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TMI Blog2015 (6) TMI 1160X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld. counsel produced the photocopy of the order of the Tribunal. However, Ms. Radha K.Narang, ld. DR, defended the conclusion arrived at in the impugned order. 2.1. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion from the aforesaid order of the Tribunal, dated 10/06/2015, for ready reference:- "4. The issue arising in the present appeal is in relation to assessability of leave and licence income received by assessee and whether the same has to be assessed as profit and gains of business or as income from other sources. The Tribunal, in the first round of appeal, vide order dated 31st October, 2008 had appreciated the facts of the case wherein the assessee under an agreement dated 16.11.2000 styled as leave and licence agreement granted licence to M/s. American Express Bank Ltd. to use the premises of which it was the lessee. The licence fee was fixed at Rs. 13,66,875/- as quarterly licence fee. The said premises along with fixtures and fittings were licensed to the party for a period of three years commencing from 01.01.2001 and expiring on 31.12.2003. The Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal to reconsider its decision having due regard to the circumstances of the case. The relevant findings of the Hon'ble High Court are as under: - "2. The appeal pertains to assessment year 2003-04. The issue before the Tribunal on the first question was whether income received from licensing of immovable property belonging to the assessee can be assessed as income from business or as income from other sources. The assessee submitted that from assessment years 1993-94 to 2000-01 the returned income treating the rental/licensing income as assessable under the head of profit and gains of business was accepted by the Revenue. For assessment years 1993-04 and 2001-02 the assessments were completed under section 143(3) whereby the Assessing Officer had accepted the submission that the licence fees received by the assessee were business income. The Court is informed that this was brought to the notice of the Tribunal. The assessee submits that no distinguishing features were brought before the Tribunal by the Revenue to justify a different treatment for the assessment year in question. In these circumstances, we are of the view that the Tribunal may be requested to recon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts of the present case assessee, as per its object clause in the Memorandum of Association, was permitted to perform business of taking on lease and earning income from the same. It had taken premises on lease which in turn was sublet to M/s. American Express Bank. The issue arising before us is in relation to assessability of such lease income earned by the assessee. The claim of the assessee before the authorities below and even before us is that such income being in continuation of its object as per the Memorandum of Association, is to be assessed as business income in its hands. Whereas the case of the Revenue is that assessee was engaged in subletting of the property, which in turn it had obtained on lease and hence the income arising there from is assessable in the hands of the assessee as income from other sources, since the assessee was not the owner of the property. The assessee had entered into lease agreement with American Express Bank in the earlier year and admittedly the rental income declared by the assessee was assessed as business income in the hands of the assessee after allowing the related business expenditure claimed. The said decision was accepted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by the assessee. The income arising from such exploitation of the assets which had been taken by the assessee on lease and had been further sublet by it is a systematic and organized activity of carrying on its business. Undoubtedly, assessee was not the owner of the premises but was only a lessee of the premises, which in turn had been sublet by the assessee with the intention of exploiting the same and the receipts arising there from are assessable in the hands of the assessee as income from business and the necessary related expenditure has to be allowed as deduction in the hands of the assessee. 12. The Hon'ble Supreme Court in the case of Chennai Properties and Investment Ltd. (supra) has appreciated the facts before it, wherein the assessee had acquired properties in the city of Madras and in turn let out those properties and the rental income received by it was shown as income from business, it was held that where main object of the assessee company as per its Memorandum of Association was to acquire properties and to let out those properties as well as make advances upon the security of land and building, then it was held that "what we emphasis is that holding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to them. It was highlighted and stressed that the objects of the company must also be kept in view to interpret the activities. In support of the aforesaid proposition, number of judgments of other jurisdictions, i.e. Privy Counsel, House of Lords in England and US Courts were taken note of. The position in law, ultimately, is summed up in the following words: - "As has been already pointed out in connection with the other two cases where there is a letting out of premises and collection of rents the assessment on property basis may be correct but not so, where the letting or sub-letting is part of a trading operation. The diving line is difficult to find; but in the case of a company with its professed objects and the manner of its activities and the nature of its dealings with its property, it is possible to say on which side the operations fall and to what head the income is to be assigned." 13. The Apex court also noted the fact that in Sultan Brothers (P) Ltd. (supra) the Constitution Bench had clarified that merely an entry in the object clause showing a particular object would not be determinative factor to arrive at a conclusion whether the income has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed. 15. The issue in ground of appeal No. 1 raised by the assessee in ITA No. 3033/Mum/2010 is identical to the issue in ground No. 1 before the Tribunal in ITA No. 4977/Mum/2006 and our decision in ITA No. 4977/Mum/2006 is applicable mutatis mutandis to ground of appeal No. 1 in ITA 3033/Mum/2010, hence the said ground is allowed." 2.2. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel and the conclusion drawn in the order of the Tribunal, if kept in juxtaposition and analyzed, we find that vide para-4 onwards of the order, the Tribunal has deliberated upon leave & licence income, received by the assessee, is whether to be assessed as profit & gains of business or from other sources. While coming to a particular conclusion, the Tribunal has discussed the director's report dated 26/08/2003 with respect to licence fee with American Express Bank, which came to an end on 31/03/2003 after which a new licence agreement was entered into by the assessee with British Deputy High Commission, ratio laid down in Sultan Brother Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Kumar was sent to USA to pursue his education. As rightly contended by learned Departmental Representative that there was no evidence as to show what was the nature of course that was to be pursued by Mr. Naval Kumar in USA. The certificate for eligibility for non-immigrant student status mentions that Mr. Naval Kumar was to pursue a course in Rochester Institute of Technology, U.S.A. with Computer science as a major subject. This document is at page No. 79 of the assessee's paper book. This does not give any indication as to what is the nature of course that was to be pursued by Mr. Naval Kumar. In its letter dated 28.11.2005, the assessee has explained before the Assessing Officer that there was good scope for towel with printed images and that one M/s. Max Imaging Systems Ltd., UK was doing the digital printing on assesses' towel and such product commands good market abroad. It has been further explained by the assessee that because of getting the printing done by Max Imaging Systems Ltd., UK, cost of the towel was high and therefore to have inhouse printing Mr. Naval Kumar was sent for training abroad. The assessee has filed various correspondences between itself and overseas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff training and salary pad to Mr. Naval Kumar was wholly and exclusively for the purpose of business of the assessee. We, therefore, confirm the orders of revenue authorities and dismiss Ground N. 2 & 3 of the assessee." 18. The Hon'ble High Court (supra) approved the order of the Tribunal observing as under: - "3) On the second question, we do not find any reason to interfere with the decision of the Tribunal, having regard to the factual position. As noted in the order of the Tribunal, the assessee was not able to substantiate that sending Shri Naval Kumar for training abroad was for the benefit of the business of the assessee. Counsel appearing on behalf of the assessee fairly placed on record the judgments of the Division Bench in the case of M/s. Echjay Forging Ltd. V/s. The Asstt. Commissioner of Income Tax & Anr. [Income Tax Appeal No. 584 of 2009] decided on 12th June, 2009 where this Court affirmed the decision of the Tribunal for similar reasons." 19. The issue raised before us is similar, i.e. on account of staff recruitment and staff training expenses of Rs. 15,27,872/- incurred on Shri Naval Kumar. Following the same parity of reasoning, we uphold the order o ..... 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