UNIQUE CONSTRUCTION & DEVELOPERS, MUMBAI v. ASST CIT CIR 15(2), MUMBAI

ITA 1397/MUM/2012 | 2008-2009
Pronouncement Date: 24-07-2013 | Result: Allowed

Appeal Details

RSA Number 139719914 RSA 2012
Assessee PAN AABFU7020P
Bench Mumbai
Appeal Number ITA 1397/MUM/2012
Duration Of Justice 1 year(s) 4 month(s) 25 day(s)
Appellant UNIQUE CONSTRUCTION & DEVELOPERS, MUMBAI
Respondent ASST CIT CIR 15(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 24-07-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 24-07-2013
Date Of Final Hearing 17-07-2013
Next Hearing Date 17-07-2013
Assessment Year 2008-2009
Appeal Filed On 29-02-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI . ! '# $% &'. .. ( ) $% ' * BEFORE SHRI B. RAMAKOTAIAH AM AND DR. S.T.M. PAVAL AN JM ITA NO. 1397/MUM/2012 : ASST.YEAR 2008-2009 & ITA NO. 2696/MUM/2012 : ASST.YEAR 2009-2 010 UNIQUE CONSTRUCTION & DEVELOPERS 77 UDYOG BHAVAN SONAWALA LANE GOREGAON(E) MUMBAI-400 063 PAN : AAABFU7020P ( ( ( ( / VS. ASSTT.COMMISSIONER OF INCOME TAX CIRCLE-15(2) AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. ( - / // / APPELLANT) ( ./ - / RESPONDENT) ITA NO. 1421/MUM/2012 : ASST.YEAR 2008-2009 & ITA NO. 3317/MUM/2012 : ASST.YEAR 2009-2 010 ASSTT.COMMISSIONER OF INCOME TAX 15(2) MATRU MANDIR ROOM NO.113 TARDEO MUMBAI-400 008 ( ( ( ( / VS. UNIQUE CONSTRUCTION & DEVELOPERS 77 UDYOG BHAVAN SONAWALA LANE GOREGAON(E) MUMBAI-400 063 PAN : AAABFU7020P ( - / // / APPELLANT) ( ./ - / RESPONDENT) 0% 1 2 ' / REVENUE BY : SHRI R.R. PRASAD ./ - 1 11 1 2 2 2 2 ' '' ' / ASSESSEE BY : SMT. AARTI VISSANJI ( 1 3# / DATE OF HEARING: 17.07.2013 45 1 3# / DATE OF PRONOUNCEMENT: 24.07.2013 $'6 $'6 $'6 $'6 / O R D E R PER B. RAMAKOTAIAH A.M. THESE ARE FOUR APPEALS BY ASSESSEE AND REVENUE FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10 AGAINST THE O RDERS OF THE 2 ITA NO .1397/1421/2696/3317 / MUM/2012 UNIQUE CONSTRUCTION & DEVELOPERS MUMBAI CIT(A)(26) MUMBAI DATED 10.12.2011. SINCE ISSUES AR E COMMON THESE APPEALS ARE HEARD TOGETHER AND DECIDED BY THI S COMMON ORDER. 2. THE ISSUE IN THESE APPEALS IS WHETHER INCOME EARNED BY THE ASSESSEE BY LETTING OUT THE PROPERTY ON LEAVE AND L ICENSE BASIS ALONG WITH SEPARATE AGREEMENT FROM AMENITIES IS TO BE ASS ESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY OR AS BUSINESS INCO ME. 3. BRIEFLY STATED THE ASSESSEE IS A PARTNERSHIP FI RM CONSTITUTED FOR DEVELOPMENT AND CONSTRUCTION OF COMMERCIAL PREMISE NAMED GARDENIA IN BANDRA KURLA COMPLEX OF MUMBAI. THE ASS ESSEE GAVE THIS COMMERCIAL PREMISES ON LEAVE AND LICENSE BASIS TO CENTRUM GROUP OF CONCERNS ON 10 DECEMBER 2007 FOR A PERIO D OF 5(FIVE) YEARS WITH AN OPTION TO RENEW FOR A FURTHER PERIOD OF 4(FOUR) YEARS. THE ASSESSEE ENTERED INTO AGREEMENT FOR LEASE OF PR EMISES ON LEAVE AND LICENSE BASIS AT A