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TMI Blog2017 (11) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. We take assessee's appeal in ITA No.1204/Kol/2014( lead case) wherein the grounds of appeal raised by the assessee reads as under: "1. That while dealing with ground numbers 1 to 5, the Ld. ClT(Appeals) instead of mechanically following the decision of the ITAT in respect of a group company, should have applied his mind and adjudicated the issue afresh considering the fact that the Hon'ble Calcutta High Court has already admitted the appeal challenging the said ITAT Order and has also stayed the operation of that order. 2. That the Ld. ClT(Appeals) erred in holding that the order of the ITAT in respect of a group-company is operational as on date ignoring the fact that the Hon'ble High Court has already passed an order staying the operation of the said ITAT order. 3. That the Ld. ClT(Appeals) erred in considering the contribution received from the shops as income from 'house property' and not as 'business income' as claimed by the assessee. 4. That the Ld. ClT(Appeals) erred in holding that 1% of the dividend income should be disallowed under section 14A on an ad-hoc basis. 5. That the assessee craves leave to add, amend, modify, rescind, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o explain why the income from letting out of such assets will not be treated as "income from house property". In response to this question, the assessee replied to the AO stating that in terms of section 22 of the Act any income is chargeable under the head 'lncome from house property' only on fulfilling the following conditions: * Income should be derived from a property consisting of any building or lands appurtenant thereto. * The assessee is the owner of the said property. * The property should not be used for the purpose of business or profession carried on by him, the profits of which are chargeable to Income Tax. Evidently, only in case of legal owner the income from property could be assessable as house property income and the company is not the owner of the shopping arcade. Apart from legal owner, section 27 of the Act also provides for certain circumstances where a person is treated as 'deemed owner' of house property for the purpose of taxability under the head "Income from house property'. As per section 27(iiib) of the Act, a person, who acquires any right in or with respect to any building or part thereof by virtue of any transaction which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany is neither the owner nor the deemed owner in terms of section 27(iiib) so the "Contribution from Shops" can not be assessed under the head "Income from house property". The assessee stated before the AO that, the company had basically been formed with the main objective of carrying on the business of an investment company and the business of acquiring on licence or by purchase, Iease, exchange, hire of lands and property and to sublease or sublicense such land or property. lt is the business of the company to acquire premises on licence and to sublicense the same in order to earn revenue. The assessee also pointed out before the AO that the Memorandum of Association of the company clearly provides the objects for which the company has been formed. Clause lll, Part B of the Memorandum providing the objects ancillary to the main objects covers under point No.3 the following: "To acquire on a license premises suitable for housing and accommodating shops, boutiques, stores, offices, show rooms for the purpose of making the same available on the basis of lease and licence or sub-licence (and not for leasing or renting the same out) to any person, firm or company". Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 in appeal No.179/CIT(A)(-VI/07-08/6(3) in the assessee's group concern Oberoi Building and Investment Pvt. Ltd. for Assessment Year 2005- 06. In that case, under similar facts and circumstances his predecessor had allowed relief. Revenue filed appeal against the said order. Vide its order dated 23.07.2010 in ITA No.330/Kol/2008, Hon'ble Tribunal reversed the order of his predecessor and upheld the action of the assessing officer in treating income from shopping space as 'income from house property'. At the time of hearing it was informed by the assessee that the aforesaid order of ITAT had been disputed by the assessee before Hon'ble Calcutta High Court which have vide its order dated 4.10.10 stayed order of Hon'ble Tribunal. According to the assessee, in view of the High Court's order, the tribunal order is no longer required to be followed. However, it is settled position of law that merely because an appeal had been filed before a higher court, which had grated stay, the order of lower court does not become invalid. As long as the higher court does not overrule and reverses the order of the lower court, the latter remains very much valid. Admittedl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein also that assessee took license from the East India Hotels Ltd., which fact is evident from page 10 and 11 of that order. Taking note of these facts, the Tribunal had been pleased to come to the conclusion that the assessee carried on a systematic and regular activity in the nature of business by letting out premises on rent and, therefore, the income from granting sub-license was to be assessed under the head income from business. We note that in the assessee's case for AY 2005-06, the order of the Tribunal is dated 23.07.2010 whereas the Hon'ble Supreme Court's decision in Chennai Properties & Investments Ltd.'s case (supra), has been passed on 09.04.2015 and that in Rayala Corpn. (P.) Ltd.'s case (supra) was passed on 11.08.2016 so, these judgments were passed after the Tribunal's order in assessee's own case for AY 2005-06. In the instant case, we take note of the fact that the assessee's main object as stated in its Memorandum of Association was to acquire on license or by purchase, lease, exchange, hire or otherwise lands and property of any tenure, or premises in any part of India and to license or sub-license or lease or sub-lease or le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome from business has to be upheld and it cannot be treated as income from house property. This proposition of law has been reiterated by the Hon'ble Supreme Court in Rayala Corpn. (P.) Ltd.'s case (supra). Taking into consideration the ratio laid down by the Hon'ble Supreme Court, the coordinate Bench of this Tribunal "B" Bench, Kolkata in the case of the sister concern of the assessee i.e. Bombay Plaza (P.) Ltd.'s case (supra) was pleased to uphold the assessee's claim that the income from granting premises on sub-license was to be assessed under the head income from business. Therefore, considering the factual position and respectfully following the judgment of the ITAT in assessee's own sister concern case, we therefore, set aside the order of CIT(A) and allow the claim of the assessee and hold that income from contribution received from the shops has to be assessed under the head Income from business. 8. In the result, the appeal filed by the assessee (Ground No.1,2 and 3 of ITA No.1204/Kol/2014 and ITA No.1205/Kol/2014), are allowed. 9. During the course of hearing, the ld. Counsel for the assessee has submitted before us that assessee is not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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