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TMI Blog2016 (7) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... lopment and leasing of commercial space. This mentioned in the first sentence of the assessment order passed u/s.143(3) of the Act, which was the subject matter of the revisionary proceedings. So it is not a case where AO had not made enquiries. He was aware that assessee was into real estate development and leasing of commercial space. Assessee was required to file copies of lease deeds, specifically mentioning the types of services to be given by the assessee. AO thereafter assessed thes income of the assessee was to be considered under the head ‘income from business’. We cannot say that it is an illegal or unlawful view which was not possible in the facts and circumstances of the case. - Decided in favour of assessee - I.T.A No.806/Bang/2015 - - - Dated:- 10-6-2016 - SHRI. SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER For The Assessee : Shri. Padamchand Khindha, CA For The Revenue : Dr. Sibichen K. Mathew, CIT ORDER PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : Through this appeal, assessee assails an order, dt.23.03.2015, passed by the Pr. CIT, u/s.263 of the Income-tax Act, 1961 ( the Act in short). Grounds take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the head 'Profits and gains of business'. 02. Facts apropos are that assessee doing the business of real estate and commercial space had filed return of income on 14.10.2010, declaring business loss of ₹ 19,00,83,981/-. Notice u/s.143(2) of the Act, was issued to the assessee on 27.09.2011 and this was responded to by the assessee. Representative of the assessee appeared before the AO. AO states in the assessment order that the representative had furnished relevant details and documents. Assessment was completed accepting the loss returned by the assessee. 03. On 05.03.2015, notice u/s.263 of the Act, was issued to the assessee by the Pr. CIT. According to him, assessee had admitted income from rentals under the head profits and gains of business or profession , whereas the proper head was income from house property . By considering the receipt of business income, assessee, in the opinion of Pr. CIT, had claimed huge depreciation and consequent loss. As per the Pr. CIT, acceptance of the return of the assessee by the AO was erroneous and prejudicial to the interests of Revenue. To the above show-cause notice, assessee filed a reply stating that the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deeds, that the AO came to the conclusion regarding the nature of income of the assessee in the original assessment. Ld. AR submitted that assessee s income was rightly considered under the head income from business and not income from income from house property . Thus as per the Ld. AR, AO having taken a possible view which was a lawful one, Pr.CIT could not invoke the powers vested on him u/s.263 of the Act. AO had carried out enquiries, he had received replies, and he had considered such replies. Thereafter he had passed such assessment orders u/s.143(3) of the Act. As per the Ld. AR, there was no error in the order much less any order which caused prejudice in the order of the AO. Ld. AR placed specific reliance on one judgment of Hon ble Karnataka High Court in the case of CIT v. Prestige Estate Projects Ltd [ITA.119/2014, dt.03.06.2014]. As per the Ld. AR it was held by the Hon ble Karnataka High Court that rental income based on lease deeds, through which facilities were also to be provided to the lessor, where such facilities were inseparable would fall only under the head profits and gains from business or profession . As per the Ld. AR assessee in the above case was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding Hon ble Apex Court is that an assessee, even if it was in the business of real estate, income earned from letting out of property was to be assessed under the head income from house property . Exception to this rule is where letting of the building was inseparable from letting of the plant, machinery and furniture in which case circumstance alone, it could be treated as income from business. This position of law has been clearly enunciated by the Hon ble Madras High Court in the case of Keyaram Hotels (supra), after considering its own judgment in the case of Chennai Properties Investments Ltd, (supra). AO was aware that assessee was in the business of real estate development and leasing of commercial space. This mentioned in the first sentence of the assessment order passed u/s.143(3) of the Act, which was the subject matter of the revisionary proceedings. So it is not a case where AO had not made enquiries. He was aware that assessee was into real estate development and leasing of commercial space. Assessee was required to file copies of lease deeds, specifically mentioning the types of services to be given by the assessee. AO thereafter assessed thes income of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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