CRIMSON PROPERTY P. LTD, MUMBAI v. DCIT 5(10, MUMBAI

CO 39/MUM/2009 | 2005-2006
Pronouncement Date: 09-04-2010 | Result: Dismissed

Appeal Details

RSA Number 3919923 RSA 2009
Assessee PAN AAACC2206R
Bench Mumbai
Appeal Number CO 39/MUM/2009
Duration Of Justice 1 year(s) 1 month(s) 23 day(s)
Appellant CRIMSON PROPERTY P. LTD, MUMBAI
Respondent DCIT 5(10, MUMBAI
Appeal Type Cross Objection
Pronouncement Date 09-04-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 09-04-2010
Date Of Final Hearing 30-03-2010
Next Hearing Date 30-03-2010
Assessment Year 2005-2006
Appeal Filed On 16-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: MUMBAI BEFORE SHRI D MANMOHAN VICE PRESIDENT AND SHRI R K PANDA ACCOUNTANT MEMBER ITA NO 5387/MUM/2008 (ASSESSMENT YEAR: 2005-06) DY COMM OF INCOME TAX -5(1) ROOM NO 568/525 AAYAKAR BHAVAN M K ROAD MUMBAI -400 020 VS M/S CRIMSON PROPERTY PVT LTD 3RD FLOOR SUNAMA HOUSE OPP SHALIMAR HOTEL KEMPS CORNER MUMBAI -400 026 PAN: AAACC 2206 R REVENUE ASSESSEE-RESPONDENT CROSS OBJECTION NO 39/MUM/2009 ARISING OUT OF ITA NO 5387/MUM/2000 AY 2005-06 M/S CRIMSON PROPERTY PVT LTD 3RD FLOOR SUNAMA HOUSE OPP SHALIMAR HOTEL KEMPS CORNER MUMBAI -400 026 PAN: AAACC 2206 R VS DY COMM OF INCOME TAX -5(1) ROOM NO 568/525 AAYAKAR BHAVAN M K ROAD MUMBAI -400 020 CROSS OBJECTOR REVENUE-RESPONDENT CROSS OBJECTOR ASSESSEE BY: SHRI S C TIWARI REVENUE BY: SHRI S M KESHKAMAT ORDER PER R K PANDA AM THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTI ON (CO) FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 4 TH JANUARY 2008 OF CIT (A)-V MUMBAI RELATING TO ASSESSMENT YEAR 2005-06. FOR THE SAKE OF CONVENIENCE THE APPEAL AND CO WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E COMPANY DERIVES PROPERTY INCOME WHICH HAS BEEN SHOWN AS HIRE AND SERVICE INC OME AT RS 1 38 84 985/-. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE INCOME OF RS 1 38 84 985/- SHOULD NOT BE CONSIDERED AS ITA 5387/M/2008 CROSS OBJECTION NO 39/M/09 M/S CRIMSON PROPERTY PVT LTD 2 PROPERTY INCOME SINCE THE SAME HAS BEEN EARNED BY L EASING OF SUCH PROPERTY. THE ASSESSEE IN ITS REPLY FURNISHED THE COPY OF AGREEM ENT ENTERED INTO WITH THE PARTIES AND SUBMITTED THAT THE INCOME EARNED IS COMPOSITE I NCOME WHICH INCLUDES FURNITURE & FIXTURE ETC TO ITS MEMBERS. IT WAS SUBMITTED THA T THE ASSESSEE COMPANY HAS TO PROVIDE VARIOUS FACILITIES TO THE MEMBERS LIKE MANP OWER FURNITURE & FIXTURE AND LIGHTING ETC FOR THE COMPOSITE FEES. FROM THE PERU SAL OF THE DETAIL BREAK-UP OF THE INCOME THE ASSESSING OFFICER OBSERVED THAT MAJOR C