2017 (7) TMI 779

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....me received by the Respondent/Assessee by way of rent is a business income. Aggrieved thereby, the Revenue has filed the present Appeals. 3 Mr.Pinto, the learned counsel for the Appellant strenuously contends that the Tribunal was not right in applying the principle of consistency in dismissing the Appeals ignoring the fact that during the instant year, the original Company has demerged and this was the first year of assessment of the demerged Companies. The Assessing Officer was entitled to consider the issue afresh. The learned counsel submits that the principle of res judicata would not apply to these proceedings. The learned counsel further submits that the Assessee Company was the owner of the property and the income received from the....

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....ase it. The entire income of the Respondent/Assessee is rent income except the other paltry sum received by the interest on fixed deposits and sale of scrap. According to the learned counsel, the Commissioner (Appeals) and the Tribunal have applied the various tests such as the intention and the object and have arrived at correct conclusion. The leaned counsel further submits that for the earlier years also, the income of the Respondent/Assessee by way of rent was assessed as 'business income'. One Company namely ECity Entertainment has demerged and its properties are divided between the present Respondent Companies from which also the income is by way of rent. In respect of ECity Entertainment also for the earlier years, prior to i....

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....f rent is a business income. The deviation is from the Assessment Year 2007-08. One of the ground raised is that there is demerger of the Company and that is why the Assessing Officer has right to revisit the facts and arrive at an independent conclusion. 9 The Company which is demerged is ECity Entertainment Pvt.Ltd. The properties of the said demerged Company are divided in the present Assessing Companies. It is not disputed that ECity Entertainment was assessed till the Assessment Year 2005-06 and the income derived by the said Company by way of rent was always assessed as 'business income'. 10 There is no dispute with the proposition that the principle of res judicata would not apply, however principle of consistency has to be....

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.... rent was not the sole income. It was observed by the Apex Court, in the said case, that the Assessee has not established that he was engaged in any systematic or organized activity of providing service to the occupiers of the shops/stalls so as to constitute the receipts from them as business income. It was for the Appellant to produce sufficient material on record to show that its entire income or substantive income was from letting out of the property, which was the principal business activity of the Assessee. 14 In the present case, the facts are otherwise. The substantive income of the Assessee is from leasing out the shop/stalls. 15 The Tribunal in its Judgment, while appreciating the facts, has observed that the various malls are b....