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TMI Blog2017 (10) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... t year under consideration. On this aspect, we find no clear finding by either of the lower authorities and, therefore, we remand this issue to the file of the Assessing Officer who shall examine the plea of the assessee of the liability having crystallized during the year under consideration. Treating income from sale of units of Mutual Fund - Income from other sources OR claim of capital loss made by appellant - Held that:- We deem it fit and proper to restore the matter back to the file of the Assessing Officer to be adjudicated afresh in accordance with the law since no clinching findings have been recorded on the pleas raised by the assessee. Therefore, on this aspect also, assessee succeeds for statistical purposes. - ITA NOS. 394, 395 And 398/MUM/2017 And ITA NOS. 396 And 397/MUM/2017 - - - Dated:- 27-9-2017 - SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER For The Assessee : Shri Sanjay Kapadia For The Revenue : Shri V. Justin ORDER PER G.S. PANNU, AM : The captioned are five appeals by the assessee pertaining to Assessment Years 2006-07 to 2010-11 and involve certain common issues, therefore, they have been club ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. 5. The Assessing Officer considered the explanations furnished by the assessee and noted that assessee had received deposits from 23 counter-holders who were running their business, displaying their products, arranging the material for effecting purchase and sales through counters, etc. The Assessing Officer observed that assessee was involved in carrying out only a limited activity of receiving cash at the cash counter and delivery of goods and was paying the counter-holders at specified interval of 7 days after deducting its commission due. The Assessing Officer also observed that assessee had only cash counter staff and some other part-time staff, whereas the activities of the business were carried out by the counter-holders and it was their responsibility to procure orders and improve the sales. The Assessing Officer was of the view that the commission income earned by the assessee from the different counter-holders was, in effect, a compensation for allowing the use of the premises. It was also noticed by the Assessing Officer that the assessee was occupying the premises as a tenant of LIC of India for about 50 years. In sum and substance, the inference drawn by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income from running the Department store under the head income from house property by pointing out that the past history of the case has been given a complete go-bye. It is the stand of the assessee that both on facts and in law the income from running the Department store is a business income and that the gross receipts earned from running the Department store are to be reduced by the relevant expenditure and the balance is assessable under the head income from business . In the course of the hearing, the learned representative has taken us through the factual aspects of the manner in which the activity of running of Department store is being carried out by the assessee in order to demonstrate that it is not a case of receiving compensation for allowing use of the premises simpliciter , but it is a case where systematic and organised activities are being carried out with the object of earning profits. 8. On the other hand, the ld. DR appearing for the Revenue has defended the orders of the authorities below by reiterating the reasoning contained therein, which we have already noted in the earlier paragraphs and is not being repeated for the sake of brevity. 9. Having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht by the other party are unsalable or damaged or otherwise not fit for trading, the same would be removed from the premises of the assessee-firm or that of the customers at own cost by the party/counter holder. Clause (7) of the agreement prescribes that as and when the products/goods are sold by the counter holder, the sale proceeds shall be collected by the cash counter which is managed by the assessee-firm and the proceeds shall be paid to the counter holder at the end of every week after deduction of its Commission by the assessee-firm. It is also prescribed that the assessee will be entitled to deduct any other costs, charges and expenses payable by the counter holder. The necessary furniture required to display and sell the products shall be provided by the assessee-firm. It is further provided that the keys of the counters or the cupboards or racks where the products or goods brought in by the counter holder are kept for sale shall remain with the assessee-firm only. On the basis of the arrangement with the counter holders some factual inferences which can be drawn are as follows. That the assessee-firm is providing facilities to different persons for selling different comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts own cost to look after the facilities provided by the assessee-firm to the different counter holders to effect sales. The repairs and maintenance of the business are undertaken by the assessee at its own cost. The assessee-firm has arranged and installed the central air-conditioning facility in the Department store, which it is maintaining. All other amenities such as water supply, toilet facilities, maintenance of cleanliness, etc. are undertaken by the assessee at its own cost. The aforesaid features of the arrangement of the assessee with the counter holders have been duly noted by the lower authorities and are not in dispute. 11. In the above background, we may now touch upon some of the judicial pronouncements which would provide the necessary benchmark to decide as to whether in the instant facts and circumstances, the income earned by the assessee is to be treated as business income or it is to be treated as income from house property . At the outset, we may refer to the judgment of the Hon'ble Supreme Court in the case of Karnani Properties Ltd., 82 ITR 547 ( SC ), which lays down certain tests in order to determine whether the services rendered by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting of the Department store is merely facilitated by the use of the property. At this stage, we may also refer to two aspects which have been brought out by the learned representative before us. It has been pointed out that assessee earns income by way of Commission from various counter holders and such Commission is based on the actual sales effected by the different counter holders. For the year under consideration, the total Commission earned from the various counter holders was referred to, which shows that the amount of Commission is not consistent or constant across the counter-holders. Even the month-to-month Commission earnings of the assessee from the different counter holders are not constant, but it varies with the level of sales effected. It is a matter of common knowledge that in a typical rental arrangement, inconsistent level of compensation would be clearly missing. Therefore, in our view, the lower authorities erred in treating the income earned by the assessee from running the Departmental store as rental income assessable under the head income from house property . 13. One aspect which has been emphasised by the lower authorities is that the assessee was ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income . The Assessing Officer held that such income also originated from the property itself and, therefore, was to be taxed as income from house property . The Hon'ble High Court disagreed with the view of the Revenue and noted that the business conduct agreement showed that the maintenance charges collected by the assessee not only related to the open area/common areas, but related to repairs and maintenance of equipment, transformers, fire-fighting equipment, air-conditioning plant, etc. and other services in the common area of the complex like cost of security services and overall house-keeping of the common area. Considering the factual matrix, the Hon'ble High Court upheld the plea that the income was attributable to conduct of business activity of renting the mall and accordingly, the stand of the assessee for treating the receipts as business income was not faulted. In the present case too, the fact that the assessee was not actually selling the goods or that it was undertaking a set of organised activities in support of the counter holders who were executing the sale and purchase of goods, would not distract from the fact that the receipts from the counter hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me from other sources instead of claim of capital loss made by appellant and the reasons assigned for doing so are wrong and contrary to the Income Tax and Rules made there under. 20. On this aspect, the grievance of the assessee is that the lower authorities have erred in including the profit on sale of units of mutual funds amounting to ₹ 93,352/- as income from other sources instead of deducting the same from the Capital Loss of ₹ 2,58,878/- suffered by the assessee on sale of units of the mutual funds. On this aspect also, we deem it fit and proper to restore the matter back to the file of the Assessing Officer to be adjudicated afresh in accordance with the law since no clinching findings have been recorded on the pleas raised by the assessee. Therefore, on this aspect also, assessee succeeds for statistical purposes. 21. The last Ground of appeal in this appeal, i.e. Ground of appeal no. 6 reads as under :- 6. On the facts and in the circumstances of the case and in law the Hon'ble CIT(A) erred in upholding the action of the Ld AO of separately taxing the income from foreign exchange difference of ₹ 2.53 Lacs and income from Money Transf ..... 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