TaxTMI 
TaxTMI 
TaxTMI 
2011 (6) TMI 1014
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....from licencing of its business centre as 'business income' as against which the Assessing Officer has held it to be 'income from house property'. Undisputedly, the assessee has provided services like provision of lift, receptionist besides other secretarial services, data processing, conference room, etc and has also provided toilets and pantries etl. The ld. CIT(A) has confirmed the order of the Assessing Officer. Now the assessee is further aggrieved. For ready reference, we are extracting the grounds taken in assessment year 2001-02 which would give a clear picture of facts and issues involved in other years: "1. The common order of the learned CIT (Appeals)-III dated 22.12.2009 in IT A No.322, 323,324/07-08 & 941/06-07 for the Assessment Years from 2001-02 to 2004-05 and the assessment order of the Assessing Officer dated 30.11.2006 are arbitrary, incorrect and baseless both on law as well as on facts. 2. Relevant dates in the case 2002-03, 2003-04 and 2004-05 2001-02 2002-03 2003-04 2004-05 i. Return filed on 14.9.01 27.6.02 14.7.03 25.6.04 ii. Notice u/s 148 28.3.06 19.3.07 19.3.07 19.3.07 iii. Assessee's letter seeking reasons 25.4.06 26.3.07 26.3.0....
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.... scrutinizing the return or verification of the same. Where the Assessing Officer has issued notice under Section 147 accompanied by a letter indicating that he wanted to verify the claim of carriage expenses and the income in respect of each truck, besides check the overdraft account apart fro III such other details, there was absolutely no inference of any escapement of income, so as to justify notice under Section 147. The notice has to be issued only under Section 143(2) in such cases. Section 147 is not an extension of the right under section 143 (2), as otherwise there would have been no purpose in laying down the time limit of one year. The High Court in an elaborate judgement has inter alia, relied upon Board's Circular No.549, dated 31st October, 1989 ([1990] 182 ITR (St.) 1), explaining the new procedure, which had come into vogue from 01.04.1989, wherein the Board has in unmistakable terms advised its officers that, if the assessee has not been served with a notice under Section 143(2) within the stipulated time, he can take it that the return filed by him has become final and that no scrutiny proceedings are to be started in respect of that return. The Supreme Court....
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....is decision for all these years. But the department did not utilize the opportunity. The information about Supreme Court judgement was very much available during the period available for issue of Notice u/s. 143 (2). Hence, there is no new information at the time of issue of Notice u/s. 148. Therefore, it is a case of invalid Notice u/s 148 as there is no new information. Just, because, the case has not been chosen for scrutiny, it is not open to revenue to assume jurisdiction, as such assumption would tantamount to change of opinion. Consequently, Notice u/s 148 dated 19.03.07 for Asst. Year 2001-02, 2002-03 to 2004-05, assuming jurisdiction, based on Apex Court decision rendered on 21st January, 2003, when notice for issue of Notice u/s 143 (2) had not expired, is a case of mere change of opinion and hence, lack jurisdiction. Hence, it is obvious that the reason given by Learned CIT (Appeals) - III for not considering the above decision quoted by the appellant on the ground that it is a case where assessment u/s 143 (3) was completed is factually incorrect. Hence, learned CIT (Appeals) - III ought to have considered the rational behind the above decision and followed it. 3.2 Th....
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....perty and let out the rest to be used as table space to occupants, with furniture and fixtures and lights and air-conditioners. The assessee provided services like watch and ward staff, electricity and water and other common amenities. The monthly rent payable was inclusive of all charges. The assessee had also recovered by way of security from the occupants a sum of ₹ 4,25,000/-. The High Court held that the income from the property was assessable in the hands of assessee as income from House property (see [2001] 249 ITR 47 (Cal)). The assessee preferred appeals to the Supreme Court. The Supreme Court dismissed the appeals holding that there was no reason to interfere with the conclusion arrived at by the High Court". The Calcutta High Court has held as follows :- The Head note in 249 ITR 47 as follows: "Merely because income is attached to any immovable property, that cannot be the sole factor for assessment of such income as income from property. If the main intention of the assessee is to let out the property or any portion thereof the income must be considered as rental income or income from property whereas if the primary object is to exploit the immovable....
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....rs i.e. 2001-02 to 2004-05 relying upon this case, which is not applicable to the assessee, are therefore, perse illegal, arbitrary, baseless, mechanical and without any logic. The learned CIT (Appeals) did not get over the contention of the appellant that Income from Lease / Licensing of business centre can only be Business Income vide Asst. CIT vs. Saptarishi Services Ltd (2004)265 ITR 379 (Guj)special leave against this decision has also been refused by the Supreme Court (2003) 264 ITR ST 36. In the case of Everest Hotels Ltd V CIT (1978) 114 ITR 779 (Cal) applied in CIT v Roy Chowdhury (K.G.) (1992) 195 ITR 801 (Cal), the lessor intended that during the period of the lease, the building along with the fittings, furniture, goodwill, equipments, etc., which were leased out should be used for the purposes of a hotel business. There was evidence to the effect that on the expiry of the lease, the lessor had resumed possession of the buildings and fittings, etc, and was carrying the hotel business as before. It was held that income derived from the letting out of the building along with the fittings, furniture, etc. constituted business income and was not assessable under section 5....
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....s) ought to have considered that Cases relied upon by the department are distinguished in grounds of appeal filed by the appellant. 10. The CIT (Appeals) - III ought to have considered the contention of the appellant that treating Business Centre Charges as income from House property is not beneficial to revenue, in the long run as Depreciation is only on WDV, whereas statutory deduction of 30% is on Business Centre charges received and this is a permanent one and decreasing like depreciation. 11. The CIT (Appeals) ought to have considered tile grounds of appeal taken by tile appellant that the assessee has been in the business of licensing out business centre consisting of property alongwith furnitures and fixtures including air conditioners, together with maintenance on license and receives composite business centre charges. As the above licensing out of business centre is in the course of the business of the assessee, the income therefrom is rightfully to be charged under business. In this connection, it is emphasized that main objects of the assessee company is to carryon license, sell, develop, manage and deal in properties and the main objects as stated in the Memorandum ....
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....Jurisdictional High Court which was rendered in the case of A.R Complex vs ITO, 167 Taxman 46, in which letting out of commercial complex was held to be 'income from house property'. After hearing both sides, we have found for a fact that the assessee has given their office space in 1H and 4L, century Plaza, 560-562, Anna Salai, Teynampet, Chennai -18, situated in Mount Road, which is a commercial establishment, alongwith the above amenities. The Hon'ble Jurisdictional High Court in the case of CIT vs V.S.T. Motors Pvt. Ltd. (supra) has held as under: Held, (i) that inasmuch as the building in question on Mount Road was a commercial asset, the assessee could exploit it either by itself or by letting it to others. Therefore, in a matter like this the fundamental position that had to be ascertained was whether a particular building or premises was a commercial asset or a house property. If the premises were a commercial asset, then the income derived therefrom would amount to business income, otherwise it would be income derived from property assessable under the head "Property income". On the facts, the Tribunal had found in the present case that the property in ques....