OMPONENT OF INCOME IS FROM RENT. SINCE THE BASIC SOURCES OF INCOME IS HIRING OF PROP ERTY AND SPACE TO THE MEMBERS THEREFORE THE ASSESSING OFFICER OBSERVED THAT SERVI CES PROVIDED BY WAY OF LIGHTING FURNITURE & FIXTURE ETC CANNOT ALTER THE NATURE AND CHARACTER OF INCOME. THE ASSESSING OFFICER ACCORDINGLY HELD THAT THE ENTIR E INCOME RECEIVED BY WAY OF HIRING AND SERVICE INCOME AS INCOME FROM HOUSE PROPERTY. AFTER ALLOWING DEDUCTION @ 30% FOR REPAIRS AND MAINTENANCE AT RS 41 65 496/- THE ASSESSING OFFICER DETERMINED THE PROPERTY INCOME AT RS 97 19 489/-. 3. BEFORE THE CIT (A) THE ASSESSEE SUBMITTED THE C OPIES OF AGREEMENT ENTERED INTO IT WITH VARIOUS PARTIES AND SUBMITTED THAT AS PER THE AGREEMENT CERTAIN SERVICES WERE REQUIRED TO BE RENDERED BY THE ASSESSEE COMPAN Y. THE NATURE OF SERVICES WHICH ARE REQUIRED TO BE RENDERED NUMBERING ABOUT 2 9 ITEMS WAS BROUGHT TO THE NOTICE OF THE CIT (A) AS PER PAGE 4 OF HIS ORDER AN D IT WAS SUBMITTED THAT THE CUSTOMERS OF THE ASSESSEE WERE NOT PAYING ONLY FOR THE USAGE OF THE SAID PREMISES BUT ALSO TOWARDS SERVICES RENDERED BY THE COMPANY. IT WAS SUBMITTED THAT THE COMPANY HAS BEEN FORMED WITH THE SOLE OBJECTIVE OF OPERATING BUSINESS SERVICE CENTRE. THE ASSESSEE COMPANY HAS INCURRED HUGE CAP ITAL EXPENDITURE ON THE RENOVATION ELECTRICAL INSTALLATIONS FURNITURE & F IXTURE OFFICE EQUIPMENTS MANPOWER ETC TO ENSURE THAT THE PREMISES CAN BE OPERATED AS BUSINESS SERVICE CENTRE. THE ASSESSEE WAS OPERATING A FULL CENTRAL OFFICE TO ENS URE THAT SERVICES AS DIRECTED TO BE PROVIDED TO ITS CUSTOMERS WERE PROVIDED AND THAT TH E BUSINESS SERVICE CENTRE WAS OPERATED EFFICIENTLY. IT WAS SUBMITTED THAT THE AS SESSEE HAD GOT ITSELF REGISTERED UNDER THE SERVICE TAX UNDER THE HEAD BUSINESS SUPP ORT SERVICES. THE ASSESSEE CHARGED SERVICE TAX FROM ITS CUSTOMERS AND SUCH SER VICE TAX WAS PAID BY THE CUSTOMERS FOR RECEIVING SERVICES. ITA 5387/M/2008 CROSS OBJECTION NO 39/M/09 M/S CRIMSON PROPERTY PVT LTD 3 4. REFERRING TO THE SERVICE AGREEMENT ENTERED INTO BY THE COMPANY IT WAS SUBMITTED THAT IT WAS CLEARLY DISTINCT FROM THE NOR MAL LEASE AGREEMENT DUE TO THE FOLLOWING:- A) THE OCCUPANTS OF THE SAID BUSINESS SERVICE CENT RE WERE ALLOWED THE USAGE OF THE SAID PREMISES ONLY FOR A SPECIFIED PER IOD OF THE DAY I.E. FROM 8.00 AM IN THE MORNING TO 8.00 PM IN THE NIGHT ON WEEKDA YS AND FROM 8.00 AM IN THE MORNING TO 6.00 PM ON SATURDAYS. THE OCCUPANTS HAD NO RIGHT TO OPERATE THE SAID BUSINESS SERVICE CENTRE ON SUNDAYS. THE O WNER I.E. THE APPELLANT WOULD DETERMINE THE PRECISE HOURS WHEREIN SUCH BUSI