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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether lease rent received from commercial space developed and operated under a BOT arrangement with DMRC was taxable as income from house property on the assessee being treated as a deemed owner, or as business income.
Analysis: The assessee held only a licence over a bare shell structure under a BOT/concession arrangement. The arrangement was not one of transfer of immovable property attracting section 53A of the Transfer of Property Act, 1882, and therefore the deeming fiction under section 27(iiib) of the Income-tax Act, 1961 did not apply. The income arose from a commercial BOT venture involving development, operation and sub-licensing, not from mere ownership of property. The reliance placed on section 269UA(f)(i) of the Income-tax Act, 1961 and on the treatment of rent under section 22 of the Income-tax Act, 1961 was held to be misplaced. The reasoning adopted by the appellate authority that the activity was covered by CBDT Circular No. 9/2014 dated 23.04.2014 was accepted.
Conclusion: The lease rent was held to be business income and not income from house property, and the assessee succeeded.
Ratio Decidendi: In a BOT arrangement where the assessee operates under a licence and carries on systematic commercial activity, the receipts are taxable as business income and cannot be assessed as income from house property merely by invoking deemed ownership provisions.
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