TaxTMI 
TaxTMI 
2011 (3) TMI 445
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.... received by the assessee company as well as the notional interest on the interest free deposits received should not be treated as income from house property. In reply, the assessee furnished the following submissions :- - Roma Builders Pvt. Ltd. is a registered company engaged in the business of construction and development of property since inception. The company constructs buildings and sells units in the said buildings. - Since its inception the company has developed number of properties and dealt with immovable properties only. - During the year the company has given some commercial units on lease and has earned lease/license fees from the same. Leasing of units is also one manner of commercial utilisation of immovable property and hence forms part and parcel of business of company. In support, the assessee also relied on the following judicial decisions:- (1) CIT v. New India Industries Ltd. [1993] 201 ITR 208 (Guj.) (2) Karnani Properties Ltd. v. CIT [1971] 82 ITR 547 (SC) (3) Universal Plast Ltd. v. CIT [1999] 237 ITR 454/1....
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....ssee to enjoy the rental proceeds proves that they are not part of any business activity held that the rental income received by the assessee company is chargeable under the head income from house property and accordingly he assessed the rental income under the head income from house property at Rs. 28,77,627 as per computation given at page 8 of the assessment order. 3. On appeal, the ld. CIT(A) while distinguishing the decisions relied on by the assessee, followed the decision in the case of Shambhu Investment (P.) Ltd. v. CIT [2003] 263 ITR 143/129 Taxman 70 (SC) wherein the Hon'ble Supreme Court has affirmed the decision of Hon'ble Calcutta High Court reported in CIT v. Shambhu Investment (P.) Ltd. [2001] 249 ITR 47/116 Taxman 795 and the decision in the case of CIT v. Chennai Properties & Investments Ltd. [2004] 266 ITR 685/136 Taxman 202 (Mad.) and other decisions, observed that in the case of the appellant, there is no such complex asset hired out or no such exploitation of property through complex commercial operations has been carried out, held that in the case of the assessee unsold units have been let out which are in the form of extra space flats and no complexity is....
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.... 2 months 1400000 30000 Sold on 29-7-02 3. Bharti Cellular Ltd. Stanford Antena rent Putting up Antenna 27-4-02 N.A. Nil 225000 Handed over to Society 4. Mastek BPO Pvt. Ltd. Hamilton B 6th floor Commercial 1-3-02 3 years 8174430 121440 Sold on 18-11-03 5. Mind Axis (1) Sol Pvt. Ltd. Hamilton A 203 Commercial 15-4-02 33 months 814000 186480 Sold on 21-6-05 6. Varun Polyclinic Hamilton A 204 Commercial 15-8-02 33 months 814000 179760 Sold on 26-7-04 7. Vista International Pvt. Ltd. Hamilton A 201 Commercial Mar-02 36 months 814000 186480 Sold on 16-1-08 Note: Cost of lease & rent received in case of Lear Seating has been aggregated." With regard to the Assessing Officer's finding that the assessee has transferred the flats from fixed assets and in treating the rental income as income from house property, the ld. Counsel for the assessee submits that as per Point 39 of AS-19 appearing at page 15 of AS-19 appearing at pages 7 to 17 of the assessee's paper book wherein it has been provided that....
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....submissions of the rival parties and perused the material available on record. We find that there is no dispute that principal object of the assessee company is to develop and sell the premises constructed. There is no material on record to show that the principle object of the assessee company includes to lease its stock i.e., certain premises for a temporary period to persons/companies interested for temporary use. In the case before us, the assessee company has given on lease temporarily certain units to the aforesaid lessees for a period of 2 months to 36 months and received rent therefrom. According to the assessee, leasing is one of the methods of commercial utilisation of immovable property forming part of the business of the assessee company, therefore, the income derived therefrom should be assessed as income from business. Per contra, the case of the revenue is that no commercial activity is involved, the assessee has received simple rent from the flats/units, therefore, the assessee being the owner of the flat/property, the income derived therefrom should be assessed as income from house property. 8. In the case of Shambhu Investment (P.) Ltd. (supra) affirmed by the ....
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....ble to tax under the head 'income from house property' and not as business income irrespective of the fact that assessee company was doing business of acquiring, developing and selling of properties and the rental income was received by it because of ownership and not by exploitation of the property by way of complex commercial activity. 10. In Chennai Properties & Investments Ltd.'s case (supra) it has been held that the assessee was only exploiting the property as owner by leasing out the same and realising the income by way of a rent. Such rental income was liable to be assessed under the head "Income from house property". 11. In East India Housing & Land Development Trust Ltd.'s. case (supra) it has been held : "...........Income-tax is undoubtedly levied on the total taxable income of the taxpayer and the tax levied is a single tax on the aggregate taxable receipts from all the sources; it is not a collection of taxes separately levied on distinct heads of income. But the distinct heads specified in section 6 indicating the sources are mutually exclusive and income derived from different sources falling under specific heads has to be computed for the purpose of taxati....
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....ssessee is from exploitation of the property by way of complex commercial activities as prime object. This being so, we are of the view that the rental income derived by the assessee as an owner of the property is liable to be assessed under the head 'income from house property' for the purpose of section 22 of the Act. 15. As regards the rental income from terrace given to Bharti Cellular Ltd., we observe that terrace is not like an open space of land, but is an integral part of the building wherein the lessee was also entitled to put up temporary structure on the terrace for proper use and occupation thereof. The income from such terrace floor, therefore, could not be termed as income from business. It is very clearly coming within the ambit of the meaning of the word 'annual value' envisaged in section 22. This view also finds support from the decision of the Tribunal in the case of S. Sohan Singh v. ITO [1986] 16 ITD 272 (Delhi) wherein it has been held that lease income from terrace floor received was to be taxed as 'income from house property'. 16. That being the legal position, irrespective of the plea of the assessee that leasing is also one of the methods of commerci....