TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 1057
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....n these two appeals, the Revenue has raised multiple grounds of appeal but at the time of hearing, the main grievance of the Revenue have been confined to the following issues: "i) Ground No. 1 raised by the Revenue relates action of ld CIT(A) in treating the amount of Rs. 1,15,81,078/- as income from "profits and gains from business and profession" instead of "income from house property". ii) Ground No. 2 raised by Revenue relates to deletion of addition of Rs. 1,50,00,000/- by ld CIT(A) holding that the creditor has proved creditworthiness and identity to substantiate her investment. iii) Ground No. 3 raised by the Revenue in ITA No. 170/Gau/2018 relates to the deletion of addition of Rs. 54,120/- on account of parking fees." 4. Now, we take ground No. 1 raised by the Revenue which relates to action of ld CIT(A) in treating the amount of Rs. 1,15,81,078/- as income from "profits and gains from business and profession" instead of "income from house property" 5. Brief facts qua the issue are that the assessee has filed its return of income for A.Y. 2012-13 on 24.09.2012, declaring total income to the tune of Rs. Nil. The Return of income was processed under section 143....
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....activity actually carried out. "We would like to draw your kind attention to relevant case law of Income-tax Officer, Wared-2, Gandhidham v. Tejmalbhai & Co. [2006 ITD 399(Rajkot)] wherein the Hon'ble ITAT has held that merely because the property is immovable it cannot be considered as income from house property and that if the main hiring is main business than it would be business income." 6. However, the ld assessing officer rejected the contention of the assessee and held as follows: "The fact of the case law referred by the assessee i.e. Income-tax Officer, Wared-2, Gandhidham v. Tejmalbhai & Co.[20061TD 399(Rajkot)] is as below 1. the entire godowns had not been given for exclusive possession but space had been let out as per the requirements of the parties 2. various services such as lighting, telephone, watch and ward and staff for managing loading and unloading are provided by the assessee and possess the key 3. the assessee is engaged in the warehousing business. Here, in case of the assessee company the shops are given on lease to different parties. As per the lease agreement it is evident that the licensee has given exclusive possession of the pr....
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....ligatory. In fact, the Hon'ble Supreme Court has held in the case of East India Housing and Development Trust vs. CIT 42 ITR 49 that if a company incorporated with the objects of buying and developing landed properties and promoting and developing markets, purchases some land, sets up a market therein and realizes rent from tenants of shops and stalls in the market, the income so derived must be computed for assessment purposes under the head "Income from House property". It was observed by the Apex Court that: "the distinct heads specified in section 6 of the Income-tax Act indicating the sources are mutually exclusive and income derived from different sources falling under specific head has to be computed for the purpose of taxation in the manner provided by the appropriate section if the income from a source-falls-within a specific head set out in section 6, the fact that it may indirectly be covered by another head will not make the income taxable under the later head." Similar principle has been laid down by different High-courts in cases such as: Brijnath Brijmohan & Sons Pvt. Ltd. 161 ItR 234 (Bombay) CIT vs. New India Maritime Agencies (P) Ltd. 256 ITR 51....
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.... or on lease, hire or otherwise acquire, whether for investment or sale, or working the same, any real or personal estate including lands, mines, business, building, factories, mill, houses, cottages, shops, depots, warehouses, machinery, plant, stock-in-trade, mineral rights, concessions, privileges; licenses, easement or interest in or with respect to any property or interest in or with respect to any property whatsoever for the purpose of the Company in consideration for a gross sum or rent or partly in one way and partly in the other or for any other consideration and to carry on business as proprietors of lands, plots, buildings, etc. and to let on lease or otherwise properties therein." The second object mentioned in MOA is as follows: "To acquire by purchase, lease, exchange, hire or otherwise, lands, plots, buildings and hereditaments of any tenure or description situated in India or abroad and any estate or interest and rights therein, in particular by building, constructing, reconstructing, adapting, upholding, altering, improving, decorating, furnishing and maintaining all kinds and types of immovable properties and providing the same on lease, rent, hire or letting....
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.... 1,15,81,078/- under the head "Business". In course of assessment proceedings, the Ld. Assessing Officer misconstrued the provision of section 22 of the Income Tax Act, 1961 and conceived that the assessee have earned the rental income as an owner and is accordingly liable to be assessed under the head "House Property". The Ld. Assessing Officer was apprised by the assessee that the income earned from letting out its property do not partake of the character of "Income from House Property" and had been correctly disclosed under the head "Business" since the assessee carried on this business in consonance with its main objects. In the present instance, the assessee has developed shopping mall on a property owned by it and let out same by providing host of services/facilities/amenities in the said mall and as such, the basic intention of the assessee was commercial exploitation of its property by developing them as shopping malls, therefore, ld Counsel claimed income derived there from as "business income'. 12. There is no dispute that as per memorandum of Association of the assessee, it has main object to purchase, construct and/or acquire property and to give on lease and/or on li....