NESS SERVICE CENTRE WOULD OPERATE. HENCE YOUR HONOUR SHALL APPRECIATE THE FAC T THAT OCCUPANTS OR USERS HAD RESTRICTED RIGHTS TO THE USAGE OF THE SAID PROP ERTY AS COMPARED TO NORMAL LEASE AGREEMENTS WHERE THERE ARE NO SUCH RESTRICTIO NS. B) THE AGREEMENTS SPECIFICALLY STIPULATE THAT THE U SER IS GRANTED ONLY PERMISSIVE USE OF THE SERVICES AND FACILITIES PROVI DED IN THE SAID PREMISES BY THE ASSESSEE. THE OCCUPANTS OR USERS WOULD NOT BE VESTED WITH OR ENJOY ANY RIGHT TITLE OR INTEREST OF ANY KIND IN THE SERVICE S AND FACILITIES PROVIDED BY THE ASSESSEE ANY MACHINERY EQUIPMENTS AND ARTICLES IN THE BUSINESS CENTRE OR ANY PART OR PORTION OF THE BUILDING. C) AS PER THE TERMS OF THE SAID AGREEMENT THE APPE LLANT WAS UNDER A CONTRACTUAL OBLIGATION TO PROVIDE THE VARIOUS SERVI CES AS MENTIONED IN THE SAID AGREEMENT. THERE WOULD NOT HAVE BEEN ANY SUCH OBLI GATION ON THE OWNER IN CASE OF NORMAL LEASE AGREEMENTS. D) THE OCCUPANTS OR THE USERS HAVE NO OCCUPANCY RIG HTS IN THE SAID PREMISES. IT IS VERY CLEARLY STATED BY THE APPELLA NT THAT NO PERSON OF THE USER WAS ALLOWED TO RESIDE IN THE SAID PREMISES. IT WAS ALSO VERY CLEARLY MENTIONED THAT THE SAID PREMISES HAS TO BE USED ONLY AS A BUS INESS SERVICE CENTRE AND COULD NOT BE USED AS A RESIDENTIAL PREMISES. E) FURTHER ALL THE AGREEMENTS ARE ALREADY EXISTING AND THE APPELLANT HAS BEEN RENDERING SUCH SERVICES TO ITS CUSTOMERS IN TH E PAST ALSO. YOUR HONOUR SHALL APPRECIATE THAT THE APPELLANT IS ENGAGED IN T HE COMPLEX SET OF ACTIVITIES AND THE PURPOSE OF RENDERING SUCH ACTIVITIES CANNOT BE IN ANY MANNER REGARDED AS MERE EARNING OF RENTAL INCOME. THE VARIOUS FEAT URES OF THE AGREEMENTS AS STATED ABOVE ALSO INDICATE THAT THERE IS MUCH MORE THAN LETTING OUT OF THE PROPERTIES FOR EARNING RENTAL INCOME. THE MERE FAC T THAT THE INCOME IS ATTACHED TO IMMOVABLE PROPERTY CANNOT BE THE SOLE C RITERION FOR ASSESSMENT OF SUCH INCOME AS INCOME FROM PROPERTY. YOUR HONOUR S HALL APPRECIATE THAT IT IS NECESSARY TO DIG FURTHER TO FIND OUT WHAT IS THE PR IMARY OBJECT OF THE ASSESSEE WHILE LETTING OUT THE PROPERTY. IF THE MAIN INTENT ION IS FOUND TO BE THE EXPLOITATION OF THE IMMOVABLE PROPERTY BY WAY OF CO MMERCIAL ACTIVITIES THEN THE RESULTANT INCOME MUST BE HELD AS BUSINESS INCOM E. ITA 5387/M/2008 CROSS OBJECTION NO 39/M/09 M/S CRIMSON PROPERTY PVT LTD 4 5. IT WAS ALSO BROUGHT TO THE NOTICE OF THE CIT (A) THAT IN THE PREVIOUS ASSESSMENT YEARS ASSESSMENTS WERE COMPLETED U/S 14 3(3) OF THE INCOME-TAX ACT AND THE ASSESSING OFFICER HAS TREATED SUCH INCOME A S INCOME FROM BUSINESS ONLY. SINCE