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TMI Blog2023 (4) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion that Ld. AO has fallen in error in applying the aforesaid provisions of law while not following the previous year assessment. The first and foremost thing that comes up is that Section 53A of the Transfer of Property Act is applicable in regard to transfer of immovable property by way of registered document. The provision is made in regard to those transactions of immovable property where under an agreement to sell or any other contract wherein a part performance of the contract has occurred, though the title deed has not been registered, in that case, the transferor is departed from agitating his title to the property against the purchaser. The essential condition being the transferee should have taken possession of the property and should be ready and willing to perform his part of the contract. In case of transactions of the nature Build Operate Transfer (BOT), as in the case in hand an entity, which is usually government entity, enters into a build-operate-transfer (BOT) contract, by grant of a concession to a private company to finance, build, and operate a project. The concession given by DMRC to the assessee operating in the form of a license only. The company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration consists of the rental income in respect to premises lease out to Fedral Bank Ltd., AGS Transact Technologies Ltd. Prizm Payment services (P) Ltd. , Pustakkosh Textbook Rental, Barista Coffee Company Ltd. DHL Express (I) Pvt. Ltd., Devyani International ltd., Jubilant Foodworks Ltd., Bharti Retail Ltd. Jubilant Foodworks Ltd. (New Ashok Nagar), State Bank of India (New Ashok Nagar). 2.1 As per the MOU of the assessee with DMRC, assessee was entitled to have access to operate, manage and maintain the Licensed Space at the Specified Area during the License Period at the cost and risk of the License. So, Ld. AO was of the view that, for the total fixed assets of Rs.128.63 lacs include vehicles and rest of the assets is plant and machinery. The plant and machinery include air Conditioner, digital key telephone, Microwave and computer etc. Thus it is clear no investment with regard to addition in building etc. has been made by the assessee. Ld. AO also observed that the entire building and structure was received by the assessee from the DMRC. The assessee had license to lease out these assets. The license was for the period of 15 years from the date of handing over as per MOU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 27(iiib) and the assessee is deemed owner of the premises therefore the provisions of section 22 i.e. income from house property are clearly applicable in the case of the assessee. The rental income received by the assessee will be covered under the provisions of section 22 i.e. income from house property. 5.4.1 Further the TDS has also been made under section 1941 i.e rent. 5.4.2 The assessee has asserted that the proposition laid down in CBDT Circular No.9/2014 is applicable to its case and hence the revenue from its operations should be treated as business income following the principles laid down for infrastructure projects. The aforementioned circular does not assist the assessee as the circular is specifically with reference to roads and highways (and inter alia, laying of roads/bridges/highways/approach roads /culverts/ public amenities, etc.). The assessee's development of commercial space at a Metro station does not classify as an infrastructure project as envisaged by the circular. In view of the aforesaid discussion the income from lease rent received by the assessee is assessed as income from house property. 6. The Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity, along with the furniture and fixtures and all other assets permanently attached to the facility revert to DMRC at NIL cost. These activities show that the right to sub-lease the facility granted to the appellant by DMRC under the concession agreement is merely a means by which DMRC has permitted the appellant to recover and realise its consideration for the construction and development of the project facility and its infrastructural services machinery for DMRC. These contracts are being executed on BOT (Build Operate and Transfer) model under the PPP scheme for DMRC. This right to develop and operate the facility is acquired for a fixed term called the concession period. The appellant constructs and develops the space and infrastructural facilities, sub leases the space developed and maintains the space and infrastructural facilities which include common area maintenance, security, renovation, upkeep, fire safety, insurance, public conveniences etc. of the project facility. All these rights are however exercisable by the appellant strictly within the restricted framework of the concession agreement which provides for permissions and sanctions on a number activities. A t the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e concession agreements to question. From the facts listed above, it can be seen that the appellant is carrying out a business and earning business income as there are regular and systematic activities required to be carried out to earn this income. 3.2.2 In the assessment order assessing officer while considering the submissions of assessee during the assessment proceedings has opined that the submissions of assessee regarding investment in both the projects on Build-On-Transfer (BOT) with DMRC for the two metro station properties, namely:- a) New Ashok Nagar, Mayur Vihar, Delhi b) Botanical Carden, Noida. are covered by the provisions of section 269U(f)(i) read with section 53(A) of the Transfer of Property Act. Assessing officer has further held that as per the provisions of section 27(iiib) a person who acquires any rights (excluding any rights by way of a lease from month to month or for a period not exceeding one year) in or with respect to bay building or part thereof, by virtue of any such transaction as is referred to in clause (f) of section 269UA, shall be deemed be the owner of that building or part thereof. Assessing Officer has held that since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l)(ii) of the Act while in assessments, such claims are being disallowed by the Assessing officer on the grounds that such infrastructural facility is not owned, wholly or partly, by the taxpayer which is an essential condition for claiming depreciation and further right to collect toll does not fall in any of the categories of 'intangible assets' specified in subcause( ii) of sub-section (1) of section 32 of the Act. 3. In BOT arrangements for development of roads/highways, as a matter of general practice, possession of land is handed over to the assessee by the Government/notified authority for the purposes of construction of the project without any actual transfer of ownership and such assessee has only a right to develop and maintain such asset. It also enjoys the benefits arising from use of asset through collection of Toll for a specified period without having actual ownership over such asset. Therefore, the rights in the land remain vested with the Government or its agencies. Thus, as assessee does not hold any rights in the project except recovery of toll fee to recoup the expenditure incurred, it cannot therefore be treated as an owner of the property, either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is covered by circular no. 9 of 2014, assessing officer is directed to treat the lease rent as business income as claimed by appellant. Assessing officer is also directed to allow the claim of expenses u/s 37 of the Income Tax Act of Rs.l,85,36,430/-. 4. The Revenue is in appeal raising following grounds :- (1) Whether on the facts and under the circumstances of the case, the Learned CIT(A) has erred in law and facts in applying Circular No. 9/2014 by not considering the fact that the said circular deals with aspect of allowance of BOT (Build, Operate and Transfer) expenses u/s 32 or otherwise, which presupposes taxability of highway BOT projects under head profits and gain from Business Profession. (2) On the facts and under the circumstances of the case, the Learned CIT(A) has erred in law and facts in not appreciating the fact the assesses himself offered to tax invoice under head Income from House Property for 3 years and later on revised ITR and offered to tax income under head profits and gains from Business Profession. (3) On the facts and under the circumstances of the case, the Learned CIT(A) erred in law and facts in saying that restricted righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tle deed has not been registered, in that case, the transferor is departed from agitating his title to the property against the purchaser. The essential condition being the transferee should have taken possession of the property and should be ready and willing to perform his part of the contract. 9. However, in case of transactions of the nature Build Operate Transfer (BOT), as in the case in hand an entity, which is usually government entity, enters into a build-operate-transfer (BOT) contract, by grant of a concession to a private company to finance, build, and operate a project. The concession given by DMRC to the assessee operating in the form of a license only. The company operates the project for a period of time with the goal of recouping its investment, then transfers control of the project back to the public entity. Thus, handing over of infrastructure facility/project by developer to Government/local authority/statutory body takes place after recoupment of developer's costs. Like in case in hand the bare shell structure inclusive of columns etc has been developed to be available to the tenant for commercial use. The building etc involved always belongs to the DMRC. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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