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2010 (11) TMI 1052 - ITAT MUMBAI

2010 (11) TMI 1052 - ITAT MUMBAI - TMI - ITA No. 5451/Mum/2009 - Dated:- 26-11-2010 - S. V. Mehrotra (Accountant Member) And Vijay Pal Rao (Judicial Member) For the Appellant : Prakash Pandit For the Respondent : P. Peerya ORDER Vijay Pal Rao (Judicial Member) This appeal by the assessee is directed against the order dated 24.07.2009 of the learned CIT(A)-X for the assessment year 2005-06. 2. The assessee has raised various grounds in this appeal, however, the only issue arises for our considera .....

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aluka, Khalapur, Dist. Raigad. The assessee took over the management of the existing company. During the relevant year to the assessment year under consideration, the development activities of the building were also in progress. The assessee leased out the club rooms and other infrastructures in the building to MMTI Educational Research Trust, Veera Desai Road, Andheri (W), Mumbai for a sum of ₹ 20,52,000/- The assessee admitted the rental income as business income. The AO questioned the n .....

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e arisen there from is nothing but income from business. The AO did not accept the explanation of the assessee. The AO noted that the TDS has been deducted from the income which shown as rent received from MMTI Educational. Research Trust. Accordingly the AO held that the income received under the head CLUB RENT is nothing but the income from house property . Consequently, the AO also disallowed the claim of the expenses. The AO has relied upon the decision of the Hon. Supreme Court in the case .....

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wner of the property. Hence the income is taxable under the head Income from House property . This ground of appeal is dismissed 5. Before us, the learned AR of the assessee has submitted that the part of the business premises was let out to MMTI Educational. Research Trust for a period of three years. The assessee surrendered the club and resort business and the part of its premises was let out for a temporary period in order to exploit the business premises till the development and constructio .....

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r. reported in 200 CTR 329. 6. On the other hand, the learned DR has submitted that the assessee had not started the business activities as per its own objective as given in the Memorandum Of Association. The portion of the premises was let out for the purposes of earning the income to the MMTI Educational. Research Trust for holding the classes and therefore even the premises was let out for carrying out any business of resort or hotels as per the business object of the assessee. Therefore, it .....

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ducational. Research Trust for a period of three years as per the lease agreement. Since the development work of the business premises was in progress, therefore, the portion which was leased out by the assessee was never utilized by the assessee for its business activities. It is not the case of letting out the business asset which is ready for running the business of resort or club but the assessee has simply let out the premises to an educational institution for conducting the education class .....

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siness. In the case of In Universal Plast Ltd. v. Commissioner of Income tax, the Hon. Supreme Court has decided the issue in he facts where the assessee leased out the factory not for running out of the business but it was just a make-shift transient alternative means of commercial exploitation of the commercial assets when the assessee suffered loss for consecutive two years. Therefore, the said decision is not applicable to the present case where the assessee has not all utilized the premises .....

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oint of view of a businessman in that business on the facts and in the circumstances of each case, including true interpretation of the agreement under which the assets are let out; (3) where all the assets of the business are let out, the period for which the assets are let out is a relevant factor to find out whether the intention of the assessee is to go out of business altogether or to come back and restart the same; (4) if only a few of the business assets are let out temporarily, while the .....

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