TMI Blog2011 (6) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... entre as business income as against which the Assessing Officer has held it to be income from house property . Undisputedly, the assessee has provided services like provision of lift, receptionist besides other secretarial services, data processing, conference room, etc and has also provided toilets and pantries etl. The ld. CIT(A) has confirmed the order of the Assessing Officer. Now the assessee is further aggrieved. For ready reference, we are extracting the grounds taken in assessment year 2001-02 which would give a clear picture of facts and issues involved in other years: 1. The common order of the learned CIT (Appeals)-III dated 22.12.2009 in IT A No.322, 323,324/07-08 941/06-07 for the Assessment Years from 2001-02 to 2004-05 and the assessment order of the Assessing Officer dated 30.11.2006 are arbitrary, incorrect and baseless both on law as well as on facts. 2. Relevant dates in the case 2002-03, 2003-04 and 2004-05 2001-02 2002-03 2003-04 2004-05 i. Return filed on 14.9.01 27.6.02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessing Officer. The contention of the Assessing Officer in order dated 09.10.07 that since there no assessment was made for all the above years, there was no question of change of opinion is incorrect because, jurisdiction for back assessment is limited as explained as follows:- An important principle of law was explained in Vipan Khanna v. CIT (2002) 255 ITR 220 (P H) on the powers available to the Assessing Officer under section 147 of the Income-Tax Act. Time limits are set out in law for strict observance both by the assessee or the Revenue. A notice for scrutiny of accounts under section 143(2) has to be issued within 12 months from the end of the month in which return is filed, if it is not so issued, the Assessing Officer can, no doubt, exercise his power under Section 147, but it cannot be done merely for scrutinizing the return or verification of the same. Where the Assessing Officer has issued notice under Section 147 accompanied by a letter indicating that he wanted to verify the claim of carriage expenses and the income in respect of each truck, besides check the overdraft account apart fro III such other details, there was absolutely no inferen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roval of the rationale of this decision. In the case under question, the Assessing Officer while furnishing reasons for reopening in letter dated 26.09.07 has stated as follows :- For Asst. Year 2002-03 to 2004-05 - On a perusal of records for the Asst. Year 2002-03 to 2004-05, it is seen that the rental income received from letting out of Business Centre has been claimed as business income and the expenses including depreciation has been claimed and allowed. In order to assess this receipt under the head House Property , basing on the decision in the case of M/s. Shambu Investments (P) Ltd 129 taxman 70 (SC), the assessments have been reopened and Notices u/s.148 issued . The Apex Court decision cited above was rendered on 21.01.2003. The department had ample opportunity to issue notice u/s. 143 based on this decision for all these years. But the department did not utilize the opportunity. The information about Supreme Court judgement was very much available during the period available for issue of Notice u/s. 143 (2). Hence, there is no new information at the time of issue of Notice u/s. 148. Therefore, it is a case of invalid Notice u/s 148 as there is no new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re cost of the property let out to the occupants had been recovered as and by way of interest-free advance by the assessee . But, no such advance has been recovered by the appellant and therefore, the said Apex Court decision is not applicable to the facts of the appellant's case and the said Apex court decision is fully explained below as to its applicability to the appellant's case The Apex court decision in the case of M/s. Shambu Investments (P) Ltd vs. ClT reported in 263 ITR 143, affirming the decision of the Calcutta High Court in CIT vs. Shambu Investments (P) Ltd (2001) 249 ITR 47 is not applicable to the facts of this case, as it was held as follows :- The assessee owned an immovable property costing ₹ 5,42,443/-. It occupied a portion of the property and let out the rest to be used as table space to occupants, with furniture and fixtures and lights and air-conditioners. The assessee provided services like watch and ward staff, electricity and water and other common amenities. The monthly rent payable was inclusive of all charges. The assessee had also recovered by way of security from the occupants a sum of ₹ 4,25,000/-. The High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss activities . The crucial fact that decided the issue in the above case was that the entire cost