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TMI Blog2017 (11) TMI 1086X X X X Extracts X X X X X X X X Extracts X X X X ..... greement also indicate that the licensor has the right of supervisory control in the manner in which the hotel is operated. All these, provisions of the agreement would, therefore, indicate that the licence that has been granted is that of a fully established running hotel authorising the licensee to operate the hotel for a specified period subject to the terms and conditions incorporated therein. Therefore, the license granted is that of a business. These facts would, therefore, clearly indicate that the intention of the parties as reflected in the agreement was to grant licence in respect of a running hotel, the income of which can only be income from business. Therefore, the Commissioner of Income Tax was fully justified in setting a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a commercial asset, whether the asset would cease to be a commercial asset simply because it was let out to others and is it not in law income from business no matter whether the commercial asset is used by itself or somebody else? C Whether the income earned from letting out a running hotel, a commercial asset, can be treated as income from house property at all and when such rental income is wholly and exclusively for business purpose and is it not liable to be assessed as Business income only? D Whether on analyzing Section 22 and 28(i) of the Income Tax Act and on a conspectus of the facts and circumstances of the case, where, from the very beginning the building and the machinery were a hotel of commercial activity and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel for the assessee, it was taking into account the provisions of the Act, the decided cases and the agreement between the assessee and the licencee, that the first appellate authority has held the income to be income from business. On the other hand, the learned counsel for the Revenue placed considerable reliance on the judgment of the Apex Court in Sultan Brothers Pvt. Ltd. v. CIT (1964) 51 ITR 353 and contended that, this is a case where the assessee was exploiting a commercial asset and therefore, the income in question was income from house property as rightly concluded by the Tribunal. 5. Having considered the submissions made, we feel that as held by the Apex Court in Sultan Brothers Pvt. Ltd. v. CIT (supra), each case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erations of the hotel with a view to satisfy itself that the hotel is being operated in terms of the agreement and also to intimate observation, if any, to the licensee. Similarly, Clause-2 of Item-V of Article XV, specifically provides that the membership of the hotel in the Federation of Hotel and Restaurant Association of India, Kerala Hotel and Restaurant Association etc. will be in the name of the licensor. Similarly, provision is also made to clarify that the provisions of the agreement shall not be construed as creating a partnership or joint venture or managing/selling agency or any other relationship except a licence. In Article XIV of the agreement, it is specifically provided that during the term of the agreement, the hotel shall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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