TMI Blog2008 (1) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt was delivered by K. L. MANJUNATH J. - This appeal is by the assessee challenging the concurrent findings of the Assessing Officer, Commissioner of Income-tax (Appeals), Bangalore, and the order passed by the Income-tax Appellate Tribunal, Bangalore Bench in I. T. A. No. 19/Bang/98 for the assessment year 1989-90. 2. The assessee is a company registered under the Companies Act, 1956. The assessee filed the return of income on December 31, 1989, and the same was processed under section 143(1)(a) of the Income-tax Act, 1961 (for short the "Act"). The assessee is engaged in the hotel business activities. One such establishment was in Bangalore under the name and style "East West Hotel Ltd.", at Residency Road, Bangalore. The said h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contention raised by the assessee and confirmed the order passed by the Assessing Officer and disposed of the appeal. 4. Aggrieved by the same, the assessee filed a second appeal before the Income-tax Appellate Tribunal, Bangalore Bench, which also dismissed the appeal holding that the transaction between the assessee and M/s. Indian Hotels Company Limited is in the nature of lease and cannot be held that the assessee herein is running the hotel and any income from such hotel building has to be treated as a business income of the assessee. 5. Aggrieved by the concurrent findings of all the authorities below, this appeal is filed by the assessee raising the following question of law: "Whether, on the facts and in the circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and if the Bombay High Court had considered the terms and conditions of the document therein, it would not have reached such a conclusion. He further contends that on facts, the facts in Mohiddin Hotels P. Ltd. [2006] 284 ITR 229 and the facts involved in the present case are quite different and, therefore, the said judgment cannot be applied to consider the case of the assessee. 9. In addition to that the learned counsel also relied upon a Division Bench judgment of this court in the case of Dharak Ltd. v. CIT reported in [1987] 163 ITR 734 (Karn). Relying upon these two judgments and relying upon the agreement produced by the assessee along with the appeal memo and the supplemental agreement thereon, contends that it cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 or Rs. 20 lakhs; whichever is higher For the second year to the sixth year of hotel operation 10 or Rs. 24 lakhs; whichever is higher For the seventh year to the fifteenth year of hotel operation 12.5 or Rs. 24 lakhs; whichever is higher From sixteenth year onwards of hotel operations 14 or Rs. 24 lakhs; whichever is higher. 3. While computing the licence fee, the parties have also computed the licence fee to be paid during the extended period of agreement. Clause 3.1 of the agreement reads that "The licence shall be for a period of thirty-three years commencing from the appointed date." Clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n behalf of the assessee. 15. When we consider the clauses of the agreement, it discloses that it is more in the nature of lease deed and not a licence given for a temporary period with an intention to resume its business of hotel in the premises in question. The hon'ble Supreme Court in Universal Plast Ltd. [1999] 237 ITR 454 had an occasion to consider the general principles relating to income from leasing out the assets of the business by an assessee. The four conditions are imposed therein to arrive at a conclusion whether such transaction and the income received has to be treated as a lease amount or licence fee and whether the licence has been temporarily assigned to any other persons to carry on the business with an intention ..... X X X X Extracts X X X X X X X X Extracts X X X X
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