THERE IS NO CHANGE IN SUCH INCOME IT WAS SUB MITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN CHANGING THE HEAD OF INCOME FR OM BUSINESS INCOME TO PROPERTY INCOME. THE COPY OF THE ASSESSMENT ORDER PASSED U /S 143(3) OF THE INCOME-TAX ACT FOR THE ASSESSMENT YEAR 2002-03 WAS FILED BEFORE HI M. REFERRING TO A NUMBER OF DECISIONS IT WAS SUBMITTED THAT SUCH INCOME HAS TO BE TREATED AS BUSINESS INCOME AS AGAINST PROPERTY INCOME TREATED BY THE ASSESSI NG OFFICER. 6. BASED ON VARIOUS ARGUMENTS ADVANCED BY THE ASSES SEE THE LEARNED CIT (A) DIRECTED THE ASSESSING OFFICER TO TREAT THE INCOME AS BUSINESS INCOME. WHILE DOING SO HE OBSERVED THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY THOUGHT TO THE FACT THAT HONBLE SUPREME COURT IN THE CASE OF M/S SHAMBHU IN VESTMENT PVT LTD HAS SIMPLY ENDORSED THE FINDING AND VIEWS OF HONBLE CALCUTTA HIGH COURT REPORTED IN 249 ITR 47 WHEREIN AFTER LONG DISCUSSION AND PONDERING OVER VA RIOUS DECISIONS OF THE HONBLE COURTS INCLUDING THE HONBLE APEX COURT THE PRINCI PLES HAVE BEEN LAID DOWN THAT MERELY BECAUSE INCOME HAS ATTACHED TO HOUSE PROPERT Y IT CANNOT BE A SOLE FACTOR FOR SUSTAINING OF SUCH INCOME AS INCOME FROM HOUSE PRO PERTY. IT HAS TO BE SEEN AS TO WHETHER IT WAS THE PRIMARY OBJECTIVE OF THE ASSESSE E TO EXPLOIT THE PROPERTY IN A SIMPLE MANNER OR TO EXPLOIT IT COMMERCIALLY. HE EX TRACTED THE RELEVANT PORTION OF THE DECISION OF THE HONBLE HIGH COURT. HE FURTHER ANA LYSED THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE COMPANY AND OBSERVED TH AT THE MAIN OBJECT OF THE COMPANY IS TO CARRY ON THE BUSINESS OF PROPRIETORS LESSORS LICENSES OF OFFICE FLATS MAISONETTES DWELLING HOUSES FARM HOUSES SHOPS I NDUSTRIAL ESTATE ETC. HE FURTHER OBSERVED THAT THE AGREEMENT WITH THE LESSEE FOR THE IMPUGNED PROPERTY DOES NOT MENTION THE WORD TENANT FOR THE OCCUPIER IN IT AND THEREFORE THERE IS NO SIMPLY LANDLORD AND TENANT RELATIONSHIP BETWEEN THE ASSE SSEE COMPANY AND THE LESSEE. HE FURTHER OBSERVED THAT SINCE THERE IS NO FRESH AGREE MENT FOR THE SAME IT IS CLEAR THAT THE INTENTION OF THE ASSESSEE HAS NOT GONE FOR A CH ANGE AND IT REMAINS THE EARLIER ONE ONLY IE TO EXPLOIT COMMERCIALLY BY WAY OF COMPL EX COMMERCIAL ACTIVITIES OF ITA 5387/M/2008 CROSS OBJECTION NO 39/M/09 M/S CRIMSON PROPERTY PVT LTD 5 GENERATING BUSINESS INCOME AS EARLIER AS IT IS PART AND PARCEL OF THE OF THE ASSESSEES BUSINESS ACTIVITY ONLY. HE HELD THE DECISION OF SH AMBHU INVESTMENT (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AND ACC ORDINGLY DIRECTED THE ASSESSING OFFICER TO TREAT THE INCOME DECLARED BY THE ASSESSE E FROM SUCH PROPERTY AS BUSINESS INCOME. 