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TMI Blog2020 (2) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... for treating the income as income from house property. - Decided in favour of assessee - ITA No. 331 /Mum/2019, 334 & 333/Mum/2019 (Assessment Year: 2013-14, 2010-11 & 2011-12) - - - Dated:- 28-1-2020 - SHRI R.C. SHARMA, ACCOUNTANT MEMBER Assessee by: Shri Viraj Mehta (AR) Revenue by: Shri Akhtar H Ansari (DR) ORDER PER: R.C. SHARMA, A.M. These are the appeals filed by the assessee against the separate orders of the ld. CIT(A)-38, Mumbai dated 10/08/2018 and 28/06/2018 for the A.Y. 2013-14, 2010-11 2011-12 respectively in the matter of order passed U/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short, the Act). 2. All these appeals have common issue, therefore, all are clubbed and heard together and for the sake of convenience, a common order is being passed. 3. Common grievance of the assessee in all these years relate to treatment of lease income as income from house property which was offered by the assessee under the head income from business and profession. 4. Rival contentions have been heard and record perused. Facts in brief are that the assessee firm is the owner of a commercial property, Unit No. 609 at Kohinoor City Mall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main business is to lease out properties and earn income from them, the main object clause of the Partnership Deed reads as follows: whereas all the parties are desirous of joining hands to carry on the business of buying/selling/leasing/sub letting, commercial/residential properties/offices and any other business as the partners may mutually decide from time to time, in partnership, it has been mutually decide the to reduce it into writing the terms and conditions of the partnership. 8. It is evident from the main object clause that assessee is into the business of leasing properties. Thereby, in no manner it can be concluded that assessee is not in business activity' of renting its properties. Hon'ble Apex Court at Page nos. 772-773 in the case of Narain Swadeshi Weaving Mills vs Commissioner of Excess Profits Tax IR 1955 SC 176, (1954) 26 ITR 765 SC, 1955 1 SCR 952 stated as under:- Business as defined in section 2(5) of the Excess Profits Tax Act includes amongst others, any trade, commerce or manufacture or any adventure in the nature of trade, commerce or manufacture. The first part of this definition of a business in the Excess Profits Tax Act i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he business irrespective of the manner in which that asset was exploited by the company. This Court clearly indicated that no general principle could be laid down which would be applicable to all cases and that each case must be decided on its own circumstances according to ordinary common sense principles. In the case before us the assesses firm's business had entirely closed. It no longer manufactured any ribbons and laces. It had accordingly no further trading or commercial activity. It could not in fact use the plant, machinery, etc., after the land and the buildings where they were installed had been sold to the company. In these circumstances the assessee firm let out the plant, machinery, etc., on an annual rent of ₹ 40,000. These facts are very similar to those found in Jnjgnd Revenue Commissioners v. Broadway Car Co. Ltd. (11946] 2 A.E.R. 609). There the war conditions had reduced the company's business to very small proportions. In that situation it was observed that in that case the company dealt with part of its property which had become redundant and was sublet purely to produce income - a transaction quite apart from the ordinary business activities of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness activities, then it is a case of exploiting the business assets otherwise than employing them for his own use for making profit for that business; but if the business never started or has started but ceased with no intention to be resumed, the assets also will cease to be business assets and the transaction will only be exploitation of property by an owner thereof. 10. In the case of Chennai Properties Investments Ltd. V. CIT (2015) 373 ITR 673, Hon ble Supreme Court held as under:- Fact:- The assessee-company was incorporated with main objective, as stated in the Memorandum of Association.) to acquire the properties in the city and to let out those properties. Held:- The Memorandum of Association of the appellant-company which is placed on record mentions main objects as well as incidental or ancillary objects in clause III. (A) and (B) respectively. The main object of the appellant company is to acquire and hold the properties known as Chennai House and Firhauin Estate both in Chennai and to let out those properties as well as make advances upon the security of lands and buildings or other properties or any interest therein. What we emphasise is that h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals. The business of the company is to lease its property and to earn rent and therefore, the income so earned should be treated as its business income. In view of the law laid down by this Court in the case of Chennai Properties Investment Ltd. (supra) and looking at the facts of these appeals, in our opinion, the High court was not correct while deciding that the income of the assessee should be treated as Income from House Property. 12. Applying the judicial pronouncements as stated above to the facts of the instant case, I found that assessee was mainly in the business of leasing of properties and its substantial income was also from leasing of properties. The assessee was carrying out all the activities which are relevant for earning the income for these properties by extending various facilities. Thus, I found that holding of said properties and earning income by letting out those properties is the main objective of the assessee. The income arising therefrom is necessarily assessable under the head Income from Business and profession and assessee is eligible to get deduction in respect of expenditure incurred for earning the aforesaid income and also depreciation on th ..... 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