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2015 (6) TMI 129
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....e was selected for both these assessment years and the assessments were completed under Section 143(3) of the Income Tax Act, 1961 (in short 'the Act') vide orders dt.15.3.2013 and 5.3.2014 wherein the income was determined at Rs. 1,94,91,252 and Rs. 1,94,52,163 for Assessment Years 2010-11 and 2011-12 respectively. While the assessee had declared the income earned from letting out of commercial spaces, amenities and maintenance as income under the head 'Profits and Gains from Business', the Assessing Officer was of the opinion that the Lease Agreements are composite agreements of rent for commercial space with basic fixture and fittings and since the basic necessities are inseparable from the immovable property let out by the assessee, the income received by the assessee constitutes 'rent from letting out' and was exigible to tax under the head 'Income from House Property'. In coming to this conclusion, the Assessing Officer relied on the following judicial pronouncements :- (i) Shambu Investments Pvt. Ltd. (2003) 263 ITR 143(SC). (ii) Bhoopalam Commercial Complex & Industries (262 ITR 517) (Kar). (iii) CIT V Sarabhai Pvt. Ltd. (2003) 263 ITR 197 (Guj) (iv) CIT....
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....iled to appreciate the fact that, the amount paid by the tenants is not only rent but it includes charges towards providing services, and the amount payable by the tenants is a composite amount. 8. The Ld. Commissioner of Income Tax (Appeals) failed to appreciate the fact that, the facts of the case of the Shambhu Investments Pvt Ltd on which the Assessing officer has relied is entirely different from the facts of the assessee's case. 9. The learned CIT (Appeals) ought to have appreciated that the appellant was providing maintenance facilities to its tenants apart from letting out its premises. 10. The CIT (Appeals) erred in not deleting the interest charged u/s.234A and 234B of the Act. Both these appeals were heard together and are disposed of by this common order since the grounds raised are identical. 4. The Ground at S.No.1 is general in nature and therefore no adjudication is called for thereon. 5. In the Ground at S.No.10, the assessee denies itself liable to be charged interest under Section 234A and 234B of the Act. The charging of interest is consequential and mandatory and the Assessing Officer has no discretion in the matter. This proposition has been ....
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....sel Generators j. Working internet connection along with routers and Local Area Network (LAN) cables. k. Server Rooms and anti-static flooring. l. Water & Electricity. m. Centralised Air-conditioning. n. Fire Fighting Equipment at Vantage points. o. Telephone Lines. p. Designated Canteen Space and Food facility for the occupants. q. Parking Space. 6.4.2 Drawing reference to Schedule III of the Lease Agreements enclosed at pages 16, 46, 61 of the assessee's paper book, it was submitted that the assessee was also responsible for providing various maintenance facilities listed hereunder :- (i) Round the clock security (ii) Insurance of the premises. (iii) Parking Management. (iv) Maintenance of common areas, land scaped areas and common electrical installations. (v) Maintenance and operation of elevator, bore well and generator. (vi) Collection and payment of electricity and water bills. (vii) Upkeep of common areas. 6.4.3 It was submitted that in terms of the Lease Agreements, it is evident that the assessee was responsible for maintenance of the common areas such as basement, terrace, car park, lobby, landscape, compounds ....
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....ead 'Income from Business', the assessee placed reliance on the decision of the co-ordinate bench of this Tribunal in the case of DCIT V Velankani Information Systems Pvt. Ltd. in ITA No.1507 to 1510/Bang/2010 dt.30.3.2012. The assessee has furnished an item-wise comparison of the services rendered and facilities provided by it vis-à-vis those provided in the case of M/s. Velankani Information Systems P. Ltd. (supra) as listed out at pages 4 to 6 of the cited order; which are as under :- Sl. No. Velankani Information Systems P Ltd. V/s. DCIT In the case of the Appellant a. Provision of common reception area for all lessees The Appellant has earmarked a common reception area, furnished it and appointed a Receptionist to cater to all the Lessees b. Provision of lifts and undertaking the responsibility of its maintenance The Scope of Maintenance has been provided in Schedule III of the Agreements enclosed in pages 16, 31, 46 etc. of the paper book wherein the Appellant is not only providing the elevators but has also undertaken the responsibility of maintaining them. The Appellant has insured the premises c.. Comprehensive Insurance of th....
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....pump, generators, electrical installations, air conditioners is the responsibility of the Appellant. The Appellant has also undertaken responsibility of procuring additional power and collection & payment of electricity & water bills. Reference is drawn to Para 9 and Schedule III of the Agreements on pages 7, 23, 38, etc. and pages 16, 31, 46 etc. of the paper book respectively. k. Responsibility of supplying water l. Provision of air conditioning facility and responsibility of maintaining the same m. Provision of canteen area The Appellant has earmarked a canteen area in the premises and is providing food to the employees of the Lessees on a daily basis. The occupants are charged separately on head count basis for the facilities utilized by them. Reference is drawn to Para 5 of the agreements on Pages 4, 20, 50 etc. of the paper book. n. Provision of Telecom & Internet facilities The tenants occupying the Appellant's premises are software companies mostly subsidiaries of international companies. Data security, integrity & confidentiality ranks high in their list of priorities. The risk of compromise of data security and confidentiality is high w....
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....sted Rs. 2.61 Crores during the F.Ys 2009-10 and 2010-11 on additions to the building (details at pages 136 and 139 of assessee's paper book) with the primary intention of setting up new infrastructure of approx. 54,000 sq. ft. which can accommodate about 750 persons and is conducive for software companies to establish their office set ups overnight on plug and play basis. It was submitted that to fund this construction and interior works, the assessee raised a term loan of Rs. 3.23 Crores from Corporation Bank @ 14.25% interest per annum. It is submitted that with some of the lessees such as Meridium International Inc. and Kanchi Technologies Ltd., the assessee has proceeded further to cater to their specific requirements in respect of layout of the premises and furniture. The assessee submits that in the light of the above, it can be clearly said that the primary intent of the assessee was to set up a software park and that this premises is being exploited as a business asset. 6.4.8 The learned CIT (Appeals) was also of the view that the essential requirements of a business as a prescribed by the Hon'ble High Court of Gujarat in the case of CIT V Smt. Minal Rameshchand....
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....arious other amenities as listed out at paras 6.4.1 and 6.4.2 of this order (supra). We, therefore, find that the facts of the case on hand are different and distinguishable from the aforesaid decision relied on by the learned CIT (Appeals). 6.4.10 Similarly, in the case of Mahesh Investments (supra), the rent received was for letting out of only the commercial space, without any amenities, furniture and fixtures or the undertaking of any maintenance activities, was held to exigible to tax as 'Income from House Property.' 6.4.11 What emerges from the above discussion from para 6.1 to 6.4.10 of this order (supra), is that the question of whether the rental income derived by the assessee from letting out of property is to be treated as 'Income from House property' is essentially to be decided on the basis of the facts and circumstances of each particular case. The scheme of the Income Tax Act, 1961 contains 6 heads of income under which income can be categorized / classified. These heads of income are, in a sense, exclusive of one another and the income which falls under one head cannot be assigned to or taxed under another head. Therefore, the deciding factor is not the owners....