7. AGGRIEVED WITH SUCH ORDER OF THE CIT (A) THE RE VENUE IS IN APPEAL BEFORE US WITH FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD CIT (A) ERRED IN APPRECIATING THE FACT THAT THE BASIC S OURCE OF EARNING OF INCOME IS PROVIDING SPACE TO THE TENANTS. SERVICES PROVIDED BY WAY OF LIGHTING FURNITURE FIXTURES ETC. CAN NOT ALTER THE CHARACTER OF HOUSE PROPERTY INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD CIT (A) ERRED IN NOT APPRECIATING THE FACT THAT ANY PRE MISES GIVEN ON RENT ALONG WITH AMENITIES ARE INSEPARABLE AND IS TO BE ENJOYED TOGETHER. THE SO CALLED ADDITION OF AMENITIES AND SERVICES PROVIDED JUST AD D THE VALUE TO THE PROPERTY BUT THE AMOUNT RECEIVED ON ACCOUNT OF THE PROPERTY WHICH IS LEASED OUT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD CIT (A) ERRED IN APPRECIATING THE FACTS OF SHAMBHU INVE STMENT PVT LTD 263 ITR 143 (SC) WHICH IS IN FAVOUR OF REVENUE. 4. THE APPELLANT PRAYS THAT THE ORDER OF THE LD CIT (A) BE SET ASIDE AND THE ORDER OF THE AO BE RESTORED. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE HEAVILY RELIED ON THE ORDER OF THE ASSESSING OFFICER. HE ALSO PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SHAMBHU INVESTMENT (SUPRA) AND SUBMI TTED THAT THE INCOME FROM LETTING OUT OF THE PROPERTY HAS TO BE TREATED AS I NCOME FROM HOUSE PROPERTY. 9. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND STRONGLY RELIED ON THE ORDER OF THE CIT (A). HE SUBMITTED THAT THERE IS NO LETTING OUT OF THE PROPERTY THEREFORE THE DECISION OF THE HONBLE SUPREME COUR T IN THE CASE OF SHAMBHU INVESTMENT (SUPRA) IS NOT AT ALL APPLICABLE. HE SU BMITTED THAT THE ASSESSING OFFICER HAS NOT RECORDED THE FACTS CORRECTLY. REFERRING TO THE COPY OF THE AGREEMENT WHICH WAS FILED BY THE REVENUE HE SUBMITTED THAT THE BUS INESS CENTRE FACILITIES ARE GIVEN TO THE MEMBERS ON A WEEK TO WEEK BASIS AND EACH WEEK I S BEING COMPUTED FROM 9.00 ITA 5387/M/2008 CROSS OBJECTION NO 39/M/09 M/S CRIMSON PROPERTY PVT LTD 6 AM ON MONDAY TILL 5.00 PM ON SATURDAY OF THE WEEK. HE SUBMITTED THAT FOR THE USE AND ENJOYMENT OF THESE SERVICES PROVIDED THE USER SHALL PAY TO THE CENTRE SUBSCRIPTION AND SERVICE CHARGES AT PRESCRIBED RATE S PER WEEK AND NOT RENT. HE ACCORDINGLY SUBMITTED THAT ONCE IT IS HELD THAT IT IS NOT A LETTING OUT THE VARIOUS CASE LAWS RELIED ON BY THE REVENUE BECOME INAPPLICABLE. HE SUBMITTED THAT IN THE EARLIER YEAR THE ASSESSING OFFICER IN THE ORDER PASSED U/S 143(3) HAS ASSESSED SUCH INCOME AS BUSINESS INCOME. THIS YEAR THERE IS NO CHANG E OF FACTS. SINCE THE CIT (A) HAS GIVEN A FINDING THAT THE ASSESSEE HAS NOT LET OUT T HE PROPERTY AND SINCE THE ASSESSEE WAS COMMERCIALLY EXPLOITING THE PROPERTY BY GIVING VARIOUS FACILITIES THEREFORE THE ENTIRE INCOME SHOULD BE ASSESSED AS BUSINESS INCOM E. