TaxTMI 
TaxTMI 
2013 (8) TMI 402
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.... to Centrum Group of concerns on 10, December,2007 for a period of 5(five) years, with an option to renew for a further period of 4(four) years. The assessee entered into agreement for lease of premises on leave and license basis at a monthly rent of Rs.13,15,700/- for the first year, with an option to increase every year as stated in para 5.2 of the agreement. Along with this agreement assessee also entered into separate agreement for amenities on a monthly rent of Rs.6,57,900/- in the first year, with an option to increase for every one year later as detailed in para 2B of the agreement. Assessee treated the entire receipt as rent and offered the income under the head 'income from the house property'. On the reason that the property is a commercial property and the assessee was providing services to the tenants, relying on the decision of the Jurisdictional High Court in the case of CIT vs. National Storage Pvt. Ltd. [48 ITR 577 (Bom)], AO treated the entire receipt as income from business. He has also listed out the amenities/facilities provided, in para 4.2(b) of the assessment order. The Ld. CIT(A) considering the contentions of the assessee treated the leave and license amoun....
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....k). (iv) ACIT vs. Vijay S. Mallya 52 SOT 197. 6. Ld. Counsel in reply distinguished the above decisions to submit that the assessee was not providing any service, therefore, the entire receipt has to be taxed as income from house property as offered by the assessee. 7. We have considered the issue and the rival contentions. The issue whether a particular let out is business or rental income by the owner of the premises has to be decided on the facts and circumstances of each case. So for as, the rental income of letting out the premises, earned by the assessee is concerned, the issue is settled by the Hon'ble Supreme Court in various decisions, more particularly in the case of Shambhu Investment Pvt. Ltd. vs. CIT 263 ITR 143. It has been held that the income realized by the owner by way of rental income from a building, whether commercial building or residential, is assessable under the head income from house property. Therefore, to the extent of leave and license amounts received by the assessee by letting out the commercial building is concerned, the CIT(A) has correctly analysed and came to a conclusion that the income is assessable under the head income from House Property. ....
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....concurrent with the Leave and license agreement for the period also. Not only that the TDS was deducted, both on rent and amenities, as rent only by the tenants. It was further provided by Clause 11 of the license agreement that tenants shall be entitled to maintain common arrears of the building, either by itself or by Complex Management Agency and shall be entitled to proportionate re-imbursement of maintenance charge from other occupants of the building. Assessee is not connected either to the maintenance of the building or providing any service to the tenants, except making provision for the amenities as listed in agreement as extracted above. Therefore, it cannot be stated that the assessee is providing services which can come under the nature of business. As seen from the agreement the amenities are part of the building and main purpose is to let out the building along with amenities provided, therefore, the rents are inseparable as amenities are fixed to the building and part of the commercial building constructed by the assessee. It cannot be stated that the assessee has earned the income in the nature of business by providing amenities. The assessee let out the building al....
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....city bills etc., therefore, the facts in the above case does not apply to the assessee. 13. Coming to the last case relied on by the Ld. CIT DR in the case of ACIT vs. Vijay S. Mallya 52 SOT 197, the decision is also distinguishable on facts. There assessee was not owner of the entire premises and let out building along with facilities and amenities including, transport facilities in the business complex developed by assessee. Since, assessee business was to let out to flex Solution Ltd, the Ld. CIT (A) segregated the receipts of 40 % of services as business income, 60% towards premises as income from House Property and on facts of the case, ITAT upheld the order of the CIT. However, in the present case, assessee is not providing any service to the tenants. Assessee simply let out the commercial building with amenities without any services being rendered in this regard, for fixed period of 5 years which could be extended by another 4 years, therefore, AO's contention that incomes pertain to nature of business activities cannot be upheld. 14. The Ld. AO relied on the Jurisdictional High Court decision in the case of CIT vs. National Storage Pvt. Ltd. [48 ITR 577 (Bom)]. The facts ....