TMI Blog2019 (3) TMI 1468X X X X Extracts X X X X X X X X Extracts X X X X ..... acilities and services rendered, the operations involved in such letting out is in the nature of business and the income derived therefrom has to be treated as business income and not income from property. The income derived by the assessee cannot be regarded as simply from the exercise of property right. Where the assessee company has developed the shopping mall and let out the same by providing a variety of services, facilities and amenities in the mall, it can be found that the primary intention of the assessee was commercial exploitation of the property and where it has derived substantial part of its income by such activity, which constitutes its main business, the income so derived would be business income of the assessee. We, therefore, agree with the view of the Tribunal that the income derived by the assessee by letting out the shops in the mall has to be assessed as income from business and not as income from house property. - Decided in favour of assessee - IT Appeal No. 166 of 2016 - - - Dated:- 27-3-2019 - Mr C. K. ABDUL REHIM AND R. Narayana Pisharadi, JJ. For The Appellant : Christopher Abraham and K.M.V. Pandalai, Advocates For The Respondent : Nemi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Attukal Shopping Complex Private Limited v. Commissioner of Income tax : [2003] 259 ITR 567 and also the decision of the Hon'ble Supreme Court in Shambhu Investment Private Limited v. Commissioner of Income Tax : [2003] 263 ITR 143. Learned counsel for the revenue has also placed heavy reliance upon the decision of the Apex Court in Raj Dadarkar v. Assistant Commissioner of Income Tax : [2017] 394 ITR 592 in support of his contention. 7. On the other hand, learned counsel for the assessee/respondent invited our attention to the relevant provisions in the Act and contended that the amount received by the assessee by letting out the rooms in the shopping mall cannot be considered as income from house property. Learned counsel would contend that letting out the shop rooms in the mall amounts to commercial exploitation of the building constructed by the assessee and it is a part of the business activity of the assessee company. Learned counsel has cited a plethora of decisions in support of his contentions. 8. Section 22 of the Act reads as follows: 22. Income from house property.-The annual value of property consisting of any buildings or lands appurtenant thereto of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 964 SC 1389, the Constitution Bench has held that, whether a particular letting, is business has to be decided in the circumstances of each case. 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. 12. In Karanpura Development Company v. Commissioner of Income Tax : AIR 1962 SC 429, the Apex Court has held that, in the case of a company with its professed objects and the manner of its activities and the nature of its dealing with its property, it is possible to find the nature of its operations and to what head the income is to be assigned. A company formed with the specific object of acquiring properties not with the view to leasing them as property but to selling them or turning them to account even by way of leasing them out as an integral part of its business, cannot be said to treat them as landowner but as trader. It has been held that in deciding whether a company dealt with its properties as owner, one must see not to the form which it gave to the transaction but to the substance of the matter. 13. In Karnani Properties Limited v. Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perties in the City of Madras and to let out those properties. The assessee had rented out two properties and the rental income received thereby was shown as income received from business in the return filed by it. The Apex Court observed that the assessee had no other income except the income from letting out the two properties. Upon considering the main object of the company, the Apex Court held that the income from rent ought to be treated as business income. 17. A conspectus of the decisions referred to above makes it evident that each case has to be considered on its own facts to determine whether the income obtained by letting out property constitutes income from house property or business income. An owner of a commercial asset is entitled to exploit it to the best advantage. He may do so either by using it by himself or by letting it out. Whether a particular income received by the assessee as a result of the activities carried on by him is business income or rental income depends upon the manner of exploitation of the assets. In each case, the intention has to be gathered as to whether the asset was intended to be commercially exploited by the assessee or whether it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mall. In such circumstances, the Tribunal has found that the disputed income of the assessee is from exploitation of the immovable property for business purposes and it is essentially business income. 22. Learned counsel for the revenue has not been able to show that the findings made by the Tribunal are in any way perverse. The Income Tax Appellate Tribunal, being the last forum in so far as factual determination is concerned, the findings made by it on factual aspects have to be treated as final, unless they are perverse. 23. Learned counsel for the revenue has placed heavy reliance upon the decisions in Attukal Shopping Complex(supra), Shambhu Investment(supra) and Raj Dadarkar(supra) and contended that the issue involved is squarely covered by these decisions. 24. In Shambhu Investment(supra), the Hon'ble Supreme Court has not laid down any dictum with regard to charging of income to tax under any particular head. The Apex Court has only affirmed the decision of the Calcutta High Court in Commissioner of Income Tax v. Shambhu Investment Private Limited : [2001] 249 ITR 47, in which, on the facts of that case the High Court had held that the income of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fact that the assessee did not produce sufficient materials 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 it. The situation in the present case is different. It is to be noted that in the present case, the finding of the Tribunal, which is the final authority on facts, is in favour of the assessee. 27. In the instant case, it is not a letting out of property simpliciter, without anything more. A host of services are being provided by the assessee at the shopping mall. The assessee is engaged in a complex set of activities at the shopping mall. Management of the shopping mall is done by the assessee. The basic purpose is commercial exploitation of the property. The assessee has earned the income not merely by letting out the shop rooms but also by providing amenities and facilities at the shopping mall. Such amenities and facilities are not the basic facilities required for occupation of a shop room by a tenant. They are the special facilities for running the shopping mall and are meant to attract the customers and provide them the comfort and convenience of shopping. In cases whe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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