years, if the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01. 13) Before dealing with the respective contentions, we may state, in a summary form, scheme of the Act about the computation of the total income. Section 4 of the Act is the charging Section as per which the total income of an assessee, subject to statutory exemptions, is chargeable to tax. Section 14 of the Act enumerates five heads of income for the purpose of charge of income tax and computation of total income. These are: Salaries, Income from house property, Profits and gains of business or profession, Capital gains and Income from other sources. A particular income, therefore, has to be classified in one of the aforesaid heads. It is on that basis rules for computing income and permissible deductions which are contained in different provisions of the Act for each of the aforesaid heads, are to be applied. For example, provisions for computing the income from house property are contained in Sections 22 to 27 of the Act and profits and gains of business or profession are to be computed as per the provisions contained in Sections 28 to 44DB of the Act. It is also to be borne in mind that income tax is only One Tax which is levied on the sum total of the income classified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of each case. It is so held by the Constitution Bench of this Court in Sultan Bros. (P) Ltd. v. CIT , (1964) 5 SCR 807 and we reproduce the relevant portion thereof: 7. 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 which trade is commonly carried on. We find nothing in the cases referred, to support the proposition that certain assets are commercial assets in their very nature. 16) In view thereof, the object clause, as contained in the partnership deed, would not be the conclusive factor. Matter has to be examined on the facts of each case as held in Sultan Bros. (P) Ltd. case. Even otherwise, the object clause which is contained in the partnership firm is to take the premises on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT being the last forum insofar as factual determination is concerned, these findings have attained finality. In any case, as mentioned above, the learned counsel for the appellant did not argue on this aspect and did not make any efforts to show as to how the aforesaid findings were perverse. It was for the appellant to produce sufficient material on record to show that its entire income or substantial income was from letting out of the property which was the principal business activity of the appellant. No such effort was made. 19) Reliance placed by the appellant on the judgments of this Court in Chennai Properties Investments Ltd. and Rayala Corporation (P) Ltd. would be of no avail. In Chennai Properties Investments Ltd. where one of us (Sikri, J.) was a part of the Bench found that the entire income of the appellant was through letting out of the two properties it owned and there was no other income of the assessee except the income from letting out of the said properties, which was the business of the assessee. On those facts, this Court came to the conclusion that judgment of this Court in Karanpura Development Co. Ltd. v. CIT , (1962) 44 ITR 362 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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