9911796707
TMI Blog2017 (5) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... of Commissioner of Income Tax (A), Guntur dated 29.02.2016 and it pertains to the assessment year 2011-12. 2. The brief facts of the case are that the assessee is a partnership firm engaged in the business of tobacco trade and also let out commercial properties on rental basis. The assessee has filed its return of income for the assessment year 2011-12 on 28.9.2011 admitting total income of ₹ 1,39,83,810/-. The case was selected for scrutiny and notices u/s 143(2) 142(1) of the Income Tax Act, 1961 (hereinafter called as 'the Act') were issued. In response to notices, the authorized representative of the assessee appeared and furnished the information called for. During the course of assessment proceedings, the A.O. noticed that the assessee has considered income from rental receipts under the head income from business . After considering the details furnished by the assessee and analyzing the provisions, held that income from lease rentals received by the assessee is assessable under the head income from house property, but not under the head income from profits and gains of business or profession. Aggrieved by the assessment order, the assessee preferred an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t under the head income from house property . The relevant portion of the order is extracted hereunder: 10. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The assessee is Sri Bharati Warehousing Corporation existed by virtue of partnership deed dated 21.1.2000. As per the partnership deed, the object of the firm is the nature of business is to construct godowns or residential or commercial buildings or flats or commercial shops, etc. on lands owned by the firm or by taking land on long lease basis from others, as mutually agreed upon from time to time, and lease out the same to others . It is also mutually agreed that any other business also may be carried with the mutual consent of all the partners if deemed lucrative. From the above, it is clear that the intention of the assessee is to acquire the land by its own or by lease out the land for a longer period and there after construct a building and lease out the same to the third parties. This is the activity of the assessee. In the assessment order, the A.O. has noted that the assessee has leased out near about 4 properties one to Standard C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness it cannot be treated as an Income from house property and appeal filed by the assessee is allowed. 12. In the present case, the assessee has acquired the land on lease basis in various places i.e. Mumbai, Kolkata, Bangalore, Chennai and constructed commercial complexes and leased out the same to the commercial entrepreneurs such as Standard Chartered Bank, Bata India Limited, EDS Electronic Data Systems India (P) Ltd. and Spencers for a higher rental amount. The intention of the assessee is very clear from the date on which it is existed is to carry out the business activity such as to construct the godowns or residential or commercial buildings or commercial shops, etc. the lands owned by firm or by taking land on long lease from others is the activity of the assessee. In our opinion, the judgement of the Hon ble Supreme Court squarely applies to the facts of the case and we hold that the income earned by the assessee is Income from business and not Income from house property . 13. So far as the order of the ITAT in the assessee s own case (supra) is concerned, the Tribunal has observed that assessee has constructed its properties at various places and let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial buildings or flats or commercial shops etc., on the lands either owned by the firm or by taking on long lease basis from others and lease out the same to others. The terms would further signify that doing of any other business was only ancilliary to the main business and that too an optional one which is evident from the clause any other business also may be carried on with the mutual consent of all the partners if deemed lucrative . Nonmentioning of specific type of business and doing of such unspecified business, only if the partners deemed it lucrative, would indicate that the unspecified business proposed to be carried on with mutual consent was only an optional but not the main objective of the partnership firm. Thus the optional business proposed was not as clear and emphatic as that of the main business. b) Be that as it may, admittedly during the assessment period under scrutiny, the assessee firm earned income in tobacco business as well as by rents. Hence the point was whether the assessee firm under law, was entitled to show both the incomes under the head income from business or under two different heads i.e., income from business and profession and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property and not a business income, in the instant case also it should have held similarly, for the reason that in the earlier instances, the Tribunal had no occasion to peruse the judgement in M/s. Chennai Properties Investments Ltd., Chennai s case (supra) which was rendered by the Apex Court on 9.4.2015. 7) At the outset, we do not find any substantial questions of law involved in this appeal. Accordingly, this appeal is dismissed at the admission stage. 6. Considering the facts and circumstances of this case and also respectfully following the decision of Telengana and A.P. High Court, in assessee s own case and also following the decision of coordinate bench of this Tribunal, in assessee s own case for the assessment year 2008- 09, we are of the view that the rental receipt from letting out commercial properties is assessable under the head income from profit gains of business or profession and not as income from house property . 7. In the result, the appeal filed by the revenue is dismissed. 8. The assessee has filed cross objection in support of order of the CIT(A). Therefore, for the detailed discussion in preceding paragraphs, we dismiss cross obje ..... X X X X Extracts X X X X X X X X Extracts X X X X
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