TMI Blog2021 (6) TMI 452X X X X Extracts X X X X X X X X Extracts X X X X ..... together and therefore a common order is passed for the sake of convenience. 2. Briefly the facts as culled out from AY 2011-12 are that the assessee company engaged in the business of infrastructure development and rental services, e-filed its return of income for AY 2011-12 on 31/10 /2011 declaring total income at normal provisions of ₹ 4,92,10,595/- and income under book profits of ₹ 7,62,08,202/- u/s 115JB of the Act, which was processed u/s 143(1) of the Act. Subsequently, the AO noticed that the income received by the assessee on leasing properties was shown as operation income in P L Account, and as income from house property in its return of income and also claimed deduction u/s 24(a) and, therefore, issued notice u/s 148 of the Act on 19/09/2017. After issuing statutory notices, the AO completed the assessment u/s 143(3) rws 147 assessing the total income at ₹ 8,39,01,215/- by treating the income shown by the assessee as income from business as against the income shown by the assessee under the head income from house property. 3. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A) raising the grounds that the reopening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has filed copies of its returns of income and computation of income from the AY. 2010-11 onwards upto 2016-17, wherein the assessee has offered rental income as 'income from house property' and the Assessing Officer has accepted the same till the AY. 2011-12 and it was for the first time in AY. 2012-13 that there is a change of stand by the Revenue that too pursuant to the order passed by the CIT u/s. 263 of the Act. It is seen that the ITAT has upheld the initiation of proceedings u/s. 263 of the Act, and has directed the Assessing Officer to consider the nature of transaction in line with the case laws on the subject. Thus, it cannot be said that the stand of the Revenue that the income is to be treated as 'business income' has been upheld by the ITAT. Thus, the case laws relied upon by the assessee are not applicable to the case before us. 7.1 The main reason for treating rental income as 'business income of the assessee' by the A.O, is the admission of the assessee itself in its letters addressed to the A.O that its business was also of leasing or letting out of its properties. The Assessing Officer had relied upon the judgment of the Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and to carry on business as proprietors of flats and buildings and to let on lease or otherwise apartments therein and to provide for the conveniences commonly provided in flats, suites and residential and business quarters. 5. To carry on the business of builders, developers, real estate agents and constrictors for construction or demolition work of any kind, and to purchase or otherwise acquire lands, houses, offices, workshops, buildings and premises for the purpose of that business. 7.2 Thus, from a literal reading of clause (4) of para III, it is clear that the assessee's business is to purchase, sell, develop, take in exchange or on lease, hire or otherwise acquire the properties and to carryon business as proprietors of lands and buildings and to-let on lease (emphasis given by us) or otherwise apartments therein and to provide for the conveniences commonly provided in flats, suits and residential business quarters. Therefore, the main business of the assessee is to develop the properties and also to let out the properties on lease. In the case of Chennai properties, the said company had two properties known as 'Chennai House Esplanade' Madras and ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g l. Flooring - tiles / carpets m. Roller blinds Lessor confirms that it shall provide good quality materials for the interiors and warrants that any defect in the interiors would be rectified, repaired and made good at its own cost, to the satisfaction of the lessee, during the first 6 months from the date such interior, fitting and fixture work is completed an certified by the Lessor. 7.3 We have also noticed that the lease rental is to be paid to the lessor only after the lessor i.e assessee herein, completes all the interior, fittings and furniture works and has provided the infrastructural facilities and materials to the lessees as per Annexure - A to the agreement. Therefore, it is not mere bare structure that is provided by the assessee to the tenant on rent but it is with furniture and fixtures along with power back up and AC facility. The Ld. Counsel for the assessee has relied upon various decisions in favour of his arguments let us therefore examine the applicability of the said decisions to facts of the case before us. i) The judgement of the Hon'ble Supreme Court in the case of Raj Dadarkar and associates (supra); In this case, we find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property constructed by it was assessable to tax as income from house property. For coming to this conclusion, the Hon'ble High Court followed its earlier decision in the case of CIT Vs. Sane Doshi Enterprises, (2015) 377 ITR 165/232 Taxman 452/58, we find that SLP against the said decision has been admitted by the Apex Court as reported in [2017] 77 taxmann.com 288(SC). iv) The Hon'ble Punjab Haryana High Court in the case of Batra Palace (P.) Ltd. Vs. CIT, reported in [2017] 79 taxmann.com 324 (P H), held that where it is not shown that the intention was to let out the properties for a temporary period, it was the intention of the assessee to enjoy the rental income from the letting out the property and hence it was to be treated as income from house property. v) The Hon'ble Apex Court in the case of Sultan Brothers (P) Ltd., reported in [1964] 51 ITR 353 (SC) has held that where property has been let out fully equipped and furnished for running a hotel, it could not be said that letting of building amounts to doing business and rental income could not be assessed as business income u/s 10 of 1922 Act. 7.4 By applying the rationale of the abov ..... 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