TMI Blog2004 (9) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1996-97, the assessee had shown a loss of Rs. 5,05,040. 3. The assessee had taken over a vacant land on lease for a term of 30 years commencing from 1st May, 1985. According to assessee, as a business venture, the land was developed by putting up a complex from assessee's own funds. The assessee should surrender the lease with the improvements to the landlord at the end of 30 years, as per the lease deed. The assessee on completion of the building, leased out the complex to various persons and the income so received by the assessee was claimed as income from business. For all the assessment years, the assessing authority declined to accept the claim of the assessee. However, for the asst. yrs. 1993-94 to 1995-96, the learned CIT(A) accepted the claim of the assessee and hence the Revenue is in appeal. For the asst. yr. 1996-97, the learned CIT(A) confirmed the order of assessment and hence the assessee is in appeal. 4. The learned Departmental Representative appearing for the Revenue vehemently contended that the income by way of rent cannot be assessed under the head 'Business' and the expenses claimed by the assessee under various heads are not allowable, as the income wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of the lights in the common area, maintenance of the building, supply of water, providing lift, installing electrical transformer for providing LT power to the lessees, providing standby generator, overhead tank, pumps, maintenance of drainage, sanitary and fitting, etc. For these, an agreed amount is collected under the head 'other facilities' as commercial proposition. In all the earlier years, the lease and income from facilities were assessed as business income. The learned counsel further submitted that in the memorandum of association of the company, the main business of the assessee as per its object clause are: 1. To carry on the business of estate property. 2. To acquire, construct or lease hotel, commercial and residential complexes. 3. To acquire, construct, run or lease lodging and boarding houses, hotels, canteens and restaurants. 4. To acquire, improve, manage, develop, turn to account or deal with, any property and rights of the company. 6. The learned counsel further submitted that the objects make it very clear that the respondent is doing business in all aspects of real estate which includes acquiring property on lease, developing it as a comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee-company. In the case of Bhoopalan Commercial Complex Industries (P) Ltd., there was only a lease rent collected as per the lease deed and no additional facilities and services provided nor charged. In this case, in the earlier years, the income was treated as property income. But, in the case of the present assessee, M/s Manmit Arcade (P) Ltd., the land was taken on lease as business venture in accordance with the objects of the company. The assessee is not the owner of the land. The assessee has to necessarily surrender the lease with the improvements made over the land to the landlord at the end of 30 years as per the lease deed. When the constructed commercial building is leased out to various people the assessee collects : (a) lease rent, and (b) charges for the facilities and services. Further, in all the earlier years, this income was assessed as business income. From the aforesaid factors, it is obvious that the facts in the case law relied on by the learned Departmental Representative are distinguishable. Therefore, the decision of the jurisdictional High Court in the case of Sri Balaji Enterprises vs. CIT is applicable to the case in hand. As already stated, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Further, from the facts it is gathered that the assessee is providing watch and ward, maintenance of common area, corridors, toilets, staircase, maintenance of lights in the common area, maintenance of building, supply of water, providing lift, installing electrical transformers for providing LT power to the lessees, providing standby generator, overhead tank, pumps, maintenance of drainage, sanitary fittings, etc. Thus, from the above facts, it is clear that the entire activity of the assessee is on an organised manner to earn profit out of investments made by the assessee as a commercial venture. In the case law relied on by the learned counsel for the assessee reported in (2003) 183 CTR (Kar) 257 : (2003) 226 ITR 517 (Kar), it has been held as under: 'Inasmuch as the building in question on Mount Road was a commercial asset, the assessee could exploit it either by itself or by letting it to others. Therefore, in a matter like this the fundamental position that had to be ascertained was whether a particular building or premises was a commercial asset or a house property. If the premises were a commercial asset, then the income derived therefrom would amount to business in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting portions thereof was part of the business and trading activity of the assessee and the income of the assessee fell under s. 10 of the IT Act; and (iv) that where, as in this case, the income could appropriately fall under s. 10 as being business income, no resort could be made to s. 12.' 13. The aforesaid decision was delivered by a Full Bench of the apex Court which was delivered on 4th Jan., 1972. In the Supreme Court decision, relied on by the learned Departmental Representative in the case of East India Housing Land Development Trust Ltd. vs. CIT (1961) 42 ITR 49 (SC) was by a Division Bench dt. 2nd Nov., 1960, therefore, the larger Bench of the apex Court will have a binding force. The AO also relied on another decision of the Hon'ble Karnataka High Court in the case of D.R. Puttanna Sons (P) Ltd. vs. CIT (1987) 59 CTR (Kar) 108 : (1986) 162 ITR 468 (Kar) which was delivered on 1st July, 1986. However, the decision relied on by the counsel for the assessee in the case of Sri Balaji Enterprises, the Hon'ble Karnataka High Court delivered the decision on 14th Feb., 1997, wherein the earlier decision of the Hon'ble Karnataka High Court was considered. Under these c ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
