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TMI Blog2014 (1) TMI 1413X X X X Extracts X X X X X X X X Extracts X X X X ..... ia Commercial Corporation Ltd and since the property was let out for a long period, he considered the receipts as income from the house property, thereby re-working out the computation of income. It was the submission of the assessee that they have acquired the property for its own office, but they were occupying two floors in Nirmal Building at Nariman Point which was decreed to be vacated by March, 2010. The assessee purchased the property but due to employee resistance, they could not shift to the above said property. Hence they have given it on lease temporarily by exploiting the commercial establishment. Therefore, the income is to be considered as income from business only. On aggrieved by the order of the Assessing Officer, the matter was carried to the CIT (A), who after considering the statements of the assessee and relying on the case law, the decision of Hon'ble Supreme Court in the case of Shambhu Investments (P) Ltd, 263 ITR 143 and further the case of CIT vs. Chennai Properties 266 ITR 685 Madras, held that income is to be assessed as income from house property. His findings in Paras 5.8 to 5.10 are as under: "5.8 From the above, it is amply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derived by the appellant from letting of its property at Andheri is in the nature of income from house property because the appellant has not derived his income through any commercial complex operations. The income derived is practically from the bare letting of the premises. Hence I uphold the action of the A.O." Similar order was passed for the Assessment Year 2006-07 following the above. 3. Contesting the above findings of the CIT (A), it was the submission of the assessee that it is having an office at Nariman Point in a lease premises since number of years. In the year 2000, a dispute arose between the assessee and landlord with respect to the said property where by eviction notice was issued and suit was filed in Bombay High Court. Therefore, in anticipation that the suit will go against the assessee, in the year 2001 the assessee purchased new premises in Andheri. As per the decree of the Court dated 3rd December, 2002, assessee is to vacate the premises by 31st March, 2010. After the decree was passed, the parties arrived at certain consent terms. As per the consent terms, the assessee had agreed to vacate the premises by 31st March, 2010 subject to payment of higher rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome (referred to by whatever nomenclature, lease amount, rents, license fee) received by an assessee from leasing or letting out of assets would fall under the head "Profits and Gains of Business or Profession". (b) It is mixed question of law and fact and has to be determined from the point of view of a businessman in that business on the facts and in the circumstances of each case including true interpretation of the agreement under which the assets are let out; (c) Where all the assets of the business are let out, the period for which the assets are let out is a relevant factor to find out whether the intention of the as is to go out of business altogether or to come back and restart the same. (d) If only or a few of the business assets are let out temporarily while the assessee is carrying out his other business activities then it is a case of exploiting the business assets otherwise than employing them for his own use for making profit for that business; but if the business never started or has started but cea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate income with a view to keep them in good usable condition so that they can be exploited for the regular bidi manufacturing business of the assessee was assessable as business income and not as income from house property. 4.9 In the case of Sewari Chemicals (P) Ltd (1 SOT 549 Mum), the assessee let out its factory premises along with plant & machinery for a short period of three years on leave and license basis during suspension of its manufacturing activity on account of bad market condition. The ITAT held that income from such letting constituted business income regardless of the fact that the plant & machinery was subsequently sold by the assessee. 4.10 In the case of Skipper Properties (P) Ltd (113 ITD 56 (Del), the assessee company had on account of lull in business, temporarily let out its theatre premises on hire. The ITAT held that the income from temporary letting was assessable as business income since there was no intention of the assessee to remain out of business. The ITAT came to the conclusion after duly considering the Supreme Court decision in the case of Shambhu Investments (263 ITR 143) relied upon by the Assessing Officer in this case. 4.11 Also in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.07.02 also indicate that property was leased prior to the date of decree ( 03-12- 02), so the reasons stated by assessee for non-occupation for own use is not employees resistance as submitted. Not only that, agreement do indicate that the assessee was not involved in day to day management or maintenance of the premises and except giving the property on leave and license basis, there are no complex commercial activities involved in this agreement. The agreement was also registered by virtue of Maharashtra Rent Control Act and there are no other plant and machinery so as to consider that the assessee is exploiting it on commercial basis. Therefore, we are of the opinion that the CIT (A) has come to correct conclusion that the rental income has to be treated as income from house property. 7. Before us the learned Counsel also placed reliance on various case law stated above. In all the cases either there was a temporary lull in the business or existing business was leased out for short period with an intention to resume the business activities. In those circumstances, the incomes were considered as income from business. However, in the present case after acquiring the property, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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