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TMI Blog2007 (10) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, which was illegal and bad in law. 2. The learned CIT(A) ought to have held that the notice issued under section 148 of the Act is bad in law. The Assessing Officer has not complied with the mandatory requirement for assuming jurisdiction under section 148 of the Act. 3. The learned CIT(A) has erred in law and in facts in upholding the order of the Assessing Officer assessing the income from service charges under the head income from house property as against the claim of the appellant for assessment thereof under the head business income . 4. Without prejudice to the above, the learned CIT(A) ought to have considered and allowed various expenditure incurred by the appellant under section 57 of the Act and part of the service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Organic Chemical Pvt. Ltd. and M/s. Sriman Corporation, respectively. All these concerns are the sister-concerns of the assessee-firm. As per the assessee, it was conducting the business service centre in the premises, wherein the assessee-firm used to provide infrastructure facilities like electronic instruments and gadgets, air-conditioners, Epbx systems, telephone instruments, telefax etc. On going through various agreements filed by the assessee, it was found that the assessee, in fact, had given on rent the entire building to its sister-concerns. The assessee had entered into various agreements with various sister-concerns so as to give colour of providing services to the tenants. The true legal relation arising from a transaction alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 001] 249 ITR 47 , held that merely because the income is attached to any immovable property, that cannot be the sole factor for assessment of such income as income from property. If the main intention of the assessee is to let out the property or any portion thereof, the income must be considered as rental income or income from property, whereas if the primary object is to exploit the immovable property by way of complex commercial activities, in that event it must be held as business income. 4.1 As we have already discussed earlier that the assessee has given office space along with the infrastructure facilities like electronic instruments and gadgets, air-conditioners, Epbx systems, telephone instruments, tele-fax etc. to its sister-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue added services through the medium of a common service provider. The assessee is collecting charges for various services rendered from the occupants of the premises from time-to-time and making payments to the service provider against the bills raised by it. Therefore, providing of the services by the assessee to various clients is a service by the assessee to various clients is a separate business different from letting out of the property as such. The letting portion could be treated as a business. Likewise, it is not possible to accept the contention of the revenue that the entire income should be treated as income from house property for the reason that it would amount to ignoring the relevant and formidable facts relating to providin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no segregation of rent and service charges in the bills raised against all the tenants by the assessee, therefore, 60 per cent of the amount may be reasonably treated on account of rent and the rest 40 per cent on account of services charges. The assessee is eligible for deduction of corporation tax and deduction under section 24 as per law on the rent portion. The assessee is eligible for deduction of various expenses under section 37(1) from the portion of service charges." 5.2 In view of the aforesaid decision, we find that the services rendered by the assessee to its tenants were as a result of its activities carried out continuously in an organised manner with a set of purpose and with a view to earn profit. Considering t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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