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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 ..... tax, Bangalore 5, Bangalore has erred in concluding that income / loss from business of operation and maintenance of Forum Value Mall, Whitefield, Bangalore is assessable under the head 'Income from house property.' 1.2 The learned Principal Commissioner of Income tax, Bangalore 5, Bangalore has erred in not appreciating that (a) in the instant case letting out of the property along with provision of other services, amenities and facilities constituted the business carried on by the assessee; (b) there was a commercial exploitation of the property in distinction to mere letting out, leading to the income being characterized as business income. 1.3 The decision relied on by the learned Principal Commissioner of Income tax, B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e held as assessable under 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 Rs. 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 rental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above order, assessee is now before us in appeal. Ld. Counsel for the assessee submitted that AO during the course of assessment proceedings had issued a notice dt.24.12.2012, u/s.142(1) of the Act, placed at page 25 of the paper book. According to him specific questions regarding break-up of rental income received by the assessee, party-wise break up of the lease deposits, details of expenditure incurred and details of sundry creditors were raised. As per the Ld. AR, through its reply placed at page 28 of the paper book, assessee had given all the above details including sample lease deeds. Further as per the Ld. AR, sample lease deeds, copies of which have been placed at paper book-II, pages 1 to 266, clearly proved that it was an insepa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 a sister concern of the assessee here and the said decision was also related to renting out a similar mall called Forum Mall as that of the assessee here. Thus according to him, view taken by the AO was perfectly legal and lawful. 06. Per contra, Ld. DR submitted that the case of Prestige Estate Projects Ltd (supra) relied on by the assessee was clearly different, since Prestige Estate Projects Ltd was acting through an agent. On the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eds placed at paper book pages 1 to 15 does show that assessee had to give a number of facilities and services to the lessees which included the following : 09. Rent payable by the lessees is given in Schedule 2 of the agreement which reads as under : 10. There is no break-up of the rent between facilities and shop area rented out. Obviously the lease deeds were composite. No doubt consistent view taken by various courts including 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 furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that the rental income received from Forum Mall. Eva Mall and UB City should be treated as "Income from Business" and not as "Income from House Property" despite a specific agreement between the landlord and tenant contemplating a landlord tenant relationship and rental income being paid every month as held by the Apex Court in the case of Shambhu Investments (263 ITR 143)? 12. Their Lordship had followed the judgment in the case of CIT v. Velankani Information Systems (P) Ltd [(2013) 218 Taxman 88], and held that when the intention was to carry on the business of letting out commercial property and complex commercial activity resulting in rental income, then such rental income would fall under the head profits and gains of busine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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