TaxTMI 
TaxTMI 
2018 (7) TMI 360
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....24/09/2012 Rs. 73, 44, 401/- 29/01/2015 Rs. 1. 31 crores 2013-14 (Revised ROI 30/09/2013) Revised ROI. Rs. 80, 07, 200/- 16/03/2016 Rs. 1. 41 crores ITA. /5534/Mum/2016, AY. 2009-10 2. First effective Ground of appeal about treating License Fee of Rs. 1, 45, 67, 300/- as income from business as against income from house property. During the assessment proceedings, the AO observed that the returned income comprised of income from Leave & License of Rs. 1, 45, 67, 300/-and other income of Rs. 9, 99, 783/-, that the appellant had claimed administrative and general expenditure of Rs. 1, 06, 91, 783/-. He treated the entire rent receipt as income from House Property, after allowing Standard Deduction u/s 24(a)of the Act. He also did not allow the administrative expenses as claimed by the appellant. He made reference to the provisions of Section 269UA(f)read with section 27(iiib) of the Act as well as to the case of M/s Shambhu Investment Ltd. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority(FAA) and raised additional grounds. He called for a remand report from the AO. After considering the availab....
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....eal for appeal for AY 2007-08 (ITA No. 6423/Mum/2012). 2. First, we shall take up appeal of the assessee (AY. 2006-07), wherein, first ground pertains to confirming the assessment order in treating the licence fee as 'income from other sources' instead of 'business income', without appreciating the fact. At the outset, the ld. counsel for the assessee, Shri Rakesh Joshi, claimed that the impugned issue is covered in favour of the assessee by the order of the Tribunal for AY 2003-04 and 2005-06, order dated 10/06/2015. The ld. counsel produced the photocopy of the order of the Tribunal. However, Ms. Radha K. Narang, ld. DR, defended the conclusion arrived at in the impugned order. 2. 1. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion from the aforesaid order of the Tribunal, dated 10/06/2015, for ready reference:- "4. The issue arising in the present appeal is in relation to assessability of leave and licence income received by assessee and whether the same has to be assessed as profit and gains of business or as income from other sources. The Tribunal, in....
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....see had returned the income from assessment year 1993-94 to 2000-01 treating rental/incensing income as assessable under the head 'profits and gains of business', which in turn was accepted by the Revenue. It is also noted by the Hon'ble High Court that assessment for assessment years 1993-94 to 2001-02 were completed under section 143(3) of the Act and the income was assessed in the hands of the assessee as income from business. In the absence of any distinguishing features brought in the case, the Hon'ble High Court directed the Tribunal to reconsider its decision having due regard to the circumstances of the case. The relevant findings of the Hon'ble High Court are as under: - "2. The appeal pertains to assessment year 2003-04. The issue before the Tribunal on the first question was whether income received from licensing of immovable property belonging to the assessee can be assessed as income from business or as income from other sources. The assessee submitted that from assessment years 1993-94 to 2000-01 the returned income treating the rental/licensing income as assessable under the head of profit and gains of business was accepted by the Revenue. For as....
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.... 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 in the past and the income declared during the year under consideration was received from American Express Bank, which will also be sub-lessee in the earlier years. The Hon&#....
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....ase 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 Brothers (P) Ltd. vs. CIT [(1964) (5) SCR 807] and the ratio laid down in the case of Karanpura Development Co. Ltd. vs. CIT reported in 44 ITR 362 (S....
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....ation. 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 under the head 'income from business'. 14. The facts before us are similar to the facts before the Hon'ble Supre....
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....he Tribunal, if kept in juxtaposition and analyzed, we find that vide para-4 onwards of the order, the Tribunal has deliberated upon leave & licence income, received by the assessee, is whether to be assessed as profit & gains of business or from other sources. While coming to a particular conclusion, the Tribunal has discussed the director's report dated 26/08/2003 with respect to licence fee with American Express Bank, which came to an end on 31/03/2003 after which a new licence agreement was entered into by the assessee with British Deputy High Commission, ratio laid down in Sultan Brother Pvt. Ltd. (1964) (5) SCR 807 (SC), Karanpura Development Company Ltd. vs CIT (44 ITR 362) (SC), identical fact in the case of Chennai properties, decided by Hon'ble Apex Court and by following the decision in ITA No. 3033/Mum/2010 along with ITA Nos. 4977/Mum/2006 decided in favour of the assessee. No contrary decision, on identical fact, was not brought to our notice, specifically by the Revenue, therefore, following the order of the Coordinate Bench that too in the case of assessee itself, we decide this issue in favour of the assessee. " Considering the above and respectfully following t....