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TMI Blog2012 (11) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure on temporary shed was not allowable as per the order of the Commissioner of Income Tax(Appeals). The assessee is entitled for cost of temporary shed to be treated as cost of the project carried by the assessee. - ITA No. 4518/Mum/2009 & 4131/Mum/2010 - - - Dated:- 8-6-2012 - SHRI R S SYAL, SHRI VIJAY PAL RAO, JJ. Assessee by Sh S S Phatkar Revenue by Sh M Rajan ORDER PER VIJAY PAL RAO, JM These appeals by the revenue and the Cross Objections by the assessee are directed against two separate orders of the Commissioner of Income Tax(Appeals) dated 13.5.2009 and 22.3.2010 for the Assessment Years 2006-07 and 2007-08 respectively. 2 Revenue has raised common grounds in these appeals; therefore, the grounds raised for Assessment Year 2006-07 are reproduced as under: 1 The learned CIT(A) has erred on facts and in law and in the circumstances of the case in directing the AO to treat 40% of income from letting out balance portion excluding the banquet hail Ambrosia of the premises as business income, instead of income from house property as adopted by the Assessing Officer. II. The learned CIT(A) has erred on facts and in law and in the circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be said to have been generated from the activity in the nature of trade or business. Accordingly, the Assessing Officer called upon the assessee to explain as to why the income from business centre should not be taxed as income from house property as against income from business claimed by the assessee. 4.1 In reply, the assessee has submitted that the assessee is engaged in real estate development business and the property had been held by the assessee as stock in trade with the clear intention to attract customer for the assessee s proposed I T Project and not for earning rental income. Accordingly, the assessee submitted that the income has to be taxed as business income and not as income from house property. The assessee has relied upon the decision of the Hon ble Gujarat High Court in the case of Commissioner of Income-tax v. Neha Builders P. Ltd. reported in 296 ITR 661(Guj). 4.2 The Assessing Officer did not agree with the contention of the assessee and held that the income declared by the assessee is income from house property. Accordingly, the Assessing Officer treated the gross receipts of ₹ 58,40,000/- as income from house property and allowed 30% de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rights in the property including use of 35 car parking, 110 two wheelers parking area. The assessee has given a business centre together with facilities and services which includes, cabins/work stations (table spaces_ and conference rooms which are ready to use. The assessee is also engaged staff services at its own costs and expenses for providing upkeep of business faculties and services for certain hours per working day. The assessee has also agreed to provide transport services for the employees/consultants of the client round the clock between destinations (to fro) as may be communicated from time to time by the clients. 5.2 The ld AR has referred Clause 11 of the agreement and submitted that the assessee has also proposed to set out a new commercial premises in Pune and the clients have been offered to convey its acceptance or rejection of the proposal within 6 months from the date of singing of this agreement. 5.3 The ld AR then referred the agreement dated 1.9.2004 and submitted that as per the requirement of M/s I-Flex Solutions, the assessee has constructed centrally airconditioned shed admeasuring 25000 sq.,ft built up area. This additional space was given for b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come with respect to the property admeasuring 7000 sq.ft treated by the Commissioner of Income Tax(Appeals) as business income is concerned, the same is not before us. The Commissioner of Income Tax (Appeals) proceeded on the premise that the assessee has taken on lease the property admeasuring 7000 sq.ft and again let out the same to M/s I-Flex Solutions Ltd as business centre. Therefore, when the assessee is not the owner of the property, the income from the same was held by the CIT(A) as business income; whereas the property admeasuring 25000 sq.ft belonging to the assessee and the assessee has let-out the same to I-Flex Solutions Ltd., has provided various services and facilities. The Commissioner of Income Tax(Appeals) by bifurcating the rental income and lease rental had treated the expenses in the ratio of 60:40. Thus, 60% of lease rental was held to be assessed under the head income from house property and the balance 40% of the lease rental was held as assessed as business income and proportionate expenses shall be allowed against the business income. 7 The issue whether a particular let out is business or earning rental income by the owner of the premises as to be de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not in the nature of inseparable from the premises in question and therefore, when the services are provided independently and separately, then the receipt from the service charges are liable to be assessed as income from other sources or business and not income from house property. 10.1 Even otherwise, for computation of annual letting value as per the provisions of sec. 23 of the I T Act, the actual rent received or receivable by the owner has to be taken into consideration and there is no scope for adding any other amount received by the owner for providing any other service or facilities to the tenant which was not directly connected with the letting of the property. It has not been disputed that the assessee was not providing these services. 10.2 None of the parties have disputed the correctness of the ratio of 60:40 for bifurcating the receipts for rental and service charges by the Commissioner of Income Tax (Appeals). Therefore, we are of the view that the Commissioner of Income Tax (Appeals) has taken a just and proper view on this issue. 11 In view of the above facts and circumstances of the case, we do not find any error or illegality in the order of the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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