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TMI Blog2012 (8) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... iod, it cannot be said that the assessee has exploited the commercial asset temporarily. In view of the leasing out of the property for a long period the income has to be classified as income from house property. Therefore,no infirmity in the order of the lower authority - aginst assessee. - ITA No. 811/HYD/2010 - - - Dated:- 28-6-2012 - SHRI D. KARUNAKARA RAO, AND SHRI SAKTIJIT DAY, JJ. Appellant by : Shri D.S. Damle Respondent by : Shri V. Srinivas ORDER PER SAKTIJIT DEY, J.M.: This appeal filed by the assessee is directed against the order of CIT(A)-V, Hyderabad for the assessment year 2006-07. 2. The assessee has raised 10 grounds of appeal, which are argumentative in nature. The only substantive ground of appeal is ground No. 2, which is as follows:- For that on the facts of the case, the ld. CIT(A) s finding could not be sustained on question which arose for determination as to whether the operational income received from lessee constituted trading receipts assessable under the head business and/or income form house property. 3. Briefly the facts are that the Govt. of West Bengal being desirous of promoting Information Technology (IT) and Inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lease rent received from HDPI is income from business. The submissions of the assessee have been quoted in extenso in Para 4.3 of the CIT(A) s order. The CIT(A) after considering the terms of the lease deed found that the lease agreement is for rent only with no provision for services whatsoever. The observation made by the CIT(A) extracted hereunder for the sake of convenience.: From the above, it is very clear that the entire agreement is for a rental agreement with no provision for any services whatsoever. The appellant has received a 12 months lease rental at Rs. 21.75 per sq.ft. along with provisions for increase in lease rentals over the years. HDPI is to be responsible for payment of all utility charges like water, electricity, etc. HDPI also has unfettered signage rights and even rights to sub-lease and sub-rent the building. The entire agreement does not have even one clause regarding any services to be provided by the appellant. In Schedule Part-A of the aforementioned lease agreement, it has been clearly mentioned that the appellant shall be responsible for the cost of 2000 KVA transformer for the site and nothing else. It is, therefore, clear from above, that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness competence of assessee in the field of developing IT infrastructure, the business opportunity was granted to the assessee for developing the IT infrastructure facility. It was contended that the assessee company was incorporated with the object of undertaking development of IT Parks, Software Technology Parks, IT infrastructure facilities etc. Therefore the object of the assessee has a bearing on determining the head of income since the assessee was incorporated for carrying on business of developing IT infrastructure facilities. The ld. Counsel for the assessee contended that besides construction of the civil structure various facilities, amenities and equipments were also provided to the lessee. The learned counsel for the assessee contended that due to assessee s core business competence in developing IT infrastructure it has agreed to undertake commercial risk of paying liquidated damages to HDPI in case it had failed to complete the project within the stipulated time. This fact establishes that the assessee has undertaken financial risks associated with execution of IT project as a business venture. The risk undertaken was not as owner of a house property but in the capa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entative submitted that leasing out the building for such a long period reveals the intention of the assessee in earn rental income from the building and not to use it as a business venture. The Learned Departmental Representative further contended that excepting giving the building on lease with a DG set, the assessee has provided no other services or facilities. The Learned Departmental Representative, therefore, justified the stand of revenue authorities in treating the lease rent received as income from house property. 7. We have heard rival submissions and perused the documents submitted before us. The only issue that falls for our consideration is whether the lease rentals received by the assessee is to be assessed as income from business as claimed by the assessee or should be treated as income from house property as held by the revenue authorities. There is no straight jacket formula to decide whether a particular income is income from business or from house property. It has to be decided on the basis of facts involved in each case. Facts involved in the present appeal are that the Govt. of West Bengal being desirous of promoting IT Information Technology enabled se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness venture. The object in the Memorandum and Articles of Association of the assessee by itself cannot be an indicia to determine the nature and character of income. In case of Shambhu Investments Pvt. Ltd. Vs. CIT 263 ITR 143 , the Hon ble Supreme Court has upheld the decision of the Calcutta High Court whether the Hon ble Calcutta High Court in its judgment(249 ITR 49)held in the following manner: 13. Let us approach the problem from another angle by applying the lest suggested by the five judges' Bench in the case of Sultan Brothers Pvt. Ltd. . The three questions framed by the apex court are applied in the instant case as follows (page 363) : (A) Was it the intention in making the lease-and it matters not whether there is one lease or two, i.e., separate leases in respect of the furniture and the building-that the two should be enjoyed together ? In the instant case there is no separate agreement for furniture and fixtures or for providing security and other amenities. The only intention, in our view, was to let out the portion of the premises to the respective occupants. Hence, the intention in making such agreement is to allow the occupants to enjoy the table space ..... 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