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TMI Blog2008 (8) TMI 802X X X X Extracts X X X X X X X X Extracts X X X X ..... elephones. The Assessing Officer further observed that the charges for services for electricity etc. were reimbursed separately by those parties to the assessee. On being show-caused, the assessee stated that it was carrying on sustained activities of warehousing to various parties according to their requirements. It was still further submitted that the assessee was employing workers to supervise the bringing of goods for warehouse purpose as well as for taking them out. Apart from that, assessee also claimed that it had provided services of the nature of electricity, watch and ward security, clearing and forwarding and allied services in an organized manner. For some services, the assessee stated that the expenses were reimbursed by the customers, but other expenses fell on it. It was still further stated that it had paid a sum of Rs. 2,46,050 to M/s. Shivam Protection Force for providing security to the goods in the warehouse. Not convinced, the Assessing Officer opined that the assessee s income from the said property was chargeable to tax under the head Income from house property . He therefore, assessed the income accordingly and denied the deductions claimed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down in this case that : Merely because income is attached to immovable property, it cannot be the sole factor for assessment of such income as income from house property. The primary object of the assessee while exploiting the property has to be seen. If it is found, applying such decisions that the main intention is for letting out of property or any portion thereof, the same must be considered as rental income or income from house property. In case it is found that the main intention is to exploit the immovable property by way of commercial activities, in that event it must be held as business income. It is therefore, clearly borne out that the main test to determine the head under which the income from immovable property be taxed is the purpose for which the property is used. If it is exploited commercially, then the resulting income would be taxed under the head Business income . 6. We have come across an order passed by the Pune Bench of the Tribunal in Nutan Warehousing Co. (P.) Ltd. v. ITO [2007] 13 SOT 19 (Pune) (URO), in which the godown income has been held to be taxable under the head Income from house property . On the contrary the ld. AR has relied on the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment, but for the activities of the complex commercial nature, then the resultant income would not partake of the character of Income from house property . Thus the decisive test is the true nature of activity carried out by the assessee which produces the income from immovable property and not the way in which it is measured. 7. Adverting to the facts of the instant case we note that the assessee had a warehouse which was let out to 17 persons during the year in question. Sixty per cent of the first floor was let out to M/s. Glaxo India Ltd., with which agreement dated 30-9-1999 was entered into. This agreement is considered as a representative of such other agreements entered into by the assessee with the other customers because the Assessing Officer as well as the CIT(A) have taken cognizance of this agreement. A copy of the said agreement is placed on record, the relevant clauses of which are as under :- " Effective 1-10-1999, from the total space admeasuring approximately 9,500 sq. ft. on the ground floor of your premises situated at Plot No. D-22/1, TTC Area, MIDC-Turbhe, Navi Mumbai, 60 per cent space will be used by Glaxo India Ltd. for storage of their stocks of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be done by the assessee in addition to ensuring that the pesticides were properly sprayed in godown. From these responsibilities fastened on the assessee, it is discernible that the assessee was not mere letting out its premises for warehousing but was doing a complex commercial activity. All the duties cast upon the assessee by its customers do really go to show that the assessee was responsible for ensuring the incoming of goods, its proper storage and their outgoing apart from providing adequate security and host of other activities noted above. It is still further noted that unlike the case of Shambu Investment (P.) Ltd. (supra), no security deposit was paid by Glaxo India Ltd. to the assessee for the use of its warehouse. Thus, the major contention which weighed with the Hon ble Supreme Court, being the receipt of security deposit for a sum sufficient to recover the cost of the property, in holding that the income from letting of the immovable property was taxable under the head "Income from house property", is lacking in our case since no security was received by the assessee as is clearly emanating from the clauses of the agreement noted above. We further note that excep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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