TaxTMI 
TaxTMI 
2010 (6) TMI 485
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....5,00,000 can be attributed towards services charges for providing various services which was to be assessed under the head 'income from other sources'. The remaining sum was to be assessed under the head "Income from House Property". The AO was further directed to allow deduction u/s. 24 of the Act in respect of income from house property. The AO is directed to follow the aforesaid decision of the ITAT in assessee's own case and determine income from house property and income from other sources. The appeal of the Assessee is thus partly allowed. 5. WTA No. 42/Mum/03 & 38/Mum/03: WTA No. 42/Mum/03 is an appeal by the Assessee against the order dated 23.10.02 of CIT(A)-VI, Mumbai relating to A.Y.97-98. WTA No. 38/Mum/03 is an appeal by the Assessee against order dated 25.10.2002 of CIT(A)-VI, Mumbai relating to A.Y.98-99. The common issues that arise for consideration in both these appeal are:- a) Whether the immovable property at No. 6, 4th floor, 'Sahas', Veer Savarkar Marg, Prabhadevi, Mumbai-400 025, hereinafter referred to as "the property" owned by the Assessee can be included in the net wealth of the Assessee? b) If yes, what is the value of the said property for the ....
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....greement or earlier determination of the agreement. The range of services agreement provides that the Assessee would provide air conditioned Executive Suites, "A" and "B" class cabins, conference rooms and open office area. The Assessee had arrangements to provide telephone lines, facilities for faxing, photocopying and word processing. The Assessee had agreed to provide security services and house keeping facilities. The client was at liberty to have his own furniture, office equipment etc. The Assessee agreed to provide two car parking space. The agreement in clause-3 further provides that the Business centre services shall be available to the client on all working days between 8.00 A.M. to 10.00 P.M. It has been further provided in clause-3 that in the event of the client desiring to use business centre services beyond the working hours on any working day or holiday, the centre would extend such services at no extra charges. The rates to be paid are set out in Annexure-2 to this agreement. Annexure-2 gives the following figures: 1^st period 2^ndperiod 3^rd period 1-10-95 to30-9-98 1-10-98 to 30-9-01 1-10-2001 to30-9-2004 A) Executiv....
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....y business or profession carried on by him". According to the Assessee the consideration received is for services rendered and not for occupation of the building. Alternatively the Assessee submitted that it was in occupation of the part of the premises since the Assessee would operate and allow the staff of M/s. Hutchinson Max Telecom (P) Ltd., to enter the office and close on the entire staff leaving the premises. Thus the Assessee claimed that the property was not let out but a business activity was carried on by the Assessee. The WTO relied on the assessment in the income tax proceedings for AY 97-98 and 98-99 whereby the receipts were treated as Income from House property as against the claim of the Assessee that it was income from business. Since the property was not in occupation of the Assessee for any business or profession carried on by him, the WTO held that the value of the property was liable to taken as asset owned by the Assessee u/s. 2(ea) of the Act. On appeal by the Assessee the CIT(A) confirmed the order of the WTO on identical reason as was given by the WTO, giving raise to the first issue before the Tribunal. 11. Before us the learned counsel raised a new ar....
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....rty by the Assessee for a business or profession carried on by an Assessee. In view of the above, we are of the view that the aforesaid decision will not be of any help to the plea of the Assessee. Moreover the Assessee in the case before the Madras Bench of ITAT was admittedly in occupation of the portion of the property which is not the position in the case of the Assessee. 12. The learned D.R. relied on the decision of the Mumbai Bench of the Tribunal in the case of Ramnord Research Laboratories (P) Ltd. Vs. WTO 99 ITD 73 (Mum)(AY 97-98 &98-99) wherein it was held that where property is in possession of lessee, it cannot be said that the Lessor is in occupation of the property and therefore the asset in question cannot be excluded on the ground that the Assessee was in occupation of the property for the purpose of any business or profession carried on by him. 13. We have considered the rival submissions. We find that the expression used in sec. 2(ea) cl.3 is "any house which the assessee may occupy for the purposes of any business or profession carried on by him". Therefore the property in question must be a house. The property in question in the present case, even accordi....
