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TMI Blog2001 (3) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the circumstances of the case, the Tribunal was justified in law in holding that the assessment made by the Income-tax Officer was not erroneous and prejudicial to the interests of the Revenue and thereby cancelling the order under section 263 of the Income-tax Act, 1961, passed by the Commissioner?" 2. Shambhu Investment (P.) Limited, the assessee abovenamed, is the owner of a building at Raheja Chambers, Nariman Point, Mumbai. The said premises have been furnished by the assessee and have been let out to various persons and/or firms and/or organisations with all furniture, fixtures, light, air-conditioners for being used as "table space". The said assessee under the agreement with those occupiers is to provide services like watch and ward staff, electricity, water and other common amenities. A copy of one of such agreement has been filed in the court in the course of hearing and the same has been kept on record. The income derived by the assessee from the said office premises was offered for taxation as business income and the same was assessed accordingly by the Assessing Officer. The Commissioner of Income-tax perused the same in detail and held that the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cited the following decisions (i) Sultan Brothers Pvt. Ltd. v. CIT [1964] 51 ITR 353 (SC) (ii) CIT v. National Storage Pvt. Ltd. [1967) 66 ITR 596 (SC) (iii) CIT v. Admiralty Flats Motel [19821 133 ITR 895 (Mad) (iv) CIT v. Associated Building Co. Ltd. [1982] 137 ITR 339 (Bom) (v) CIT v. K. L. Puri (HUF) [19981 233 ITR 43 (Delhi) ; (vi) Saswad Mali Sugar Factory Ltd. v. CIT [1999] 236 ITR 706 (Bom); (vii) CIT v. Halai Nemon Association [2000] 243 ITR 439 (Mad) ; and (viii) Mukherjee Estate (P.) Ltd. v. CIT [20001 244 ITR 1 (Cal). 9. Before taking a decision on the issue let us first deal with the decisions cited by Mr. Murarka. (i) Sultan Brothers Pvt. Ltd. v. CIT [1964] 51 ITR 353 (SC) : A five judges' Bench. of the apex court herein has considered a case wherein the assessee constructed a building and filled it up with furniture and fixtures and let it out on lease fully equipped and furnished for the purpose of running a hotel. The lease provided for a monthly rent for the building and a hire charge for the furniture and fixtures. Dealing with the said case, the apex court held that the letting out of the said building did not amount to the carrying on of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a certain period and allowed its income to be assessed under the head "Other sources". Subsequently, an auditorium was constructed in the basement of the building and the assessee had set up an air-conditioning plant not only for providing cool air to the auditorium but also to the entire office premises. There had been other facilities given by the assessee attached to such office accommodation and other portions of the building. The Bombay High Court deciding this case held that the nature of business subsequent to setting up of the air-conditioning plant and construction of auditorium became an activity of a complex nature and held that those activities amount to business and income should be assessed accordingly. (v) CIT v. K. L. Puri (HUF) [19981 233 ITR 43 (Delhi) : In the instant case there had been two separate agreements one for rent for accommodation and the other for hire charges of the furniture and fixtures. The Division Bench of the Delhi High Court held that since the agreement for providing furniture and fixtures was done by a separate agreement, the rent realised pursuant to such agreement referable to the furniture and fixtures should not be treate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. Hence, it cannot be said that the assessee is exploiting the property for its commercial business activities and such business activities are prime motive and letting out the property is a secondary one. 13. Let us approach the problem from another angle by applying the test suggested by the five judges' Bench in the case of Sultan Brothers Pvt. Ltd. [1964] 51 ITR 353 (SC). The three questions framed by the apex court are applied in the instant case as follows : (A) Was it the intention in making the lease-and it matters not whether there is one lease or two, i.e., separate leases in respect of the furniture and the building-that the two should be enjoyed together ? In the instant case there is no separate agreement for furniture and fixtures or for providing security and other amenities. The only intention, in our view, was to let out the portion of the premises to the respective occupants. Hence, the intention in making such agreement is to allow the occupants to enjoy the table space together with the furniture and fixtures. Hence, this question should be answered in the affirmative. (B) Was it the intention to make the letting of the two practically on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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