AI Drafter 
TaxTMI 
TaxTMI 
2023 (3) TMI 400
X X X X Extracts X X X X
X X X X Extracts X X X X
....rom house property as assessed by the AO ignoring that the assessee derived income from rent earned from lease to Bharat Hotels Ltd. which has to be assessed as income from house property. 2. The Ld. CIT(A) is in error in placing reliance upon cases that are distinguishable on facts in as much as the assessee has only leased property to sister concern and the transaction is not in the business of leasing. 3. The Ld. CIT (A) has erred in allowing the appeal of the assessee by admitting additional grounds during the appellant proceedings without according an opportunity to the AO of being heard. The appellant craves to amend or add any one or more grounds of appeal." 3. Brief fact of the case is that the assessee is collecting the annual lease rent from the Bharat Hotels Ltd. to its property in Gulab Bhawan Palace, Kashmir. Accordingly, yearly lease rent was collected amount to Rs. 50 lacs to assessee. The ld. AO also found that M/s Bharat Hotels Ltd. (in brevity the BHL) has invested Rs.57,79,46,491/- had commencement of lease agreement with the flagship company of the assessee group. The ld. AO also found that the license fee i.e. BHL had invested with....
X X X X Extracts X X X X
X X X X Extracts X X X X
....- declared by the assessee concern. Accordingly, the total addition on this account is Rs. 5,27,94,694/-." 5. The ld. counsel relied on the order of the Coordinate Bench of ITAT, Amritsar Bench in ITAT No. 323/Asr/2015 date of order 26.08.2016 for A.Y. 2006-07. As per the ld. counsel the issue was already agitated before the bench and covered in case of assessee. The relevant para 6 to 10 is extracted as below: "6. Apropos the merits of the additional ground, it has been contended as follows: The assessee is a Public Limited Company. It was incorporated on 22.01.1964 with the main object of, inter-alia, acquiring and leasing properties in the State of Jammu & Kashmir and for further letting out the same. In pursuance of this main object, the assessee took on lease land measuring 222 kanals and 19 marlas under and adjoining Gulab Bhawan Palace for a period of 40 years, vide lease deed, dated 21.03.1973 at an annual rent of Rs.22,897/- from Shri Vikramaditya Singh. This lease was renewed for a period of 99 years vide lease deed, dated 22.11.1997. The said Gulab Bhawan Palace, i.e., building/superstructure thereof was renovated by the assessee and it was let out t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....acquire properties and to earn income by letting out the same, such income is taxable as business income and not as income from house property. The assessee covers that this ratio handed down by the Hon'ble Supreme Court, is directly and squarely applicable to the facts of the present case, since the assessee too was incorporated with the main object of, inter-alia, acquiring and leasing out the properties in the State of J & K, which main object was the object which was earned out by the assessee; and that therefore, the rental income earned by the assessee from letting out the property in question, is the assessee's business income, which was also the position taken by the assessee in the original return of income filed by it and it is not income from house property, as wrongly assessed. It has been stated that it is settled law that there is no estopples in law and wrong position taken can legally always be resiled from. 7. On the other hand, relying on the impugned order, the ld. DR has contended that 'Chennai Properties And Investments Limited' (supra), is not at all applicable to the facts of the present case and, therefore, the same has wrongly been sought to be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to be treated as income from business, or whether it was to be treated as rental income from house property. The Hon'ble Supreme Court observed that the main object of the assessee company was to acquire and hold properties and to let them out as well as make an advances upon the security of lands and building or other property, or any interest therein. It was emphasized that the holding of the properties and earning income by letting them out was the main object of the company. In the return filed, the entire income accrued was from letting out the property. The Hon'ble High Court, while holding the income to be income from house property, had relied on 'East India Housing and Land Development Trust Limited vs. CIT', 42 ITR 49 (SC). While discussing 'East India Housing and Land Development Trust Limited', (supra), the Hon'ble Supreme Court observed that that was a case where the company had been incorporated with the object of buying and developing landed properties and promoting and developing markets; that thus, the main objective of the company was to develop landed properties into markets; that the company had rented out some shops and stalls developed by it and the income der....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the manner of its activities and the nature of its dealings with the property, it is possible to say on which side the operation falls and to what head the income is to be assigned; and that in 'Karanpura Development Co. Ltd.' (supra), applying these principles to the facts of the case it had been concluded that the income had to be treated as income from business and not as income from house property." {Emphasis supplied} 6. We heard the rival submission and relied on the documents available in the record. The observation of the ld. AO in order is very specific that the assessee is collecting the lease rent of Rs.50 lacs and had treated the amount under the head 'Income from House Property". But the room revenue of BHL amount to Rs.37,33,74,717/-. We follow the observation of the ld. AO in page 4 which is reproduced as below: "The perusal of the reply of the assessee as well as the records revels that the licensor i.e. Bharat Hotels Limited had invested Rs. 57,79,46,491/- at the commencement of the lease agreement with the flagship company of the assessee group i.e. to whom the building and land apartment was given on lease for running the luxury hotel under....