TaxTMI 
TaxTMI 
2015 (6) TMI 1089
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....se fees and Maintence & Amenities charges" received as "Income from other sources", instead of profit and gains of business or profession." 3. The assessee has further raised additional ground of appeal in Assessment Year 2006-07 which read as under:- "1. That on the facts and in the circumstances of the case of the appellant and in law learned CIT(Appeals) has erred in upholding the disallowance of Rs. 13,56,776/ - out of Personnel Expenditure incurred by the appellant. 2. That on the facts and in the circumstances of the case of the appellant and in law learned CIT(Appeals) has erred in not allowing depreciation amounting to Rs. 2,12.204/ - as claimed by the appellant. 3. That the order of learned CIT( Appeals) being contrary to the facts of the case, evidence and material on record and law applicable thereto should be set aside, amended or modified in accordance with the grounds of appeal deduced above. 4. Each of the grounds of appeal enumerated above are independent of and without prejudice to one another. 5. That the appellant craves leave to reserve to himself the right to add to, alter or amend any of the aforesaid grounds of appeal at or before the time of heari....
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....ecting the plea of the assessee held that the receipt was to be assessed as income from other sources and the expenses claimed by the assessee were held to be not allowable under section 57(iii) of the Act. 9. The CIT(A) upheld the order of AO as there was no evidence that the assessee was in the business of letting out of premises on commercial basis. The CIT(A) disallowed, the claim of expenditure and also disallowed the depreciation claimed by the assessee. The assessee is in appeal against the aforesaid order of the CIT(A). 10. The Ld. A.R. for the assessee pointed out that where the assessee had taken the premises on lease and further provided the same on leave and license basis and this being only transaction carried on by the assessee, the income generating from the said activity is assessable as income from business. It was further clarified by the Ld. A.R. for the assessee that there was no dispute between the head of income that is income from property or business income Only dispute was between business income or income from other sources. The ld. A.R. for the assessee further pointed out that in all the years upto Assessment Year 2005-06, the said income was treated a....
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....s object as per the Memorandum of Association, is to be assessed as business income in its hands. Whereas the case of the Revenue is that assessee was engaged in subletting of the property, which in turn it had obtained on lease and hence the income arising there from is assessable in the hands of the assessee as income from other sources, since the assessee was not the owner of the property. The assessee had entered into lease agreement with American Express Bank in the earlier year and admittedly the rental income declared by the assessee was assessed as business income in the hands of the assessee after allowing the related business expenditure claimed. The said decision was accepted by the authorities below from assessment year 1993-94 onwards for which the assessment was completed under section 143(3) of the Act and copy of the assessment order is filed at pages 32-42 of the paper book. Similarly, for assessment year 2001-02 the assessment was completed under the head income from business in the assessment order passed under section 143(3) of the Act, which in turn is placed at pages 43 to 49 of the paper book. The assessee continues to earn income from same lease agreement as....
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....om business and the necessary related expenditure has to be allowed as deduction in the hands of the assessee. 12. The Hon'ble Supreme Court in the case of Chennai Properties and Investment Ltd. (supra) has appreciated the facts before it, wherein the assessee had acquired properties in the city of Madras and in turn let out those properties and the rental income received by it was shown as income from business, it was held that where main object of the assessee company as per its Memorandum of Association was to acquire properties and to let out those properties as well as make advances upon the security of land and building, then it was held that "what we emphasis is that holding the aforesaid properties and earning income by letting out these properties is the main objective of the company". The Hon'ble Supreme Court, however, noted that in the return of income the entire income which had accrued and assessed in the hands of the assessee was from letting out of the said property and there was no other income arising to the assessee. The Hon'ble Supreme Court made reference to the ratio laid down by the Constitution Bench of the Apex Court in the case of Sultan Brot....
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....lection of rents the assessment on property basis may be correct but not so, where the letting or sub-letting is part of a trading operation. The diving line is difficult to find; but in the case of a company with its professed objects and the manner of its activities and the nature of its dealings with its property, it is possible to say on which side the operations fall and to what head the income is to be assigned." 13. The Apex court also noted the fact that in Sultan Brothers (P) Ltd. (supra) the Constitution Bench had clarified that merely an entry in the object clause showing a particular object would not be determinative factor to arrive at a conclusion whether the income has to be treated as income from business and such question would depend upon the circumstances of each case, i.e. whether a particular business is letting out or not. After noting down the above said decisions the Hon'ble Apex Court held that the circumstances of the case have to be considered and in view of the facts before it and its circumstances the Hon'ble Supreme Court held that letting of the properties was the business of the assessee and assessee, therefore, rightly disclosed the income ....