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS GOT ITSELF REGISTERED UNDER THE SE RVICE TAX ACT UNDER THE HEAD BUSINESS SUPPORT SERVICES. AFTER CHARGING SERVIC E TAX FROM THE CUSTOMERS THE ASSESSEE HAS PAID SUCH SERVICE TAX TO THE GOVERNMEN T. HAD THE INTENTION OF THE ASSESSEE WAS TO PROVIDE ONLY THE SPACE ON RENT THE ASSESSEE WOULD NOT HAVE REGISTERED ITSELF UNDER THE SERVICE TAX AND CHARGED SERVICE TAX FROM ITS CUSTOMERS. REFERRING TO PAGE 4 OF THE CIT (A)S ORDER HE DREW THE ATTENTION OF THE BENCH TO THE VARIOUS SERVICES PROVIDED BY THE ASSESSEE TO ITS CU STOMERS AS PER AGREEMENT. HE SUBMITTED THAT AFTER HEAVY BORROWINGS THE ASSESSEE DEVELOPED THE PROPERTY INTO A BUSINESS CENTRE AND WAS ABLE TO PROVIDE SERVICES TO THE CUSTOMERS AS PER AGREEMENT. REFERRING TO PAGE 9 OF THE ORDER OF THE CIT (A) HE SUBMITTED THAT INCOME AMOUNTING TO RS 8 10 985/- OUT OF THE TOTAL HIRING SERVICE IN COME OF RS 1.39 CRORES IS IN RESPECT OF PREMISES WHICH ARE TAKEN ON LEAVE AND LICENSE B ASIS. THEREFORE THE ASSESSEE IS NOT THE FULLY OWNER OF THE PROPERTY. ACCORDINGLY INCOME EARNED FROM THAT PART OF THE PREMISES CANNOT BE ASSESSED U/S 22 OF THE ACT. REF ERRING TO VARIOUS SUBMISSION MADE BEFORE LEARNED CIT (A) HE SUBMITTED THAT AFTE R DUE DELIBERATIONS THE CIT (A) HAS PASSED A SPEAKING ORDER AND THEREFORE THE SAM E SHOULD BE UPHELD AND THE GROUNDS RAISED BY THE REVENUE SHOULD BE DISMISSED. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE B Y BOTH THE SIDES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND CIT (A) AND THE PAPER BOOK FILED BY THE REVENUE. WE HAVE ALSO GONE THROUGH THE VARIOUS DECISIONS CIT ED BEFORE US DURING THE COURSE OF HEARING. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSING OFFICER TREATED THE INCOME ITA 5387/M/2008 CROSS OBJECTION NO 39/M/09 M/S CRIMSON PROPERTY PVT LTD 7 EARNED BY THE ASSESSEE AS INCOME FROM HOUSE PROPER TY AS AGAINST BUSINESS INCOME DECLARED BY THE ASSESSEE ON THE GROUND THAT MAJOR COMPONENT OF INCOME IS RENT AND BASIC SOURCE OF INCOME IS HIRING OF PROPER TY AND SPACE TO THE MEMBERS. ACCORDING TO HIM THE SERVICES PROVIDED BY WAY OF L IGHTING FURNITURE & FIXTURE ETC CANNOT ALTER THE CHARACTER OF THE INCOME. WE FIND THE CIT (A) TREATED THE INCOME AS BUSINESS INCOME ON THE GROUND THAT THE