2018 (12) TMI 1062

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....at the assessee, a partnership firm, was stated to be carrying on the activity of manufacturing of pesticides, formulations for agricultural use. For the purpose of its manufacturing activity the assessee took on rent an industrial shed admeasuring 7000 sq.ft. As noted by the Assessing Officer (AO), the aforesaid business activity of the assessee continued till the year 2004. Afterwards, the assessee firm amended the object cause to include subletting of the premises and accordingly the business premises of the assessee was sublet to M/s. Movielabs Films Pvt. Ltd.. For the assessment year under dispute the assessee filed its return of income on 22.07.2013 declaring total income of Rs. 5,52,411/-. During the assessment proceedings the AO not....

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....d that the basic premises on which the rental income has been assessed as house property income is completely erroneous since the assessee is not owner of the property. Drawing my attention to the leave and licence agreement between the assessee and Movielabs Films P. Ltd executed on 2nd November, 2011, a copy of which is at page 1 of the Paper Book, the learned A.R. submitted that the said agreement clearly mentions that the assessee is not the owner of the land but he is a monthly tenant. The learned A.R. submitted, though the assessee is a tenant of the property in question since the year 1963, however, it cannot be held as owner of the property as neither the assessee is appearing as owner in government records nor before any other auth....

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....monthly tenant. Therefore, it was incumbent upon the AO to bring material on record to establish that the assessee is enjoying property having ownership rights. For this purpose it is also necessary to examine whether the provisions of Section 269UA(f)(i) is applicable to the present case or not. Since the aforesaid factual aspects have not been properly examined before treating the rental income as income from house property, I am inclined to restore the issue to the AO for de novo adjudication keeping in view the observations made hereinabove. While doing so the AO must keep in view the ratio laid down in the decisions cited on behalf of the assessee. Needless to mention, the AO must afford reasonable opportunity of hearing to the assesse....