of the property let out to occupants has been recovered as and by way of interest free advance by the assessee. The assessing officer did not cite any such heavy advance in the case of the assessee. Because, the Business Centre Charges advance is generally 6 to 10 months. Business Centre Charges, which nowhere near the cost of office space and other fixed assets which works out to and 50 Lakhs. Hence, this apex court decision cannot be applied to the facts of the assessee, on this ground and hence, the entire foundation of the assessment order relying upon this case is without appreciation of this crucial and distinguishable piece of evidence and hence, all additions for all the Asst. Years i.e. 2001-02 to 2004-05 relying upon this case, which is not applicable to the assessee, are therefore, perse illegal, arbitrary, baseless, mechanical and without any logic. The learned CIT (Appeals) did not get over the contention of the appellant that Income from Lease / Licensing of business centre can only be Business Income vide Asst. CIT vs. Saptarishi Services Ltd (2004)265 ITR 379 (Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. In the case before us, the intention being that office space together with interiors, cabins, chairs tables etc. should be enjoyed together and hence practically one letting, and without office space fully furnished would not have been accepted by other, the income from Hiring/Licensing such office space with Interiors, Business cabins, Furniture Fittings can be assessed as Business income and if not, only as Income from Other Sources and not as Income from House Property. 8. The learned CIT (Appeals) did not get over the contention of the appellant that even if one assumes that Business Centre charges is not a business income, Section 56 (2)(iii) of Income Tax Act, 1961 ought to have followed by the Assessing Officer. This was not done vide Orient Hospital Ltd. vs. DCIT 315 ITR 422 (Mad). 9. The learned CIT (Appeals) ought to have considered that Cases relied upon by the department are distinguished in grounds of appeal filed by the appellant. 10. The CIT (Appeals) - III ought to have considered the contention of the appellant that treating Business Centre Charges as income from House property is not beneficial to revenue, in the long run as Depreciation is on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 2004-05 by treating Business Centre Charges as income from House Property based on inapplicable Apex Court Decision in the case of Shambu Investments (P) Ltd 129 taxman 70 (SC) and render justice. 3. We have heard the rival submissions in the light of the provisions of the Act. After hearing both sides, we have found it for a fact that the assessee has provided conference room, security services, full fledged business centre with separate cabins, reception, fully air conditioned and local area networking, visitors chairs, etc. apart from toilets and pantry. To support this claim, the ld.AR has relied on a decision of Hon'ble Jurisdictional High Court rendered in the case of CIT vs V.S.T Motors (P) Ltd, 226 ITR 155. On the other hand, the Department has relied on a different decision of the Hon'ble Jurisdictional High Court which was rendered in the case of A.R Complex vs ITO, 167 Taxman 46, in which letting out of commercial complex was held to be income from house property . After hearing both sides, we have found for a fact that the assessee has given their office space in 1H and 4L, century Plaza, 560-562, Anna Salai, Teynampet, Chennai -18, situated in Mount Roa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n rent, but has given the commercial complex on licence for three years instantaneous user, hence, the income from this commercial asset is to be treated as business income and not income from house property . The decision of the Hon'ble Jurisdictional High Court rendered in the case of CIT vs V.ST Motors Pvt. Ltd. (supra) is directly on the issue so, we are bound to follow. Such cases are to be decided on the basis of facts of a particular case and cannot be generalized. We have rendered this decision in the given facts and circumstances of this case alone. Therefore, on merits, the assessee succeeds and we set aside the finding of the ld. CIT(A) in all these years on merits of the case and order that this receipt is to be accepted under the head income from business in all these years. 6. The other grounds relating to jurisdiction point was not really pressed before us, therefore, we dismiss the same. 7. In the result, on merits, all the appeals stand allowed, but the jurisdiction point, in whatever years it has been raised, fails. 8. To summarize the result, the appeals for assessment years 2001-02 to 2004-05 stands partly allowed whereas the appeals for assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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