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IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI
BEFORE S/SHRI A.D.JAIN (JM) AND RAJENDRA (AM)
.. , ,
./I.T.A. No.5696/Mum/2013
( / Assessment Year :2010-11)
Asstt. Commisioner of Income / M/s E-City Projects Construction
Tax9(2)(2), Vs. P Ltd.
Room No.259, 2nd floor, 844/4, Fun Repullic ,Shah
Aayakar Bhavna, M K Road, Industrial Estate, Off, New Link
Mubmai-400020 Road, Andheri (E), Mumbai-
400053
( /Appellant) .. ( / Respondent)
. / . /PAN/GIR No. :AABCE5486E
/ Appellant by Shri S S Rana
/Rspondent by Shri Rajesh Chamarial
/ Date of Hearing : 29. 7.2015
/Date of Pronouncement : 7.8.2015
/ O R D E R
PER A D JAIN (JM)
This is department's appeal for assessment year 20010-11, taking the
following grounds:
"1. On the facts and circumstances of the case, the CIT(A) erred in not
upholding the action taken by the AO in treating the rental income from
"Operating Family Entertainment Centre cum Mall" (Rent) and
"maintenance charges" amounting RS.13,73,54,169/- and
Rs.4,41,27,855/- respectively, as "income from house property'.
2. "On the facts and circumstances of the case, the CIT(A) erred in
directing the AO treat the income from commercial complex as "income
2 I T A N o . 5 6 9 6 / Mu m / 2 0 1 3
from business" without considering that the assessee has received rent
for allowing use of the property and not for carrying out any systematic
activity, which is precondition of business.
3. "On the facts and circumstances of the case, the CIT(A) erred in
completely ignoring "the decision of Hon'ble Supreme Court in the case
of Shambhu Investment (P) Ltd. V/s CIT(2003) 184 CTR (SC) 91: (2003)
263 ITR 143(SC), wherein it is held income derived by an assessee by
letting out furnished premises on monthly basis to various parties along
with various services, is assessable as income property and not business
income."
4. "On the facts and circumstances of the case, the CIT(A) erred in
holding the in from commercial complex as "income from business"
without considering that the assessee was providing various service and
amenities, viz. security system, cleaning and maintenance lighting,
repair and maintenance of lifts, provision and management of parking
space, fire fighting equipment and insurance of the property,
represent running and maintenance expenses for the property and
constitute regular amenities and facilities for occupants including
tenants."
2. The AO observed that the assessee company should have shown the
income of Rs.13,73,54,169/- and maintenance charges of Rs.4,41,27,855/-,
inter alia, the operating income of Rs.13,73,54,169/- had been sub-divided into
income from commercial complex of Rs.12,39,97,853/-, parking income of
Rs.26,18,880/- and advertisement and sponsorship income of Rs.1,07,37,436/-.
These receipts had been taken by the assessee as its income from business. The
AO, however, held that the income earned by the assessee was from letting out
of the property and ought to have taxed as income from house property.
Accordingly, the rental receipt was brought to tax as the assessee's income from
house property.
3. By virtue of the impugned order, following the First Appellate Authority's
orders in the assessee's own case for the assessment years 2007-08 to 2009-10,
the ld. CIT(A) directed the AO to treat the income from the commercial complex
3 I T A N o . 5 6 9 6 / Mu m / 2 0 1 3
as business income of the assessee and interest income as income from other
sources.
4. At the outset, the ld.counsel for the assessee has contended that in the
assessee's own case for the assessment year 2009-10, the Tribunal, vide its
order dated 30.7.2014, has confirmed the order of ld. CIT(A) for that year, while
dismissing the department's appeal and has upheld the action of the ld.CIT(A) in
treating the operational income received by the assessee companies from
running of Malls in the form of rent and service charges, as their business
income. A copy of the said Tribunal order has been placed on record.
5. The department has not been able to refute the above position. The ld.
CIT(A) has decided the matter in favour of the assessee, for the year under
consideration, observing as follows :
"2.3 The AO's order, the contentions of the appellant as well as
materials on record have been considered. The same issue had come
up for consideration in appeal for AY 2008-09, wherein the CIT(A)-16,
Mumbai had followed his own order on similar issue in AY 2007-08,
wherein vide his order dated 16.9.2010 in appeal No. CIT(A)-16/IT-
369/2009-10 dated 16.09.2010, he had held that income from the
commercial complex is to be treated as income from business and the
interest income is to be treated as income from other sources. In AY
2009-10, in appeal order dated 9.11.2012 in appeal No. CIT (A)-16/ACIT-
(OSD)-8(1)/IT.171/2011-12, it was held that " ..... income shown in
Schedule 'O' as 'Other Income' includes interest received, apart from
Miscellaneous income, and the latter includes primarily helmet income, media
barrier deal, promotion cash income, atrium corporate deal, lost and found,
leasing DC set income etc., and the latter have been directed to be treated as
business income in the earlier years' appellate orders. Since the facts and
circumstances remain the same in the present year under appeal, viz., AY 2009-
10, following the order of my predecessor CIT(A)s in A Ys.2007-08 and 2008-09,
the Assessing Officer is directed to treat the income from the commercial complex
as income from business and interest income as income from other sources.
Accordingly the grounds 1 to 3 are partlyallowed." Since the facts are similar
in the present appeal for AY 2010-11, following the appeal orders in
earlier years, in AY 2010-11, the AO is directed to treat the income from
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the commercial complex as income from business and interest income as
income from other sources. Grounds No.1 to 3, thus, are partly allowed.
In view of the finding given in respect of Grounds 1 to 3 that the income
from commercial complex is to be treated as income from business,
ground No. 4 is rendered infructuous and is dismissed."
7. For the assessment year 2009-10, vide order dated 30.7.2014, in ITA
No.1230/Mum/2013, the Tribunal has upheld the action of ld.CIT(A) by
observing , interalia, as follows :
"14. As held by the Hon'ble Calcutta High Court in the case of Shambhu
Investment Pvt. Ltd. (2001) 249 ITR 47 (Cal.), which has been
subsequently affirmed by the Hon'ble Supreme Court, what has to be seen
in this context is what is the primary object of the assessee while
exploiting the property. If it is found applying such test that the main
intention is to let out the property or any portion thereof, the same must be
considered as income from house property. In case it is found that the
very intention is to exploit the property by way of complex commercial
activity, in that event it must be held as business income. In our opinion,
the facts of the present case as borne out from the record clearly shows
that the cases of the assessees fall under the latter category as the
intention of the assessees clearly was to exploit the commercial property
by way of complex commercial activities and it was not a case of letting
out the property owned by the assessee companies simpliciter. The rental
income was not received by the assessee companies merely because of
the ownership of the property but the same was received because of the
complex commercial activity carried on by them of operating and running
Malls which brought that rental income. The rental income and service
charges thus were received by the assessee company as business
income during the course of its business carried on by them of operating
and running the Malls as a commercial activity and as rightly held by the
ld. CIT(A), the said income primarily arising from the exploitation of
commercial assets by way of complex commercial activity constituted the
business income of the assessee company.
15. It is observed that the decision of the co-ordinate bench of this
Tribunal in the case of M/s Khandelwal Estate P. Ltd. (supra) cited by the
ld. Counsel for the assessee also supports the case of the assessees. In
the said case, the income received by the assesse from the operation of
shopping malls in the form of rent and service charges was held to be
business income of the ITA 8390/M/10, ITA 1435, ITA 1436/M/12 & ITA
1430 15 assessee by the Tribunal holding that giving space with services
and facilities of varied and wide nature would definitely constitute a
business and the relationship between the parties in such case is
distinguished from that merely of a landlord and tenant relationship. We
5 I T A N o . 5 6 9 6 / Mu m / 2 0 1 3
therefore find no infirmity in the impugned orders of the ld. CIT(A) treating
the operational income received by the assessee companies from running
of Malls in the form of rent and service charges as their business income
and upholding the same on this issue, we dismiss these appeals filed by
the Revenue."
7. In view of the above, respectfully following the Tribunal order
(supra) in assessee's own case, the grievance of the department is found
to be without merit and is rejected as such.
8. In the result, the appeal of the department is dismissed.
Pronounced accordingly on 7 th Aug, 2015.
7th Aug, 2015
Sd sd
( / RAJENDRA) (.. , / A.D. JAIN)
/ ACCOUNTANT MEMBER / JUDICIAL MEMBER
Mumbai: 7th Aug,2015.
. ../ SRL , Sr. PS
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. () / The CIT(A)- concerned
4. / CIT concerned
5. , , /
DR, ITAT, Mumbai concerned
6. / Guard file.
/ BY ORDER,
True copy
(Asstt. Registrar)
, /ITAT, Mumbai
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