TaxTMI 
TaxTMI 
2004 (3) TMI 775
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....he asst. yr. 1993-94, the assessee had shown a net chargeable income of Rs. 1,67,979 from business. For the asst. yr. 1994-95, the assessee had disclosed a loss of Rs. 2,69,400. For the asst. yr. 1995-96, the assessee had disclosed a net loss of Rs. 1,48,211. In the asst. yr. 1996-97, the assessee had shown a loss of Rs. 5,05,040. 3. The assessee had taken over a vacant land on lease for a term of 30 years commencing from 1st May, 1985. According to assessee, as a business venture, the land was developed by putting up a complex from assessee's own funds. The assessee should surrender the lease with the improvements to the landlord at the end of 30 years, as per the lease deed. The assessee on completion of the building, leased out the complex to various persons and the income so received by the assessee was claimed as income from business. For all the assessment years, the assessing authority declined to accept the claim of the assessee. However, for the asst. yrs. 1993-94 to 1995-96, the learned CIT(A) accepted the claim of the assessee and hence the Revenue is in appeal. For the asst. yr. 1996-97, the learned CIT(A) confirmed the order of assessment and hence the assessee ....
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....e premises besides leasing. (vii) The lease consideration receivable is on two counts, namely : (a) lease rent for the premises, and (b) towards facilities for the additional services provided. (viii) The facilities provided by the company are providing watch and ward, maintenance of common area, corridors, toilet, staircase, maintenance of the lights in the common area, maintenance of the building, supply of water, providing lift, installing electrical transformer for providing LT power to the lessees, providing standby generator, overhead tank, pumps, maintenance of drainage, sanitary and fitting, etc. For these, an agreed amount is collected under the head 'other facilities' as commercial proposition. In all the earlier years, the lease and income from facilities were assessed as business income. The learned counsel further submitted that in the memorandum of association of the company, the main business of the assessee as per its object clause are : 1. To carry on the business of estate property. To acquire, construct or lease hotel, commercial and residential complexes. To acquire, construct, run or lease lodging and boardin....
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....ng a textile business in the same complex. These facts are not in dispute. 9. The case law relied on by the learned Departmental Representative reported in (2003) 183 CTR (Kar.) 275 : (2003) 262 ITR 517 (Kar.) (supra), is distinguishable on facts. In the aforesaid case, the land taken on lease was held as investment and on expiry of the lease period the title to the superstructure continued to vest with the assessee-company. In the case of Bhoopalan Commercial Complex & Industries (P.) Ltd. (supra), there was only a lease rent collected as per the lease deed and no additional facilities and services provided nor charged. In this case, in the earlier years, the income was treated as property income. But, in the case of the present assessee, M/s. Manmit Arcade (P.) Ltd., the land was taken on lease as business venture in accordance with the objects of the company. The assessee is not the owner of the land. The assessee has to necessarily surrender the lease with the improvements made over the land to the landlord at the end of 30 years as per the lease deed. When the constructed commercial building is leased out to various people the assessee collects : (a) lease rent, and (b) cha....
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....businessman is to earn profit at the maximum level on the investments made in the business. The entire cost of construction plus the returns have to be recovered within the lease period of 30 years. Otherwise, the assessee has to necessarily surrender the lease without any change to the lessor at the end of 30 years' period of lease. Therefore, there is no doubt that this is purely a commercial proposition resulting in a business venture carried on by the assessee-company. Further, from the facts it is gathered that the assessee is providing watch and ward, maintenance of common area, corridors, toilets, staircase, maintenance of lights in the common area, maintenance of building, supply of water, providing lift, installing electrical transformers for providing LT power to the lessees, providing standby generator, overhead tank, pumps, maintenance of drainage, sanitary fittings, etc. Thus, from the above facts, it is clear that the entire activity of the assessee is on an organised manner to earn profit out of investments made by the assessee as a commercial venture. In the case law relied on by the learned counsel for the assessee reported in (2003) 183 CTR (Kar.) 275 : (20....
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....the IT Act, 1922, or as income from other sources under section 12; Held : (i) that since the assessee-company was not the owner of the property or any part thereof, no question of making the assessment under section 9 arose; (ii) that the definition of 'business' in section 2(4), was of wide amplitude and it could embrace within itself dealing in real property as also the activity of taking a property on lease, setting up a market thereon and letting out shops and stalls in the market; (iii) that, on the facts, the taking of the property on lease and subletting portions thereof was part of the business and trading activity of the assessee and the income of the assessee fell under section 10 of the IT Act; and (iv) that where, as in this case, the income could appropriately fall under section 10 as being business income, no resort could be made to section 12.' 13. The aforesaid decision was delivered by a Full Bench of the Apex Court which was delivered on 4th Jan., 1972. In the Supreme Court decision, relied on by the learned Departmental Representative in the case of East India Housing & Land Development Trust Ltd. v. CIT (1961) ....