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TMI Blog2011 (6) TMI 771X X X X Extracts X X X X X X X X Extracts X X X X ..... on is to exploit the immovable property by way of complex commercial activities, in that event, it must be held as business income. It is thus clear that when a property is exploited by way of complex commercial activities , income so earned by exploiting the property is to be taxed as business income. Viewed in this perspective, and having regard to the fact that it is not a case of significant value addition to premises by providing all incidental and support services to facilitate cine shooting and related activities, the income is earned by complex commercial activities which can only be taxed under the head business income. The fact that it is clearly a commercial adventure, involving marketing and promotions as also appropriate improvisations on a case to cases basis, takes these receipts out of the ambit of income under the head property income. Hon ble Calcutta High Court s judgment in the case of Shambhu Investments Ltd., has duly taken into account Hon ble Supreme Court s judgment in the case of Sultan Brothers and yet reached the conclusion that where complex commercial activities are involved in exploiting a property, income can only be taxed as business income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use as shooting location, but it is not a case of renting out the property simplicitor. It was explained that complex commercial activities are involved in this process inasmuch as existing furniture and fixtures in the premises have to be modified to suit the requirements of the clients, from time to time, and to accommodate various props, that a separate meter is provided for recording consumption of electricity on hourly basis, that security arrangements have to be put in place for ensuring safety of cinema photographic equipment, that temporary structures and frameworks have to be set up so as to enable client to erect the necessary props and sheds, that the facilities of plumbers, electricians, carpenters and painters etc., have to be provided as per client requirements, and that considerable marketing activities have to be undertaken to sell the studio time to prospective clients. The assessee also submitted a list of clients so as to demonstrate that the studio facilities have been used by film industry, TV industry and generally media and broadcasting industry. None of these submissions, however, impressed the Assessing Officer. He was of the view that, on the above facts, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered by the Calcutta High Court in the case of Shambhu Investments Ltd. vs. CIT (supra) . The Assessing Officer thus proceeded to tax receipts under the head income from house property, and restricted the deductions to 30% of charges received as for repairs . Aggrieved, assessee carried the matter in appeal before the Ld. CIT (A) who reversed the action of the Assessing Officer by observing as follows:- I have carefully gone through the rival submissions and I am inclined to agree with the contention of the assessee that the income received from letting out of the bungalow/studio isn t income from house property as held by the AO. In the case of Shabvhu Invt. Pvt. Ltd. vs. CIT, the premises where let out on monthly rent basis for providing table space to the occupants. In that case, assessee has received interest-free deposit to the extent of entire cost of the property, whereas in the case of the assessee it is claimed that no deposit is received by it. In the case of Shambhu Invt. Ltd, their lordships held that property was not commercially exploited as the assessee had already received interest free deposit to the extent of cost of the property. In the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in that event, it must be held as business income. 8. It is thus clear that when a property is exploited by way of complex commercial activities , income so earned by exploiting the property is to be taxed as business income. Viewed in this perspective, and having regard to the fact that it is not a case of simplicitor renting of premises but significant value addition to premises by providing all incidental and support services to facilitate cine shooting and related activities, the income is earned by complex commercial activities which can only be taxed under the head business income. The fact that it is clearly a commercial adventure, involving marketing and promotions as also appropriate improvisations on a case to cases basis, takes these receipts out of the ambit of income under the head property income. Similarly, as regards classification of the nature of payments in the TDS certificates, nothing on turns on the same because the nature of payment, as the law is well settled, need not be the same in the hands of the recipient as in the case of the payer. That apart, it is only elementary that definition of rent in Section 194I is not conclusive of taxability of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness carried on by the lessee, or in fact doing any business at all. On the facts of this, we are unable to agree that the letting out of the building amounted to the doing of business. The income under the lease cannot, therefore, be assessed under section 10 of the IT Act as the income of a business . These observations of Hon ble Supreme Court are in sharp contrast with our findings in the present case in which assessee is actively, and on day to day basis, engaged in organized business activities and is rendering significant services. The observations made by Hon ble Supreme Court were in the context of whether it should be taxable as business income or as income from other sources. The Assessing Officer was thus clearly in error in applying these observations in the context of an unrelated question. Finally, the dispute in Sultan Brother s case (supra), which was finally adjudicated by Hon ble Supreme Court, was not whether an income is to be taxed under the head business income or under the head income from house property, but the issue really was whether the income from giving a hotel, along with furniture and fixtures, was to be taxed under the head income from other s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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