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....operties owned by it and had let out same to various users by providing host of services/facilities/amenities in said malls/business centers, it could be said that basic intention of assessee was commercial exploitation of its properties by developing them as shopping malls/business centers and, therefore, income derived there from was rightly assessed as business income. [PFH MALL & RETAIL MANAGEMENT LTD. -VS- I.T.O. (2007) 16 SOT 83 (KOL)]. At the cost of repetition, we state that where the assessee company developed shopping malls and business centers on properties owned by it and let out same by providing host of facilities in said business centre, income derived there from was business income, as held by the Coordinate Bench of ITAT Mumbai in the case of A.C.I.T. - VS- STELLER DEVELOPER (P.) LTD. (2015) 68 SOT 34 (MUM)]. Again, where the assessee's main objects were acquiring, constructing, operating and maintaining of multiplexes, business centres, etc., income derived from such activities is to be treated as business income and not income from house property as held by the Coordinate Bench of ITAT Mumbai in the case of SHREEJI EXHIBITORS -VS- A.C.I.T. (2015) 42 ITR (TR....
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....vina Mary Lyngwa was served a notice under section 131 of the I.T. Act, and her statements was taken on oath and she accepted that she made investment in assessee company. The ld DR pointed out that neither Smt. Davina Mary Lyngwa nor the assessee produced any documentary evidence to prove that the cash belongs to Smt. Davina Mary Lyngwa and the said amount was deposited by her in the bank account. It was the assessee's black money which was introduced by the assessee in the books of accounts in the name of Smt. Davina Mary Lyngwa, therefore addition made by AO should be sustained. 17. On the other hand, ld Counsel for the assessee submitted before us that the ld. AO has erred in treating the capital/premium receipt of Rs. 1,50,00,000/- comprising of share capital/premium as undisclosed income and added the same to the total income of the Assessee. Although, the subscriber herself accepted that she had made investments with ATC Realtors Pvt. Ltd but merely because the subscriber is a tribal and her income is exempt under section 10(26) of the I.T. Act, does not mean that the company had used her for issuing bogus share capital and share premium as cited by the Ld. AO in his order....
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....pertinent to mention here that in this case the assessee has filed return of income for the year under consideration on 14-10-2011 but no assessment as stipulated U/s 2(40) of the Act was made and the return of income was only processed U/s 143(1) of the Act on 20-04-2012. In view of the above, provisions of clause (b) of explanation 2 of section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment, 3.3 In this case more than four years have lapsed from the end of the assessment yer under consideration. Hence necessary sanction to issue notice U/s 148 has been obtained separately from Principal Commissioner of Income Tax-2, Guwahati, as per the provisions of section 151 of the Act. 3.4 In response to issued Notices Summons and questionnaire, assesse made their replies vide letters dated 29/10/2018 and 30/10/2018. Subsequently, Notice for furnishing of information U/S 133(6) of the Act of 1961 was issued to the Smt. Davina Mary Lyngwa asking her to furnish information with regards to the sources of the funds. The reply has accordingly been furnished. The same is perused....
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....der Section 131 were well served upon her at her residential address at D/o Late Sh. F.G. Franklin, Mission Compound Road, Mawkhar, Shillong-02. Even the Ld. AO had not disputed the identify of Mrs. Davina Mary Lyngwa. Further, Mrs. Davina Mary Lyngwa had duly confirmed the investment made by her during the above assessment year in the shares of the Assessee Company and these facts have been duly acknowledged in para 6.2 of the order impugned by the Ld AO himself. Regarding the Creditworthiness/Capacity/Financial Strength of the Share capital Subscriber, Mrs. Davina Mary Lyngwa was well confirmed by her during the course of her Statement under Section 131 of the Act, wherein she had stated as under: - Q No. 7. Please furnish details of investments made by you in the F.Y 2011-12? Please explain the source. Ans: I have the following investments: I) Two Guest Houses as mentioned 2) Properties in Shillong three number, Barupani Two numbers and Tura Two numbers 3) Investment in ATC Realtors Private Limited an amount of Rs. 2.40 crores. 4) Cash in hand and Bank This, it would be noted from the above details of her investments, including the investments made during t....
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....e concerned, whether private limited or public limited companies, they raise their capital through shares, though the manner of raising the share capital in the private limited companies on the one hand and public limited companies on the other hand, would be different. In the case of private limited companies, normally, the shares are subscribed by family members or persons known/close to the promoters. Public limited companies, on the other hand, generally raise public issue inviting general public at large for subscription of these shares. (10). That it is not just comprehensible as to when the said Smt Davina Mary Lyngwa had duly confirmed the reasons, justification for making the investment as also the mode, source and availability of the cash in hand with her, which further document was required by the Ld AO since the Ld AO had observed that no document was furnished by Smt Davina Mary Lyngwa which would prove that the money belong to her. The cash in hand is different via-a-vis balance at bank and the fact that Smt Davina Mary Lyngwa has confirmed her investment and that the Assessee had acknowledged her investment and in lieu thereof had issued shares to her, is itself a....