9911796707
TMI Blog2008 (3) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... ich were incurred for deriving income of Rs. 7,13,600 as service charges; 3. not giving a definite and clear finding about exclusion of income of Rs. 21,849 as the same stands included in service charges receipt of Rs. 7,02,000 resulting in double addition. 2. We have gone through the orders of lower authorities in view of the arguments advanced by the parties, material on record and the decisions relied upon by them. Ground No. 1 3. The relevant facts as per the orders of lower authorities are that in a business complex owned by the assessee, premises were let out on rent to six concerns belonging to the family of the assessee wherein either the assessee himself was Director/Partner or his close relatives. Six different agreements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and (vi) Harish Clays. The assessee had derived service charges on the basis of 6 separate agreements entered into with the above concerns. The services so provided were in the nature of continuous commercial activity and, therefore, income derived for such services was declared as business income in the return, whereas rate derived from the premises had been separately declared as income from property. The Assessing Officer has, however, treated such charges of Rs. 7,02,000 as income from house property. The Assessing Officer in this regard had placed reliance on rejection of similar claim in assessment year 1996-97 by the ld. CIT(A) and also on the plea that assessee has not gone in second appeal on this issue. The ld. A.R. submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for any revision, however, it is provided in the agreement that more services can be provided by landlord on extra payment. It is, therefore, not correct to say that the entire payment was in separable from the properties. In fact, the agreement separately provides rent for use of property and service charges for amenities. In the present case, the prime and main intention of the assessee was to exploit the property by way of commercial business activity. The services provided by assessee had costed him Rs. 6,80,151 which have been debited to P L A/c. It was for this reason that service charges were separately recovered. When property is let out simply for sake of earning rent then such services are not provided by the landlord and no extra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vable property cannot be the sole factor for assessment of such income as income from property. What has to be seen is what was the primary object of the assessee while exploiting the property. If on applying such test it is found that main intention is for letting out the property or any portion thereof, the same must be considered as rental income or income from property. In case it is found that the main intention is to exploit the immovable property by way of complex commercial activities in that event it must be held as business income. Similar view has been expressed by Calcutta Bench of the Tribunal in the case of PFH Mall Retail Management Ltd. placing reliance on several decisions of Hon'ble Courts. We agree with the submission o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from other sources'. 7. If the above test is applied to the facts and circumstances of the present case, we find that there is no room for doubting that the main intention of the assessee has been to exploit its immovable property, i.e., in the form of a business centre for various companies and concerns and in fact the income from service charges for the last several years except for assessment year 1996-97 (in which second appeal could not be filed due to very little tax effect) was assessed as income from the property. The primary intention of the assessee was to exploit the property as a commercial centre. The photographs placed in paper book at page Nos. 14 and 15 speak the truth. Lot of services were provided to the occupants by in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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