AGREEMENT WITH THE LESSEE FOR THE PROPERTY DOES NOT MENTION THE WORD TENANT FOR THE OCCUPIER IN IT AND THERE IS NO SIMPLE LANDLORD AND TENANT RELATIONSHIP BETWEEN THE ASSE SSEE COMPANY AND THE LESSEE. WE FIND FROM THE COPY OF THE AGREEMENT FILED BY THE RE VENUE THAT THE ASSESSEE HAS PERMITTED THE MEMBERS TO USE AND ENJOY BUSINESS CEN TRE FACILITIES ON A WEEK TO WEEK BASIS FROM 9.00 AM FROM MONDAY TILL 9.00 PM TILL SA TURDAY FOR A PERIOD OF 14 WEEKS WHICH CAN BE EXTENDED SUBJECT TO CERTAIN TERMS AND CONDITIONS. WE FIND CLAUSE 1 AND 2 OF AGREEMENT READS AS UNDER: 1. THE CENTRE SHALL GRANT TO THE USER AND THE US ER SHALL AVAIL OF FROM THE CENTRE THE BUSINESS CENTRE FACILITIES OFFERED BY T HE CENTRE IN THE PREMISES BEING PART OF 263 MADHUHANS BUILDING DR ANNIE BES ANT ROAD WORLI MUMBAI 400 023 ON A WEEK-TO-WEEK BASIS EACH WEEK BEING CO MPUTED FROM 9.00 AM ON MONDAY TILL 5.00 PM ON SATURDAY OF THE WEEK FOR A FIXED PERIOD OF 14 WEEKS COMMENCING FROM 18TH OCTOBER 2004 AND ENDIN G ON 1ST JANUARY 2005 SUBJECT TO THE TERMS AND CONDITIONS HEREINAFT ER SET FORTH. THE USER SHALL HAVE AN OPTION TO EXTEND THE PERIOD OF THEIR STAY B Y ONE MONTH ON THE SAME TERMS AND CONDITIONS BUT SHALL NOT HAVE THE OPTION OF CANCELING THIS AGREEMENT PRIOR TO 17TH JANUARY 2005. 2. FOR USE AND ENJOYMENT OF THE SERVICES PROVIDED IN THE SAID BUSINESS SERVICE CENTRE THE USER SHALL PAY TO THE CENTRE SU BSCRIPTION AND SERVICE CHARGES AT THE RAT OF RS 34 615.40 PER WEEK. THE S AID AMOUNT SHALL BE PAID EVERY 45 DAYS IN ADVANCE. 11. FROM THE ABOVE IT IS CLEAR THAT THE ASSESSEE H AS GRANTED THE USER MEMBERS TO USE THE FACILITIES ON WEEK TO WEEK BASIS AND THE US ER SHALL PAY TO CENTRE SUBSCRIPTION AND SERVICE CHARGES ON WEEKLY BASIS. THEREFORE TH ERE IS NO LANDLORD AND TENANT RELATIONSHIP. THE MEMBERS DO NOT HAVE RIGHT TO USE THE PROPERTY DURING HOLIDAYS UNLIKE ANY NORMAL LETTING OUT OF THE PROPERTY. FUR THER THE ASSESSING OFFICER DURING THE ASSESSMENT YEAR 2002-03 IN THE ORDER PASSED U/S 143(3) HAS ALLOWED THE CLAIM OF THE ASSESSEE AS BUSINESS INCOME A FACT BROUGH T ON RECORD BY THE CIT (A) ON ITA 5387/M/2008 CROSS OBJECTION NO 39/M/09 M/S CRIMSON PROPERTY PVT LTD 8 PAGE 8 OF HIS ORDER AND NOT CONTROVERTED BY THE REV ENUE. THE RELEVANT PORTION OF THE ORDER OF THE CIT (A) AT PAGE 8 READS AS UNDER:- FURTHER THE PERVIOUS ASSESSMENTS OF THE COMPANY W ERE ALSO COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961. IN ALL THE EAR LIER ASSESSMENTS SUCH INCOMES HAVE BEEN TREATED AS INCOME FROM BUSINESS O NLY. THERE IS NO CHANGE IN SUCH INCOME SO AS TO JUSTIFY