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TMI Blog2019 (3) TMI 1468X X X X Extracts X X X X X X X X Extracts X X X X ..... nd promotion of residential and commercial complexes. The assessee constructed a shopping mall by name 'Oberon Mall' in Kochi in the property owned by its sister concern and let out the shop rooms. In the revised return of income filed by the assessee on 06.04.2011 (which was beyond the prescribed time) for the assessment year 2009-10, an amount of Rs. 80,09,364/- received by it on letting out the shop rooms, was shown as income from business. The assessing officer treated this amount as income from house property and after deducting municipal taxes and statutory benefit of 30%, computed tax on the balance amount of Rs. 54,41,293/- and passed assessment order dated 29.12.2011 under Section 143(3) of the Act. 4. The assessee challenged the assessment before the Commissioner of Income Tax (Appeals). But the appeal was dismissed by order dated 27.03.2013. The assessee challenged the aforesaid order before the Income Tax Appellate Tribunal. The Tribunal found that the disputed amount is business income of the assessee and allowed the appeal. The revenue has come up in appeal challenging the order of the Tribunal. 5. We have heard learned counsel for the appellant as well as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion itself for the portions of the property as may be occupied for the purpose of business or profession carried on by the assessee, the profits of which are chargeable to income tax. 10. In Commissioner of Income Tax v. M/s Poddar Cement Private Limited : AIR 1997 SC 2523, the Hon'ble Supreme Court has held that, inspite of the settled position that under the common law 'owner' means a person who has got valid title legally conveyed to him after complying with the requirements of law, in the context of Section 22 of the Act, having regard to the ground realities and further having regard to the object of the Income Tax Act, namely, 'to tax the income', owner is a person who is entitled to receive income from the property in his own right. Therefore, in the instant case, we are not concerned whether the assessee is the real owner of the land in which the shopping mall is constructed. It is an admitted fact that the assessee was entitled to receive the rental charges of the shop rooms leased out and it had received such charges. It follows that the assessee is the owner of the shop rooms let out, for the purpose of Section 22 of the Act. 11. Now, the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arn profits and therefore, those activities have to be considered as business activities. 14. In Universal Plast Limited v. Commissioner of Income Tax : AIR 1999 SC 1641, the Hon'ble Supreme Court has held that no precise test can be laid down to ascertain whether income (referred to by whatever nomenclature, lease amount, rents, licence fee) received by an assessee from leasing or letting out of assets would fall under the head "profits and gains of business or profession" and that it is a mixed question of law and fact and has to be determined from the point of view of a businessman in that business on the facts and in the circumstances of each case including true interpretation of the agreement under which the assets are let out. 15. In Raj Dadarkar(supra), the Apex Court has held that, merely because there is an entry in the object clause of the business showing a particular object, it would not be a determinative factor to arrive at a conclusion that the income has to be treated as 'income from business'. It has been held that such a question would depend upon the circumstances of each case and the matter has to be determined on the facts of each case. 16. The d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng materials, construction equipments, electrical and sanitary equipments." 19. Learned counsel for the respondent has made great emphasis on the aforesaid objective of the company stated in its memorandum of association. He has contended that the main business of the company is construction and promotion of residential and commercial complexes and letting out of the shop rooms in the shopping mall constitutes part of its business activity. 20. It is stated that the assessee company is managing and conducting the shopping mall. It is stated that the company is actively engaged in the day to day operations and the management of the mall which includes house keeping services, customer support, technical and electrical support, security, car parking facilities, maintenance of lifts and escalators etc. It is stated that the assessee is not merely a passive owner of the shopping mall who has let out the rooms and who only collects the rent. It is also stated that the assessee has employed more than 100 persons in the shopping mall for the operation and management of the mall. 21. The Income Tax Appellate Tribunal has taken into consideration the fact that the assessee has exploited i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vour of the assessee. 25. Attukal Shopping Complex (supra) has dealt with a different fact situation. It was a case in which the assessee had purchased immovable property and constructed shop rooms and let them out. The Income Tax Appellate Tribunal in that case found that the income of the assessee had to be divided as income from property and income from business. The decision of the Tribunal was upheld by this Court. Therefore, the decision in Attukal Shopping Complex (supra) cannot be found applicable to the facts of the present case. 26. Learned counsel for the revenue has also placed heavy reliance upon the decision of the Apex Court in Raj Dadarkar(supra). In that case there was a clear finding made by the Income Tax Appellate Tribunal that the assessee did not establish that he was engaged in any systematic or organised activity of providing service to the occupiers of the shops/stalls so as to constitute the receipts from them as business income and on that basis the Tribunal had found that the assessee received income by letting out shops/stalls and the income has to be treated as income from house property. After taking note of the aforesaid findings made by the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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