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TMI Blog2019 (9) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... on the other two items and C.I.T. (A) has made a mistake in directing to allow depreciation on these above two items i.e. Gaming Zone and Event Management Area. (c) Common expenses like Audit fee, Travelling & Conveyance, Interest, and Advertisement etc. (Not directly related to business or house property) those expenses have been distributed on the basis of floor area used. The Ld. A. 0. is not justified in not apportioning the expenses on prorata basis. The C. I. T. (A) has allowed depreciation on pro rata basis but is not justified in not directing to allow the common Expenses on revised proportionate area basis. Revised calculation sheet of area is enclosed. Annexure-1 (d) That the Ld. AO is not justified in calculating the rent receipt from (a) Cinema Hall, (b) Gaming Zone & (c) Event space of Rs. 1,61,21,497/- and disallowing 30% on the same of Rs. 48,36,449/- treating the same as business income and the Ld. CIT (A) is not justified in agreeing with the view of A. 0. Ground No: 2 That the Ld. A. 0. and C. I. T. (A) is not justified in not carrying forward un-absorbed business Loss and Un-absorbed depreciation which is determined by D.C.I.T. in the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zone & mall maintenance and filed its return of income for A.Y.2011-2012 on 22.09.2011 disclosing total income of Rs.Nil, which was processed u/s.143(1) of the Act and the case was selected for scrutiny. Thereafter the Assessing Officer issued statutory notices to the assessee. In compliance to the same, the assessee submitted the details of gross profit & net profit margins with corresponding turnover as under :- Assessment Year Turnover (in lakhs) Gross Profit% Net Profit % 2011-12 26750136 -38,10,335 -2,09,54,715 2010-11 5959940 61.94 123.61 2009-10 685900 60 73 On examination of evidences submitted by the assessee, ,the Assessing Officer completed the assessment assessing total income of the assessee at Rs. 71,99,230/- and made addition of Rs. 4,49,867/- on account of inadmissible electricity expenses, Rs. 19,12,911/- on account of inadmissible depreciation and Rs. 48,36,449/- on account of income from house property, respectively. 3. Feeling aggrieved from the assessment order, the assessee appealed before the CIT(A), wherein the CIT(A) after considering the submissions of the assessee and findings of the Assessing Officer, upheld the additions m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of Hon'ble Supreme Court in the case of Radhasoami Satsang v CIT [1992] 193 ITR 321. Now, coming to the issue of rent receipt treated by the Assessing Officer as business receipts instead of House Property income and thereby disallowing 30% of standard deduction, the CIT(A) relying on the various judicial decisions has observed as under :- "[8.22 Keeping the above principles in mind, the facts as stated by the appellant need to be analysed which are stated at para-7.13(3) (a to g). The agreement that the appellant had entered into with Stargaze Cinema was not a fixed income which the appellant expected. As pointed out by the Ld. Assessing Officer, the appellant was entitled to 12% of Net Monthly Revenue if the occupancy level achieved was less than 35% calculated on an average of 5 shows per day or 17% of Net Monthly Revenue if the occupancy level achieved was 35% or more calculated on an average of 5 shows per day. There is use of expressions occupancy level* and "shows per day" to determine the revenue sharing. Besides the appellant was also entitled to receive 18% revenue generated from business activities as 'food & beverages, merchandise, memorabilia, advertisem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to promulgation of the Cinematograph film Rules. 1948, by the Government. The rules required the distributor to store films only in godowns constructed strict!) in conformity with the specifications laid down in the Film Rules and in a place to be approved by the Chief Inspector of Explosives. The assessee purchased a plot of land and had constructed 13 units. Each unit was divided into four vaults. The ground floor of vaults was utilised to rewind the films and upper floor for the storage of films. The units were constructed in conformity with the requirements of and the specifications laid down in the film Rules. The key to each vault was retained by the vault holder but the Key to the entrance was kept in the exclusive possession of the assessee. A fire alarm was installed and an annual amount was paid to the municipality towards fire sendees. The assessee opened in the premises two railway booking offices free of charge for the convenience of members for despatch and receipt of film parcels. A canteen was also run for the benefit of the vault holders. The assessee entered into agreement with the film distributors. In terms of said agreement, the film distributors were giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ety department allows the theatre to run. As was the fact in the case of National Storage (supra), the appellant also provided other amenities like space for food court etc. [8,27] In the agreement with Stargaze the appellant was entitled to a minimum amount but. on the other hand, the outer limit was based on the occupancy levels achieved by Stargaze. Further, Stargaze was required to provide detailed account of day to day revenue from sale of tickets, concessional sale and any other revenue to the appellant on a monthly basis. The appellant also had the right to verify the accounts, with prior notice to Stargaze. These facts show that the receipts had the character of business income. For this proposition reliance is place on Chennai Properties & Investments Ltd. v. C1T (2015) 373 ITR 0673 (SC) and Rayala Corporation (P) Ltd. v. Asstt. CIT(2016) 386 ITR 0500 (SC). [8.28] As against this the agreement of letting out space to other tenant was on a square foot basis which was to be enhanced after three years. The activities and entitlements of the appellant vis a vis Stargaze were completely absent. It was a mere act of letting put property at a fixed rent based on square fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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