TMI Blog2017 (10) TMI 1569X X X X Extracts X X X X X X X X Extracts X X X X ..... under broader aspects of law by referring to the facts of each case, it is the duty of the AO to have obtained the relevant information, but, the record does not indicate that the AO applied his mind. Under these circumstances, we are of the view that the case law relied upon by the assessee (Malabar Industrial Co. Ltd.[ 2000 (2) TMI 10 - SUPREME COURT] and other such cases taking a similar view) have no application to the instant case; in the aforecited cases, only AO has taken a specific stand upon application of mind, it is one of the views possible in the circumstances and those case law cannot be applied where the AO has not applied his mind. Having regard to the circumstances and for the detailed reasoning given by the revisional authority, we are of the view that the order passed by the AO is erroneous and prejudicial to the interests of revenue. Thus the issue as to whether the said income is assessable under the head income from house property or income from business has to be considered in the backdrop of the case law on the issue and therefore, the matter deserves to be set aside to the file of the AO instead of directing the AO to treat the income as income fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the business of the real estate and related activities and in the course of such activity it develops properties and gives them on lease as a business proposition. He opined that in such circumstances, the rental income from the properties given on lease by the company and classified as operational income in the financials is liable to be assessed under the head 'Income from business' and not as 'Income from house property'. CIT noted that this point was apparently overlooked by the Assessing Officer during the assessment proceedings and the computation of rental income under the head 'Income from House Property' as admitted by the assessee was accepted in the assessment order dated 27.02.2015. 3.1 Further, CIT observed that though the Director s report (last page) indicate that the assessee company did not accept any deposits during the year and Note 6 (other long term liabilities) clearly depict that an increase of ₹ 1.57 crores as compared to last year; in this back ground, as per CIT, AO ought to have examined the genuineness of the deposits during the year. it was stated in Director's report (Last page), Assessee Company has not acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be noted in the present case is that income from generators, parking space rent etc. has been treated and offered as business income and it is only income from office space that has been treated as income from house property. It is not clear on what basis the assessee has segregated the rental income as income from house property or business income, since the rent received is inclusive of office space, generator charges parking space. As per the lease deeds submitted by the assessee, the office space has been given on rent along with the car parking space, electricity supply amenities providing lift and such other amenities is an integral part of the lease of office space in the complex and such services do not constitute a separate activity. Such amenities run concurrently with the term for which the premises were given on lease and therefore the rent cannot be divorced from the other income and therefore rent income is also assessable under the head 'income from business' along with charges for amenities. In this context, it may be relevant to refer to the decision of Allahabad High Court in the case of Geol Builders vs. CIT (331 ITR 344) which directly covers the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that AO has taken a view, which is one of the possible views available to him, for which the CIT cannot object by invoking provisions of section 263. For this proposition, assessee has relied on various judicial pronouncements. Whereas the CIT opined that the main object of the assessee was to exploit its properties by letting them out on rent as business proposition. Moreover, the assessee developed the property as a developer and not merely as the owner of these properties. CIT also referred to Apex Court decisions in the case of M/s Rayala Corporation Pvt. Ltd., Vs. ACIT, 386 ITR 500 and in the case of Chennai Properties Investments Ltd., Vs. CIT, 373 ITR 673 wherein it was held that rental income received by the assessee having a business of renting the property as the main object should be assessed as business income. Hence, he was of the view that rental income should be assessed as business income. 7.1 In our considered view, the assessee ought to have submitted relevant information before the AO to substantiate that the income earned on leasing out the properties is assessable to tax under the head property income . The AO had not indicated that he has actually called ..... X X X X Extracts X X X X X X X X Extracts X X X X
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