TaxTMI 
TaxTMI 
2021 (12) TMI 139
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....f to the assessee by holding that the relevant income to be assessed as income from "House Property", basically by WT holding that the assessee did not provide any amenities nor rendered any service. 2.2. The Ld. CIT(A) ought to have appreciated the decision of the Hon'ble Supreme Court in the case of M/s Rayala Corporation Pvt. Ltd. [2016] 72 taxmann.com 255 (Mad)(HC) wherein held that income earned from an activity of leasing property and earning rent, to be brought to tax under the head of "Business Income". 2.3. The Ld. CIT(A) ought to have appreciated the decision of the Hon'ble jurisdictional High Court in the case of M/s NDR Warehousing Pvt. Ltd. [2015] 60 taxmann.com 255 (Mad)(HC) wherein held that in case of warehousing business, Th'T the income earned would fall under the head of ``Business Income". 3. For these and other grounds that may be adduced at the time of hearing. It is prayed that the order of the Ld. CIT(A) may be set aside and the order of the Assessing Officer be restored." 3. The brief facts of the case are that the assessee is in the business of providing warehouse and supply chain solution, filed its return of inco....
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....t would not be the determinative factor to arri.ve at an conclusion whether the income is to be treated as income from business and such a question would depend upon the circumstances of each case, viz., whether a particular business is letting or not. This is so stated in the followi.ng words: "We think each case has to be looked at fr6m a businessman's point of view to find out whether the letting was the doing of a business or the exploitation of his property by an owner. We do not further think that a thing can by its very nature be a commercial asset. A commercial asset is only an asset used in a business and nothing else, and business may be carried on which practically all things. Therefore, it is not possible to say that a particular activity is business because it is concerned with an asset with which trade is commonly carried on. We find nothing in the cases referred, to support the proposition that certain assets are commercial assets in their very nature. In this case the assessee viewed its assets as providing ware housing solution and supply chain management and not merely as house property as evident from website content used for market....
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....f the objectives is to lease out. The assessee leased in properties for the purposes of leasing out. The assessee built IT infrastructure and let out to an IT enabled Service Company. Hence it is concluded that the income received by assessee is assessable under the head income from business and profession. Hence the standard deduction claimed by the assessee is disallowable however the expenditures claimed in the P&L and Depreciation though not claimed by the assessee is allowed. The income is computed as follows: Business income: Profit before Tax : 11,66,72,573 Add: Depreciation As per CO Act : 93,60,735 Interest on TDS : 32,550 Interest on IT : 78,857 Donations : 11,175 Land expenses : 39,386 Loss on SPM Assets : 99,421 : 96,22,949 Less: Depreciation as per IT Act: 1,52,54,651 : 1,52,54,651 Business Income : 11,10,40,046 Assessable income : 11,10,40,046 Returned income : 8,48,87,075 Difference in income : 2,61,41,796 " 4. Being aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the Ld. CIT(A), the ....
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....has been consistently following the method of declaring rental income under the heed-income from `House Property' from this AY 2014-15 onwards. The AR has emphasized that the appellant's main objective is not the business of leasing out of properties. The AR has pointed out that in the case of Chennai Properties and Investments Ltd., the main objective of the company was letting out of properties, whereas it is not so in the appellant's case. For the same reason, the appellant's case is distinguishable from the apex court's decision in the case of Rayala Corporation Pvt. Ltd. The AR has contended that only when as assessee treats the leased out assets as business asset and is in the business of letting out of properties, the rental income can be considered as business income. The AR has pointed out that in all those decisions, wherein the income was assessed under the head, 'Business Income' the assessee would have rendered several amenities to the tenants and the properties would have been managed as business assets. In the appellant's case, the asset was not treated as business assets, etc, and no amenities were rendered to the tenants. 4.3.3. I have perused the ....
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.... of shops)- Assessee acquired leasehold rights in a property from MCGB - It constructed various shops and stalls on said property and gave same to various persons on sub-licensing basis - Income generated from sub-licensing was claimed as business income - Assessing Officer took a view that since assessee had acquired leasehold right in land for more than 12 years, it was to be regarded as 'deemed owner' of premises by virtue of section 27 (iiib) - Accordingly, income earned from letting out shops and stalls was taxed under head 'income from house property' - Tribunal as well as High Court upheld order of Assessing Officer - Whether since assessee had not established that it was engaged in any systematic or organized activity of providing service to occupiers of shops/stalls, mere fact that object clause of partnership deed mentioned that business of assessee was to take premises on rent and to sub-let same, was not sufficient to conclude that income in question was taxable as business income - Held, yes - Whether, therefore, impugned order passed by authorities below was to be confirmed - Held, yes [Paras 16 and 18] [In favour of revenue] 4.3.7 In the afor....
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....consistently declaring rental income under the head - Income from House Property. 6.5 From the above remarks and decisions relied on, I am of the considered opinion that the rental income declared by the appellant should be assessed under the head 'House Property' and not under the head, 'Business Income'. Therefore, the AO is directed to accept the appellant's declaration of rental income under the head, 'House Property' and to allow statutory deduction of 30% u/s 24(a) of the IT Act. The appellant's grounds are allowed. Since the income is to be assessed under the head - House Property, the depreciation allowed by the AO on their property should be withdrawn." 5. The Ld. DR submitted that the Ld. CIT(A) has erred in directing AO to assess rental income under the head income from house property by relying order of Commissioner of Income Tax (Appeals) -15, Chennai in the case of M/s. Singhvi Developers Pvt Ltd. in ITA No. 271/2016-17 dated 28.02.2019, without comparing facts of the present case to facts considered by the Ld. CIT(A) in the above case. The Ld. DR further submitted that the Hon'ble Supreme Court in the case of M/s. Rayala Corporation Pvt. Ltd., (2016) 72 T....
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....ncluded that main objects of the assessee is into develop and let out properties and thus, income derived from said activity falls under the head 'income from business or profession', but not under the 'head income from house property' as claimed by the assessee. To support his view, the AO has relied upon ratio of the Hon'ble Supreme Court in the case of Chennai Properties & Investments Ltd. vs CIT, (supra), where, it was held that if main objects of the assessee is to own, develop and letting out properties, then rental income derived from said activities is assessable under the head 'income from business'. 8. We have given thoughtful consideration to reasons given by the AO in light of various arguments advanced by the assessee, in light of main objects of the assessee, and we ourselves do not subscribe to the reasons given by the AO to assess rental income derived from letting out properties under the head 'income from business or profession' for simple reason that the assessee's main object is warehouse and supply chain solutions, which is different from letting out of properties on rent. Further, the assessee did not render any amenities to the tenant so as to hold rental ....