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TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 735
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....t") dated 30.03.2015 for the Assessment Year 2012-13. 2. At the outset, there is a delay in filing of appeal by 45 days by the revenue. We have gone through the reasons stated for the delay and we are inclined to condone the delay of the revenue and admit the appeal for adjudication. 3. The only issue to be decided in this appeal is as to whether the ld CITA was justified in directing the ld AO to treat the receipt from M/s Pantaloon Retail (India) Ltd as Business income , in the facts and circumstances of the case. 4. The brief facts of this issue are that the assessee is a non-banking financial company (NBFC) registered with Reserve Bank of India (RBI) carrying on financing business apart from engaging in the agency / venture business ....
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....and not as business income. The ld AO however granted flat deduction of 30% of the rental income while computing the income from house property. 5. The assessee submitted that it had been earning agency commission from M/s Pantaloon Retail (India) Ltd (PRIL) for rendering services in connection with stock and display, for retail sale, the products and goods of PRIL at its property located at 49/1, Leela Roy Sarani, (Gariahat Road), Kolkata - 700019 , which also represents retail outlet of PRIL. The assessee pursuant to an agreement with PRIL had agreed for commercial utilization of the immovable property owned by it for operating as a showroom. The assessee pursuant to the agreement had also agreed to provide various services and incur exp....
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....outlet/ showroom premises . Hence it was pleaded that the assessee had taken up the venture of setting up a showroom at the premises owned by it and for that matter all the aforementioned activities undoubtedly constitute ingredients of an organized business venture. The assessee placed reliance on the decision of Hon'ble Supreme Court in the case of Karnani Properties Ltd vs CIT reported in 82 ITR 547 (SC). 5.1. In addition to the above, it was pleaded that rental income pre-supposes existence of an owner - tenant relationship between the receiver and the payer of the rent. One of the principal characteristics of such relationship is that the tenant must enjoy tenancy rights, which he acquires the moment he becomes a tenant. Section 55(2)....
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..... It is hard to believe that the tenant would pay any rent or occupation charges without having occupancy right." 6. The ld CITA appreciated the aforesaid contentions of the assessee and also by placing reliance on the following decisions held that the agency commission income derived by the assessee from PRIL is to be taxed only as business income and not income from house property :- a) Hon'ble Supreme Court in the case of Chennai Properties & Investments Ltd vs CIT reported in (2015) 373 ITR 673 (SC). b) Co-ordinate bench decision of this tribunal in the case of PFH Mall and Retail Management ltd vs ITO reported in (2008) 298 ITR (A.T.) 371 (ITAT Kolkata) . The revenue's appeal before the Hon'ble Calcutta High Court and Hon'ble Su....
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....s to the user, to ensure smooth and efficient running of the retail outlet/ showroom which reflect a clear manifestation of an organized activity carried out by the assessee for a set purpose of earning profits out of commercial exploitation of the property owned by it. In consideration of rendering the services as per the agreement, the assessee is compensated in the form of commission calculated at 10% of gross sales in the said retail outlet /showroom. Moreover, the Hon'ble Calcutta High Court in the context of writ proceedings on the levy of higher property tax for the subject mentioned property, had held supra that PRIL does not possess any tenancy rights and the agreement entered into by the assessee with PRIL is only a mere business ....