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TMI Blog2014 (11) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... ting out of office space, but has been earned as a result of undertaking composite activities, comprising of leasing of office space and providing services of cafeteria/pantry, conference rooms and equipments such as LCD projectors, PA system etc., use of computer terminals, electrical fittings, UPS, network services and net-switch charges, etc. - The providing of such services along with the office space cannot be regarded as exploitation of the immovable property for earning rentals but it is a case where the commercial property has been exploited by undertaking complex commercial activities and therefore such income has to be held assessable as 'business income' - CIT(A) made no mistake in holding that the impugned 'license fee' received from the users of the office infrastructure facilities in 'IndiaCo iCenter Plaza' was assessable as 'business income' and not under the head 'income from house property' - no material has been lead by the Revenue to show any change of facts during the year – the order of the CIT(A) is upheld – Decided against revenue. - IT APPEAL NOS. 314 & 315 (PN.) OF 2013 - - - Dated:- 24-6-2014 - SHAILENDRA KUMAR YADAV, AND G.S. PANNU, JJ. Mrs. Sun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned property reflected that it was an arrangement for leasing out of the property on a monthly rent. According to the Assessing Officer, it was a normal rental arrangement and merely because assessee was also providing certain other services like, security, electrical installations, gensets, furniture, etc., the arrangement could not be seen independent of the main activity of renting out of the property. Therefore, according to the Assessing Officer, such income was liable to be assessed under the head 'income from house property' and not as 'business income'. In this manner, for the assessment year 2007-08, the gross license fee received by the assessee from the users of the property i.e. ₹ 72,80,371/- was assessed under the head 'income from house property' after allowing deduction for municipal taxes interest paid etc., which resulted in net income of ₹ 31,97,008/- under the head 'income from house property'. 4. Assessee carried the matter in appeal before the CIT(A) assailing the order of the Assessing Officer both in law and on facts. The CIT(A) has since accepted the plea and held that the income earned by the assessee by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oning plant, use of auditorium alongwith equipment and use of canteen were all of complex nature and supply of these services, could, in no sense, be regarded as a mere better exploitation of property. It was held It is in the light of the principles laid down in the aforesaid decision that we have to resolve the controversy raised before us. We have already stated the facts earlier. It is important to recapitulate that the building in question was constructed as early as in 1920 and was let out at that time. The air-conditioning plant was put up and the auditorium constructed several years later, in 1949. The maintenance of the air-conditioning plant requires the service of a sizeable staff, some of whom would have to be specialised in the work of maintaining an air-conditioning plant. Similarly, along with the auditorium, which was constructed, additional services have been provided like the use of a film projector, tape-recorder, microphone and so on. A canteen is also being run. Running of all these activities would necessarily involve the maintenance of a staff and close supervision. The object of these activities is to earn income. These services or facilities, namely, of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Hotels (2006) 284 ITR 229 (Bom) (iii) Gesco lorporation Ltd. (2009) 31 SOT 32 (Mum) (iv) Harvinder Pal Mehta (HUF) v. DCIT [2009] 122 TTJ 163 (Mum) 13. In the Magarpatta Township case (cited supra) it was held that extensive services amenities were provided alongwith huge investment of land, building plant machinery which would certainly amount to an organized structure for carrying out business activities. Similarly, in the present case, as discussed in the preceding paragraphs, the appellant created a commercial infrastructure with complex varied services such as conferencing, internet services, pantry, security, etc. The occupation of space was thus unseparable from the provision of these services amenities. It was therefore not imply a tenancy agreement as argued by the Assessing Officer but letting out of commercial space along with several complex services, which cannot be stated to be routine services. The income from letting out is thus, directed to be assessed as business income in the hands of the appellant. Ground No.1 to 8 for A.Y. 2007-08 and Ground No.1 to 10 for A.Y. 2008-09 are thus allowed.' 5. Against the aforesaid decision of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a business venture. Therefore, as per the assessee, the license fee earned from carrying out of such activities is to be taxed as 'business income'. 8. It is a trite law that merely because an income arises from exploitation of immovable property, it would not ipso facto be assessable under the head 'income from house property'. What is required to be appreciated is the peculiar facts and circumstances of each case to decide whether a particular rental income is assessable under the head 'house property' or not. In the case of CIT vs. Shambhu Investment (P.) Ltd. (2001) 249 ITR 47 (Cal), the Hon'ble High Court was considering a situation where assessee had let out a portion of premises and the tenancy arrangement also included an arrangement to allow the occupants use of table space, together with furniture and fixtures. The assessee had also received security deposits covering the entire cost of the property. Under these circumstances, the Hon'ble High Court held that income derived by the assessee from the premises was assessable as income from 'house property' and not as 'business income', as contended by the assessee. In comin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and 24 hour generator back-up, use of conference rooms, Rest rooms, security services, cafeteria/pantry etc., which have been detailed by the CIT(A) in para 8 of her impugned order. On the aforesaid basis, the CIT(A) has arrived at a factual finding that the income is not earned simply by renting out an office space, but it has been earned by renting out space alongwith providing facilities/complex services as stated above. The CIT(A) has also appreciated that though the leave and license agreement mentioned a consolidated figure by way of 'license fee', so however, the invoices raised by the assessee show separate billings for the use of cabins, computer terminals, electrical fittings, UPS, network services, net-switch charges, etc.. In the background of the aforesaid factual matrix, it is quite clear that it is not a case where the license fee has been earned from merely letting out of office space, but has been earned as a result of undertaking composite activities, comprising of leasing of office space and providing services of cafeteria/pantry, conference rooms and equipments such as LCD projectors, PA system etc., use of computer terminals, electrical fittings, UPS, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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