TaxTMI 
TaxTMI 
TaxTMI 
2011 (3) TMI 445
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 454/103 Taxman 493 (SC) (4) CIT v. V.S.T. Motors....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ness 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 involved therein, hence, the rental income cannot be treated as business inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 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 "The lesser should present an asset given under operating lease in its balance sheet under fixed assets", the assessee was required to present an assets given under operating lease separately in balance sheet under fixed assets, therefore, mere presenta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nciple 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 Hon'ble Supreme Court in Shambhu Investment (P.) Ltd. (supra) the assessee is the owner of Building at Raheja Chambers, Nariman Point, Mumbai. The said premises have been furnished by the assessee and have been let out to various persons and/or firms and/or or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ot 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 taxation in the manner provided by the appropriate section. If the income from a source falls within a specific head set out in section 6, the fact that it may indirectly be covered by another head will not make the income-taxable under the latter head. The income derived by t....