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.... parts with his right to enjoy the property during the leasehold interest, the lessor parts with his right to enjoy the property during the term of the lease, and it follows from it that the lessee gets that right to the exclusion of the lessor. If a document gives only a right to use the property in a particular way or under certain terms while it remains in possession and control of the owner thereof, it will be a licence. The legal possession, therefore under the licence, continues to be with the owner of the property, but the licensee is permitted to make use of the premises for a particular purpose. But for the permission, his occupation would be unlawful. It does not create in his favour any estate or interest in the property. The question in all these cases is one of intention. Did the circumstances and the conduct of the parties show that all that was intended was that the occupier should have a personal privilege with no interest in land ? In Associated Hotels of India Ltd. Vs. R.N. Kapoor their Lordships of the Supreme court held as under :- "The following propositions may, therefore, be taken as well established : (1) To ascertain whether a document creates a licen....
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.... would not be paid because the tenure of occupation is uncertain. The client was at liberty to have his own furniture, office equipment etc. The agreement in clause-3 further provides that the Business centre services shall be available to the client on all working days between 8.00 A.M. to 10.00 P.M. It has been further provided in clause-3 that in the event of the client desiring to use business centre services beyond the working hours on any working day or holiday, the centre would extend such services at no extra charges. Clause-17 of the agreement provides that because of the nature of the business of the client being a sensitive one viz., cellular phone operators/licencees in Mumbai, the client can have its own security also. All the above features in the agreement clearly show that what the parties really intended was a lease and the phraseology that it is a license cannot change the real character of the document. It is difficult to believe that a telecom operator/licencee in Mumbai would occupy a premises on a license basis, especially when the fact that the nature of business involves handling secret and sensitive information is recognized even in the agreement by which t....
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.... by the owner as annual rent or the annual value assessed by the local authority in whose area the property is situated for the purposes of levy of property tax or any other tax on the basis of such assessment, whichever is higher. The AO arrived at the valuation as per Schedule-III as follows: A.Y.97-98 A.Y.98-99 Annual rent received Rs.84,73,300 Rs.87,99,300 Add: 15% interest on security deposit of Rs.6.4 crores Rs.96,00,000 Rs.96,00,000 ---------------- ---------------- Gross Maintainable Rent Rs.1,80,74,300 Rs.1,83,99,300 A.Y.97-98 A.Y.98-99 Less: Property tax 2,00,000 9,68,546 15% of GMR 27,11,145 27,59,895 Rs. 29,11,14 Rs. 37,28,441 --------------- ---------------- NMR Rs.1,51,63,155 Rs.1,46,70,859 Capitalisation @ 12.5% = Rs.18,95,39,438 Rs.18,33,85,738 17. Before the CIT(A) the first submission of the Assessee was that while computing the GMR, the annual value assessed by the local auth....
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....a reference to the DVO. 21. The CIT(A) held that under Proviso (iii) to Expln., to Rule 5 Schedule-III to the Act, the addition of 15% interest on interest free security deposit to the annual rent received by the Assessee was proper and in accordance with law. Thus all the objections raised by the Assessee with regard to valuation were rejected by the CIT(A), except the relief with regard to Rs.5 lacs which we have referred to in the earlier paras. Aggrieved by the order the CIT(A), the Assessee is in appeal before the Tribunal. 22. We have heard the submissions of the learned counsel for the Assessee and the learned D.R. The learned counsel for the Assessee submitted that the nature of the letting by the Assessee was by way of a license and therefore in such cases the annual rent actually received should not be the basis for determining the GMR. In this regard our attention was invited to a decision of ITAT Mumbai in the case of B.Jamasji Mistry (P) Ltd. Vs. Third ITO 12 ITD 546(Bom). We find that the said decision is in the context of sec. 23(1)(b) of the Act. Moreover, we have already held that the nature of letting was by way of lease and not license. Hence this argume....