SUCH CHANGE IN THE HEAD OF INCOME AS PROPOSED BY THE INCOME TAX OFFICER. WE ARE ENCLOSING HEREWI TH FOR YOUR HONOURS READY REFERENCE COPY OF THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT 1961 FOR AY 2002-03 WHEREIN SUCH INCOMES HAVE BEEN ASSESSED AS BUSINESS INCOME ONLY. 12. WE FURTHER FIND MERIT IN THE SUBMISSION OF LEAR NED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE IS REGISTERED UNDER SERVICE TAX U NDER BUSINESS SERVICE CENTRE AND COLLETS SERVICE TAX FROM THE CUSTOMERS FOR PROVIDIN G VARIOUS SERVICES AS ENUMERATED AT PAGE 4 OF THE CIT (A)S ORDER. WE ALSO FIND MER IT IN THE SUBMISSION OF LEARNED COUNSEL FOR THE ASSESSEE THAT A PART OF THE PREMISE S IS NOT OWNED BY THE ASSESSEE AND IT HAS BEEN TAKEN ON LEAVE AND LICENSE BASIS. IN VIEW OF THE ABOVE AND IN VIEW OF THE DETAILED ORDER PASSED BY THE CIT (A) WE DO NOT FIND ANY INFIRMITY IN THE SAME TREATING THE INCOME FROM THE PREMISES AS BUSINESS INCOME AS AGAINST RENTAL INCOME TREATED BY THE ASSESSING OFFICER. ACCORDIN GLY THE SAME IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. CROSS OBJECTION NO 39/MUM/2009 13. THE ASSESSEE HAS TAKEN ALTERNATE GROUNDS IN THE CROSS OBJECTION THAT IN CASE THE INCOME IS TREATED AS INCOME FROM HOUSE PROPERT Y THEN SUCH INCOME SHOULD BE BIFURCATED AS RENTAL INCOME AND BUSINESS INCOME AND VARIOUS EXPENSES INCURRED BY THE ASSESSEE HAS TO BE ALLOWED FROM SUCH BUSINESS I NCOME. SINCE THE GROUNDS RAISED BY THE REVENUE HAS BEEN DISMISSED THEREFORE THE CROSS OBJECTION FILED BY THE ASSESSEE BECOMES ACADEMIC IN NATURE AND THEREFORE B ECOMES INFRUCTUOUS. ACCORDINGLY THE SAME IS DISMISSED. 14. IN THE RESULT APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ITA 5387/M/2008 CROSS OBJECTION NO 39/M/09 M/S CRIMSON PROPERTY PVT LTD 9 ORDER IS PRONOUNCED ON 9TH DAY OF APRIL 2010. SD/- (D MANMOHAN) VICE PRESIDENT SD/- (R K PANDA) ACCOUNTANT MEMBER MUMBAI DATE: 9TH APRIL 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)-V MUMBAI. 4) THE CIT MC- V MUMBAI. 5) THE D.R. C BENCH ITAT MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR CHAVAN* I.T.A.T. MUMBAI ITA 5387/M/2008 CROSS OBJECTION NO 39/M/09 M/S CRIMSON PROPERTY PVT LTD 10 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 5.4.2010/ 7.4.2010 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 6.4.2010/ 8.4.2010 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/A M 5 APPROVED DRAFT COMES TO THE SR.PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS 7 FILE SENT TO THE BENCH CLERK SR.PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER