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Asstt. Commisioner of Income Tax9(2)(2), Room No.259, 2nd floor, Aayakar Bhavna, M K Road, Mubmai-400020 Vs. M/s E-City Projects Construction P Ltd. 844/4, Fun Repullic ,Shah Industrial Estate, Off, New Link Road, Andheri (E), Mumbai- 400053
August, 10th 2015
                  ,   "" 
   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
                                         4                  I T A N o . 5 6 9 6 / Mu m / 2 0 1 3



      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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