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TMI Blog2021 (4) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... y, DR ORDER PER S.S.GODARA, J.M. : This assessee s appeal for AY.2010-11 arises from the CIT(A)-10, Hyderabad s order dated 31-03-2017 passed in case No.0026/CIT(A)-10/2015-16, in proceedings u/s.271(1)(c) of the Income Tax Act, 1961 [in short, the Act ]. Case called twice. None appeared at assessee s behest. He is accordingly proceeded ex-parte. 2. The assessee s sole substantive grievance raised in the instant appeal challenges correctness of both the lower authorities action imposing Section 271(1)(c) penalty of ₹ 10,46,957/- pertaining to quantum addition arising from treatment of rental income (as to whether it came under the head income from house property or income from business ). The CIT(A) s detailed discussion confirming the penalty reads as under: 5.1 It is seen that the assessee admitted rent from the tenant, capital IQ Information systems Pvt. Ltd., fully. However, instead of admitting the rent under the head 'House property', the assessee admitted half of the amount under the head 'Income from Business' and claimed various expenses under the head business'. The proportionate expenditure claimed with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income-tax (Appeals) - 10, Hyderabad ought not to have dismissed the appeal. 2. The learned CIT(A) ought to have held that the reassessment proceedings initiated by the Assessing Officer are not valid in the eye of law for the reasons that: (a) There are no reasons to believe that the income got escaped assessment from tax; (b) For the reason that the Assessing Officer had failed to furnish the reasons recorded for issuance of the notice under section 148 of the Act, despite the request made by the Appellant. 3. Without prejudice to the above, the learned CIT(A) ought to have held that the income from the property derived from the provision of amenities to the tenants of the property is assessable under the head income from business . ADDITIONAL GROUND: 3(b) The learned CIT(A) ought to have appreciated that the interest expenditure incurred on the amounts borrowed for the provision of amenities is allowable as an expenditure. 4. For these or any other ground or grounds that may be urged at the time of hearing, it is prayed that the Hon. Tribunal may be pleased to allow the appeal. 3. The assessee has raised 3 grounds and severa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. In the present case, the assessee made two agreements one for let out of the property and another for providing amenities and there is a doubt in the mind of the assessing officer regarding the correctness of the income declared by the assessee as 'income from house property' and income from business. He has treated the entire income i.e. as 'income from house property'. Admittedly, the authorities have the freedom to go beyond the documents to find out the real intention of the parties. In this case, though there is two agreements the real intention of the parties to a document is different what appears from it ex facie. Since there is a doubt, then the assessing officer is justified in going beyond the documents to find out real intention of the parties by ignoring the apparent has to be and has always been conceded. In this circumstance, the assessing officer has to remove the fa ade to expose the real intention of the parties cleverly cloaked and the actual agreement cannot be given effect. The only bona fide document to be acted upon not otherwise. There is a serious doubt and also it is shocking the conscious of the Bench, whether the assessee is ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it has to be determined from the point of view of a businessman in that business depending upon the fact and circumstances of each case and there is no readymade jacket formula. The ratio laid down by one case cannot be applied or fit to the facts of the present case. We have to see the intention of the assessee whether the letting was the doing of a business or to exploitation of his property by an owner. The assessee when exploited the property to derive rental income it has to be held that the income realized by him by way of rental income from a building if the property with other asset attached to the building to be assessed as 'income from house property' only. The only exceptions are cases where the letting of the building is inseparable from letting of the machinery, plant and furniture. In such cases, it has to be held that the rental would not have been realized but for the letting out of the machinery, plant or furniture along with such building and therefore, rental received for the building is to be assessed under the head 'income from other sources'. In the present case, on the facts of the case, it is clear that the assessee as the owner of the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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