|The Tax Publishers2020 TaxPub(DT) 5585 (Mum-Trib)
INCOME TAX ACT, 1961
Where assessee has leased out the building to a Development Centre by way of lease agreements and also entered into a special agreement for providing for amenities and facilities, which have been treated as 'Business income' and in MOU and AOA it was clearly stated that it was the business of assessee to buy, sell, construct and lease out the properties, Therefore, lease rentals and maintenance charges should be treated as business income.
Head of income - Income from house property or Business income - Lease rentals and maintenance charges -
Assessee company was engaged in the business of development of properties. AO observed that assessee had income by way of lease and maintenance charges which was treated as 'Business income by assessee'. AO observed that the letting out of property was not business of the assessee-company and it was following Project Completion Method and as a result, assessee capitalized all expenses incurred in connection with developmental activities and thus, called upon the assessee to show cause as to why the lease rentals and maintenance charges should not be brought to tax under the head 'House property'. Held: Assessee has leased out the building to a Development Centre by way of lease agreements and also entered into a special agreement for providing for amenities and facilities, which have been treated as 'Business income'. From the perusal of object clause in Memorandum of Association and Articles of Association it is evident that it has been clearly stated that it is the business of assessee to buy, sell, construct and lease-out the properties. Therefore, there was not infirmity in order of CIT(A) dismissing appeal of revenue and lease rentals and maintenance charges should be treated as business income.
Followed:Asstt. CIT v. Faery Estates (P) Ltd. [ITA No.4261/Mum/16, 4262/Mum/16, dt. 19-8-2019]. Relied:East India Housing and Land Development Trust Ltd. v. CIT (1961) 42 ITR 49 (SC) : 1961 TaxPub(DT) 132 (SC), Velankani Information Systems Ltd. v. Secretary, Ministry of Home Affairs (2014) 265 CTR 250 (Karn) : (2014) 218 Taxman 88 (Karn) : (2014) 94 DTR 357 (Karn-HC) : 2014 TaxPub(DT) 4270 (Karn-HC), CIT v. Ansal Housing Finance and Leasing Co. Ltd. & Ors. (2013) 29 Taxmann.com 303 (Del-HC) : 2013 TaxPub(DT) 681 (Del-HC) and CIT v. Shambhu Investment (P) Ltd. (2001) 249 ITR 7 (Cal-HC) : 2001 TaxPub(DT) 1251 (Cal-HC).
FAVOUR : In assessee's favour.
A.Y. : 2013-14
IN THE ITAT, MUMBAI BENCH
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