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TMI Blog2017 (1) TMI 1197X X X X Extracts X X X X X X X X Extracts X X X X ..... and a provision of host of other services and utilities is to be construed as commercial explanation of its properties and is exigible to tax as ‘business income’ as declared by the assessee, we hold that the assessee is entitled to be allowed deduction of Municipal taxes from its business income. Depreciation claimed on the Mall building - Held that:- Following the order of the Coordinate Bench for A.Y. 2009-10 and having held that the assessee’s income earned from running and operation of Mall and service charges etc. is to be taxed under the head profits and gains of business, we hold that in this regard the assessee is entitled for claim of depreciation on Mall building and also brokerage expenses incurred for grant of licence to various users. Disallowance made u/s 14A r.w.r. 8D - Held that:- Following the decision of the Coordinate Bench of the Tribunal in the assessee’s own case for A.Y. 2009-10 which followed the decisions of the Hon'ble Bombay High Court in Reliance Utilities and Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT ) and HDFC Bank Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT), we direct the AO to delete the impugned disallowance made under section 14A r.w. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2010-11 4.1 In this appeal assessee has raised the following grounds: - 1.(a) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in treating Property Lease Income of ₹ 7,37,68,263/- as income under the head 'income from House Property' instead of income under the head 'Profits and Gains of Business or Profession as declared by the appellant. 1.(b) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) failed to appreciate that: (a) the appellant does not simply let out part of its premises but also provides a host of other complex services; (b) the revenue received by the appellant is derived from commercial exploitation of the premises and not merely from exercise of property rights; and (c) the entire revenue received by the appellant is a single line of activity and forms a composite whole. 2.(a) Without prejudice to ground of appeal no. 1 above and on the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) ought not to have upheld the action of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als) erred in upholding the disallowance made by the Assessing Officer u/s. 14A of the Income Tax Act, 1961 r.w.r. 8D of the Income Tax Rules, 1962 to the extent of ₹ 6,15,771/- as against the disallowance of ₹ 1,22,932/- made by the appellant suo motto in its return of income. 5.(b) On the facts and in the circumstances of the case and in law. the authorities below ought to have appreciated that the term loan was obtained by the appellant for the purpose of construction of Mall and therefore interest expenditure amounting to ₹ 4,92.839/- being proportionate interest on term loans ought not to have been disallowed under Rule 8D by the Assessing Officer. 4.2 Assessee s appeal in ITA No. 3105/Mum/2015 for A.Y. 2011-12 In this appeal assessee has raised the following grounds: - 1.(a) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in treating Property Lease Income of ₹ 9,36,99,661/- as income under the head 'income from House Property' instead of income under the head 'Profits and Gains of Business or Profession as declared by the appellant. 1.(b) On the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als) erred in upholding the disallowance made by the Assessing Officer of brokerage expenses amounting to ₹ 5,88,860/- incurred by the appellant for grant of licenses to various users. 4.(b) On the facts and in the circumstances of the case and in law, the authorities below failed to appreciate that the brokerage expenses were incurred for the purpose of grant of license of the Mall premises to various users which activity is in the nature of commercial exploitation of the said Mall premises and therefore the brokerage expenses are allowable as deduction u/s. 37(1) of the Act having been incurred for the purpose of business of the appellant. 5. Grounds No. 1(a) 1(b) for both assessment years 2010-11 2011-12 5.1 In these identical grounds, the assessee assails the order of the learned CIT(A) as being erroneous in treating property lease income of ₹ 7,37,68,263/- for A.Y. 2010-11 and ₹ 9,36,99,661/- for A.Y. 2011-12 as income under the head income from house property instead of income under the head profits and gains from business . It is further contended that the assessee has not merely let out part of its premises, but also provides a host o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of business of the assessee as Operation of Mall therefore any income earned by the assessee by the operation of mall has to be taxed under the head Profits Gains of Business or Profession. The main object of the company as per the Memorandum of Association also refers to such activities as the main object for which the company is incorporated. As the main object itself shows that the assessee-company has been incorporated for running shopping malls /departmental stores, super markets, shopping arcades, shopping outlets, entertainment, recreation and amusement centre therefore any income earned from such activities has to be taxed under the head profits and gains of business. This will be in line with the ratio laid down by the Hon ble Supreme Court in the case of Chennai Properties Investment Ltd (supra). We, accordingly set aside the findings of the Ld. CIT(A) and direct the AO to treat the income under the head Profits Gains of Business. 5.3.2 Respectfully following the ratio of the decision of the Hon'ble Apex Court in Chennai Properties Investments Ltd. vs. CIT 373 ITR 673 (SC) and the finding rendered by the Coordinate Bench in the assessee s own case f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to various users. 8.2 We have heard the rival contentions and perused and carefully considered the material on record. We find that the Coordinate Bench of the Tribunal in its order in the assessee s own case for A.Y. 2009-10 dated 05.01.2016 (supra) at para 8.2 thereof has held that the assessee is entitled for claim of depreciation on the Mall building and brokerage expenses. Following the order of the Coordinate Bench for A.Y. 2009-10 (supra), and having held that the assessee s income earned from running and operation of Mall and service charges etc. is to be taxed under the head profits and gains of business, we hold that in this regard the assessee is entitled for claim of depreciation on Mall building and also brokerage expenses incurred for grant of licence to various users. Consequently, grounds 3 and 4(a) and 4(b) raised by the assessee for assessment years 2010-11 and 2011-12 are allowed. 9. Grounds No. 5(a) 5(b) for A.Y. 2010-11 9.1 In these grounds, the assessee contends that the learned CIT(A) erred in upholding the disallowance made by the AO under section 14A of the Act r.w. Rule 8D of the I.T. Rules to the extent of ₹ 6,15,771/- as against the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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