MONTHLY RENT OF RS.13 15 700 /- FOR THE FIRST YEAR WITH AN OPTION TO INCREASE EVERY YEAR AS STAT ED IN PARA 5.2 OF THE AGREEMENT. ALONG WITH THIS AGREEMENT ASSESSEE ALSO ENTERED INTO SEPARATE AGREEMENT FOR AMENITIES ON A MONTHLY RENT OF RS.6 57 900/- IN THE FIRST YEAR WITH AN OPTION TO INCREASE FOR E VERY ONE YEAR LATER AS DETAILED IN PARA 2B OF THE AGREEMENT. ASSESSEE TREA TED THE ENTIRE RECEIPT AS RENT AND OFFERED THE INCOME UNDER THE HE AD INCOME FROM THE HOUSE PROPERTY. ON THE REASON THAT THE PROPERT Y IS A COMMERCIAL PROPERTY AND THE ASSESSEE WAS PROVIDING SERVICES TO THE TENANTS RELYING ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. NATIONAL STORAGE PVT. LTD. [48 ITR 577 (BOM )] AO TREATED THE ENTIRE RECEIPT AS INCOME FROM BUSINESS. HE HAS ALSO LISTED OUT THE AMENITIES/FACILITIES PROVIDED IN PARA 4.2(B) OF TH E ASSESSMENT ORDER. THE LD. CIT(A) CONSIDERING THE CONTENTIONS OF THE A SSESSEE TREATED THE LEAVE AND LICENSE AMOUNT UNDER THE HEAD INCOME FRO M HOUSE PROPERTY WHEREAS HE UPHELD THE TREATMENT OF RECEIP T ON AMENITIES AS INCOME FROM BUSINESS. THE ASSESSEE IS AGGRIEVED O N THE PART OF THE CIT(A) DECISION TREATING THE AMENITIES AS BUSINESS INCOME WHEREAS 3 ITA NO .1397/1421/2696/3317 / MUM/2012 UNIQUE CONSTRUCTION & DEVELOPERS MUMBAI REVENUE IS AGGRIEVED ON THE DIRECTION OF THE CIT(A) TO TREAT THE LEAVE AND LICENSE AMOUNT AS INCOME FROM HOUSE PROPERTY. 4. THE LD. COUNSEL REFERRING TO THE AGREEMENTS SUBM ITTED THAT THE AMENITIES ARE NOTHING BUT FIXED AMENITIES TO THE BU ILDING AND SUBMITTED THAT THERE WERE NO SERVICES PROVIDED TO T HE TENANTS AND THE RECEIPTS ARE COMPOSITE RECEIPTS. IT WAS THE SUB MISSION THAT THE AMENITIES AGREEMENT IS INCIDENTAL TO THE LEAVE AND LICENSE AGREEMENT AND THE RECEIPT CANNOT BE SEPARATED PARTLY AS BUSIN ESS INCOME. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE IS ONLY PRO VIDING THE AMENITIES AS PART OF THE BUILDING LIKE GENERATOR SECURITIES SYSTEM WITH CCTV AIR-CONDITIONERS FAADE CLEANING SYSTEM VENTILATION SYSTEM CAR PARKING LANDSCAPING DECORATION GYMN ASIUM AND WATER CYCLING PLANT WHICH AMENITIES ARE NECESSARY IN THE COMMERCIAL BUILDING AND SEPARATE AMOUNTS ARE COLLECTED AS PART OF THE AMENITIES PROVIDED BUT THESE AMENITIES ARE PART OF THE COMMER CIAL BUILDING CONSTRUCTED AND ENTIRE RECEIPTS ARE TO BE TREATED A S INCOME FROM HOUSE PROPERTY. LD. COUNSEL RELIED ON THE PRINCIPLE S LAID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF SHAMBHU INVESTMEN T PVT. LTD. OF CALCUTTA HIGH COURT AS APPROVED BY THE HONBLE SUPR EME COURT IN 263 ITR 143. LD. COUNSEL FURTHER SUBMITTED THAT THE CIT(A) WAS CORRECT IN TREATING THE LEAVE AND LICENSE FEE AS IN COME FROM HOUSE PROPERTY WHEREAS HE ERRED IN TREATING AMOUNT RECEIV ED FOR AMENITIES AS INCOME FROM BUSINESS. LD COUNSEL ALSO RELIED ON THE PRINCIPLES LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE C ASE OF NATIONAL STORAGE PVT. LTD. RELIED ON BY THE LD. AO TO SUBM IT THAT ON THE FACTS THE ENTIRE INCOME IS TO BE TREATED INCOME FROM HOUS E PROPERTY. 5. THE LD. DR HOWEVER REFERRED TO THE ORDER OF THE AO TO SUBMIT THAT THE ASSESSEE IS PROVIDING SERVICES TO THE TENA NTS AND THEREFORE THE INCOME IS TO BE TREATED AS INCOME FROM BUSINESS ONLY. HE RELIED ON THE FOLLOWING FOUR CASES IN SUPPORT OF THE CONTE NTIONS; 4 ITA NO .1397/1421/2696/3317 / MUM/2012 UNIQUE CONSTRUCTION & DEVELOPERS MUMBAI (I) KENTON LEISURE SERVICES (P.) LTD. VS. DCIT 1 35 ITD 10(COCH.) (II) ITO VS. INFORMATION TECHNOLOGY PARK LTD. 49 SOT 491. (III) NARAYAN MARKET COMPLEX VS. ITO 51 SOT 387 ( CUTTACK). (IV) ACIT VS. VIJAY S. MALLYA 52 SOT 197. 6. LD. COUNSEL IN REPLY DISTINGUISHED THE ABOVE DEC ISIONS TO SUBMIT THAT THE ASSESSEE WAS NOT PROVIDING ANY SERV ICE THEREFORE THE ENTIRE RECEIPT HAS TO BE TAXED AS INCOME FROM H OUSE PROPERTY AS OFFERED BY THE ASSESSEE. 7. WE HAVE CONSIDERED THE ISSUE AND THE RIVAL CONT ENTIONS. THE ISSUE WHETHER A PARTICULAR LET OUT IS BUSINESS OR RENTAL INCOME BY THE OWNER OF THE PREMISES HAS TO BE DECIDED ON THE FACT S AND CIRCUMSTANCES OF EACH CASE. SO FOR AS THE RENTAL I NCOME OF LETTING OUT THE PREMISES EARNED BY THE ASSESSEE IS CONCERNED THE ISSUE IS SETTLED BY THE HONBLE SUPREME COURT IN VARIOUS DEC ISIONS MORE PARTICULARLY IN THE CASE OF SHAMBHU INVESTMENT PVT. LTD. VS. CIT 263 ITR 143. IT HAS BEEN HELD THAT THE INCOME REALIZED BY THE OWNER BY WAY OF RENTAL INCOME FROM A BUILDING WHETHER COMME RCIAL BUILDING OR RESIDENTIAL IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THEREFORE TO THE EXTENT OF LEAVE AND LIC ENSE AMOUNTS RECEIVED BY THE ASSESSEE BY LETTING OUT THE COMMERC IAL BUILDING IS CONCERNED THE CIT(A) HAS CORRECTLY ANALYSED AND CA ME TO A CONCLUSION THAT THE INCOME IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. WE CONFIRM THE ORDER OF THE CI T(A) AND CONSEQUENTLY REVENUE GROUNDS ARE REJECTED AND BOTH THE REVENUE APPEALS ARE DISMISSED. 8. COMING TO THE INCOME RECEIVED BY WAY OF AGREEMEN T FOR AMENITIES WHICH THE ASSESSING OFFICER TREATED AS BU SINESS INCOME AND THE LD. CIT(A) ALSO CONFIRMED THE AMENITIES PR OVIDED BY THE ASSESSEE AS EXTRACTED IN THE ORDER BY AO ARE AS U NDER : 5 ITA NO .1397/1421/2696/3317 / MUM/2012 UNIQUE CONSTRUCTION & DEVELOPERS MUMBAI (I) 125 KVA GENERATOR (KIRLOSKAR OR EQUIVALENT MAKE ) FOR ESSENTIAL ITEMS LIKE ELEVATORS PUMPS COMMON LIGHT ING SECURITY SYSTEM ETC. (II) COMMON SECURITY SYSTEM WITH CC TV FOR COMPOUN D LIFT LOBBIES STAIRCASE BASEMENT ETC. (III) AIR CONDITIONERS OF 15 TONES FOR LIFT LOBBIES . (IV) FAADE CLEANING SYSTEM. (V) MECHANICAL VENTILATION SYSTEM FOR BASEMENT. (VI) USE OS 5 NOS. OF COVERED/RESERVED CAR PARKING SPACES IN THE SAID BUILDING. (VII) COMPOUND AND DRIVE WAY PAVED WITH DECORATIVE PAVERS. (VIII) LANDSCAPED GARDEN ON GROUND LEVEL. (IX) FULLY AIR CONDITIONED ATRIUM STYLE ENTRANCE LO BBY WITH SITTING ARRANGEMENT. (X) FULLY FINISHED COMMON TOILETS IN STILT AREA. (XI) FULLY FURNISHED AND EQUIPPED GYMNASIUM IS BASE MENT WITH REST ROOM. (XII) WATER CYCLING PLANT BY ION EXCHANGE FOR FLUSH ING @ 35000 LIT. PER DAY. 9. AS CAN BE SEEN TO THE ABOVE THESE ARE FIXED AME NITIES PROVIDED TO THE TENANT AS A PART OF THE BUILDING WHICH ARE I NSEPARABLE TO THE LETTING OUT OF THE BUILDING. THE GENERATOR FOR ESSE NTIAL ITEMS LIKE ELEVATORS PUMPS COMMON LIGHTING SECURITY SYSTEM CCTV FAADE CLEANING SYSTEM AIR CONDITIONERS INCLUDING IN THE LIFTS AND LOBBIES VENTILATION SYSTEMS CAR PARKING AREAS GARDENS GY MNASIUM AND WATER CYCLING PLANT ARE PART OF THE AMENITIES PROVI DED TO THE TENANTS AND THE BUILDING WAS LET OUT ALONG WITH THESE AMENI TIES. ASSESSEE IS NOT PROVIDING ANY SERVICE IN THE FORM OF SECURITY TRANSPORT MAINTENANCE OR ANY OTHER ACTIVITIES WHICH CAN BE TR EATED AS SERVICES TO THE TENANTS. IN FACT ASSESSEE IS NOT EVEN BEARI NG THE MUNICIPAL TAX AND BUILDING MAINTENANCE AND ALL CHARGES ARE BEIN G BORNE BY THE TENANTS. ENTIRE RECEIPTS ARE SHOWN AS INCOME WHERE AS THE ASSESSEE 6 ITA NO .1397/1421/2696/3317 / MUM/2012 UNIQUE CONSTRUCTION & DEVELOPERS MUMBAI WAS CLAIMING THE ONLY EXPENDITURE TOWARDS INTEREST WHICH IS MAJOR COMPONENT ALONG WITH ADMINISTRATIVE EXPENDITURE OF ONLY RS.3 96 413 FOR THE YEAR ENDING MARCH 2008 AND RS. 1 63 362/- FOR THE YEAR ENDING MARCH 2009. THERE ARE NO OTHER EXP ENDITURES EVEN SALARY FOR ANY EMPLOYEE. THE AMENITIES AGREEMENT IS ALSO CONCURRENT WITH THE LEAVE AND LICENSE AGREEMENT FOR THE PERIOD ALSO. NOT ONLY THAT THE TDS WAS DEDUCTED BOTH ON RENT AND AMENITI ES AS RENT ONLY BY THE TENANTS. IT WAS FURTHER PROVIDED BY CLAUSE 1 1 OF THE LICENSE AGREEMENT THAT TENANTS SHALL BE ENTITLED TO MAINTAI N COMMON ARREARS OF THE BUILDING EITHER BY ITSELF OR BY COMPLEX MAN AGEMENT AGENCY AND SHALL BE ENTITLED TO PROPORTIONATE RE-IMBURSEME NT OF MAINTENANCE CHARGE FROM OTHER OCCUPANTS OF THE BUIL DING. ASSESSEE IS NOT CONNECTED EITHER TO THE MAINTENANCE OF THE B UILDING OR PROVIDING ANY SERVICE TO THE TENANTS EXCEPT MAKING PROVISION FOR THE AMENITIES AS LISTED IN AGREEMENT AS EXTRACTED ABOVE . THEREFORE IT CANNOT BE STATED THAT THE ASSESSEE IS PROVIDING SER VICES WHICH CAN COME UNDER THE NATURE OF BUSINESS. AS SEEN FROM THE AGREEMENT THE AMENITIES ARE PART OF THE BUILDING AND MAIN PURPOSE IS TO LET OUT THE BUILDING ALONG WITH AMENITIES PROVIDED THEREFORE THE RENTS ARE INSEPARABLE AS AMENITIES ARE FIXED TO THE BUILDING AND PART OF THE COMMERCIAL BUILDING CONSTRUCTED BY THE ASSESSEE. IT CANNOT BE STATED THAT THE ASSESSEE HAS EARNED THE INCOME IN THE NATU RE OF BUSINESS BY PROVIDING AMENITIES. THE ASSESSEE LET OUT THE BUILD ING ALONG WITH THE FIXED AMENITIES THEREFORE ASSESSEE TREATED ENTIR E AMOUNT AS INCOME FROM HOUSE PROPERTY. TO THAT EXTENT ORDER OF THE CIT(A) TREATING THE RECEIPTS OF AMENITIES AS PART OF BUSINESS INCOME CA NNOT BE APPROVED. 10. LD. DR RELIED TO VARIOUS DECISIONS TO PARTLY SU PPORT ORDER OF THE CIT(A). IN THE CASE OF KENTON LEISURE SERVICES (P. ) LTD. VS. DCIT 135 ITD 10(COCH.) THE FACTS ARE THAT THE ASSESSEE ENTER ED INTO THREE SEPARATE AGREEMENTS ONE FOR CONSTRUCTION OF HOSTEL BUILDING AND SECOND FOR LEASE OF THE HOSTEL BUILDING FOR 10 YEAR S AND THIRD AGREEMENT WAS FOR PROVISION AND MAINTENANCE OF AMEN ITIES AND 7 ITA NO .1397/1421/2696/3317 / MUM/2012 UNIQUE CONSTRUCTION & DEVELOPERS MUMBAI FACILITIES ATTACHED WITH HOSTEL BUILDING FOR LEASE PERIOD WHICH INCLUDED MAINTENANCE OF HOSTEL MESS FACILITIES ETC . IN THESE CIRCUMSTANCES THE BENCH OF ITAT CONSIDERED THE SC OPE OF SEGREGATION OF CONSIDERATION INTO SEPARATE STREAMS AND HELD THAT ENTIRE INCOME HAS TO BE TREATED AS BUSINESS INCOME. HOWEVER IN THE PRESENT CASE EVEN THOUGH ASSESSEE ENTERED INTO TWO SEPARATE AGREEMENTS MAIN INTENTION WAS TO LEASE COMMERCIAL B UILDING WITH ITS FIXED AMENITIES AND NO SERVICES ARE BEING PROVIDED THEREFORE THE PRINCIPLES LAID DOWN IN THE ABOVE CASE DOES NOT APP LY TO THE FACTS OF THE CASE. 11. IN THE CASE OF ITO VS. INFORMATION TECHNOLOGY P ARK LTD. THE ISSUE OF TAXABILITY OF INCOME DERIVED FROM LETTING OUT SOFTWARE TECHNOLOGY PARK WITH VARIOUS AMENITIES AS BUSINESS INCOME WAS CONSIDERED. IN THAT CASE THE ASSESSEE WAS CARRYING ON A COMPLEX COMMERCIAL ACTIVITIES OF SETTING UP A SOFTWARE TECH NOLOGY PARK BACKED WITH AMENITIES WHICH INCLUDED WATCH AND WARD THE F ACILITIES OF INTERNET COMMUNICATION SATELLITE COMMUNICATION ETC . AS ASSESSEE WAS ENGAGED IN THE BUSINESS OF DEVELOPING OPERATIN G AND MAINTAINING A TECHNOLOGY PARK BASED ON THE GUIDE LINES ISSUED BY MINISTRY OF COMMERCE THEREFORE THE FINDING WAS TH AT INCOME HAS TO BE ASSESSED AS BUSINESS INCOME. IN THE PRESENT ASS ESSEES CASE ASSESSEE ONLY CONSTRUCTED A COMMERCIAL BUILDING TO LET OUT ALONG WITH AMENITIES THEREFORE THE FACTS AND CIRCUMSTANCES O F THE ABOVE CASE ARE DIFFERENT AND THE PRINCIPLES LAID DOWN THEREIN DOES NOT APPLY. 12. LD. DR ALSO RELIED ON THE DECISION OF NARAYAN MARKET COMPLEX WHEREIN THE RENT WAS RECEIVED ON MARKET COMPLEX AL ONG WITH OTHER INCIDENTAL SERVICES LIKE ELECTRICIAN PLUMBER SWEE PER ETC. IN THE PRESENT CASE THERE ARE NO SUCH SERVICES RENDERED NO T EVEN COLLECTION OF ANY ELECTRICITY BILLS ETC. THEREFORE THE FACTS IN THE ABOVE CASE DOES NOT APPLY TO THE ASSESSEE. 8 ITA NO .1397/1421/2696/3317 / MUM/2012 UNIQUE CONSTRUCTION & DEVELOPERS MUMBAI 13. COMING TO THE LAST CASE RELIED ON BY THE LD. CI T DR IN THE CASE OF ACIT VS. VIJAY S. MALLYA 52 SOT 197 THE DECISIO N IS ALSO DISTINGUISHABLE ON FACTS. THERE ASSESSEE WAS NOT OW NER OF THE ENTIRE PREMISES AND LET OUT BUILDING ALONG WITH FACILITIE S AND AMENITIES INCLUDING TRANSPORT FACILITIES IN THE BUSINESS COM PLEX DEVELOPED BY ASSESSEE. SINCE ASSESSEE BUSINESS WAS TO LET OUT T O FLEX SOLUTION LTD THE LD. CIT (A) SEGREGATED THE RECEIPTS OF 40 % OF SERVICES AS BUSINESS INCOME 60% TOWARDS PREMISES AS INCOME FROM HOUSE P ROPERTY AND ON FACTS OF THE CASE ITAT UPHELD THE ORDER OF THE CIT. HOWEVER IN THE PRESENT CASE ASSESSEE IS NOT PROVIDING ANY SE RVICE TO THE TENANTS. ASSESSEE SIMPLY LET OUT THE COMMERCIAL BU ILDING WITH AMENITIES WITHOUT ANY SERVICES BEING RENDERED IN TH IS REGARD FOR FIXED PERIOD OF 5 YEARS WHICH COULD BE EXTENDED BY ANOTHER 4 YEARS THEREFORE AOS CONTENTION THAT INCOMES PERTAIN TO NATURE OF BUSINESS ACTIVITIES CANNOT BE UPHELD. 14. THE LD. AO RELIED ON THE JURISDICTIONAL HIGH CO URT DECISION IN THE CASE OF CIT VS. NATIONAL STORAGE PVT. LTD. [48 ITR 577 (BOM)]. THE FACTS AND ABOVE OF THE CASE ARE THAT THE ASSESSEE W AS RECEIVING AMOUNTS FOR THE FACILITIES AND SERVICES RENDERED LI KE LETTING OUT VAULTS FOR STORAGE OF FILMS AND FIRE PROTECTION FACILITIE S AND OTHER FACILITIES LIKE PAYMENT TO MUNICIPALITY RAILWAY BOOKINGS ETC. ON THOSE FACTS THE HONBLE HIGH COURT HELD THAT SUCH ACTIVITIES WO ULD BE BUSINESS ACTIVITY AND INCOME WOULD BE TAXED AS INCOME FROM B USINESS HOWEVER THE HONBLE JURISDICTIONAL HIGH COURT ALSO SET OUT VARIOUS PRINCIPLES GOVERNING THE ISSUE AT THAT TIME. THE H ONBLE JURISDICTIONAL HIGH COURT SET OUT THE PRINCIPLES AS FOLLOWS: 5. HOUSE-OWING HOWEVER PROFITABLE CANNOT BE A BUSINESS OR TRADE UNDER THE INCOME-TAX ACT. WHERE INCOME IS DER IVED FROM HOUSE PROPERTY BY THE EXERCISE OF PROPERTY RIGHTS P ROPERLY SO CALLED THE INCOME FALLS UNDER THE HEAD INCOME FRO M PROPERTY CHARGEABLE UNDER SECTION 9. IT IS THE NATURE OF THE OPERATIONS AND NOT THE CAPACITY OF THE OWNER THAT MUST DETERMINE W HETHER THE INCOME IS FROM PROPERTY OR FROM TRADE. WHERE THE OP ERATIONS 9 ITA NO .1397/1421/2696/3317 / MUM/2012 UNIQUE CONSTRUCTION & DEVELOPERS MUMBAI INVOLVED IN THE ACTIVITY OF EARNING INCOME FROM HOU SE PROPERTY ARE NOT DIFFERENT FROM THOSE OF AN ORDINARY HOUSE-OWNER TURNING TO PROFITABLE ACCOUNT THE PROPERTY OF WHICH HE IS THE OWNER THE INCOME DERIVED IS INCOME FROM PROPERTY CHARGEABLE U NDER SECTION 9 IRRESPECTIVE OF WHETHER THE OPERATIONS ARE CARRIE D ON BY A COMPANY ONE OF WHOSE OBJECTS OR EVEN THE SOLE OBJEC T IS TO INDULGE IN THE ACTIVITY OF EARNING INCOME FROM HOUS E PROPERTY. THUS WHERE HOUSE PROPERTY IS GIVEN ON LEASE OR LIC ENSE BASIS FOR EARNING INCOME THERE FROM THE TRUE CHARACTER OF TH E INCOME DERIVED IS INCOME FROM PROPERTY FALLING UNDER SECTI ON 9. THE SAID CHARACTER IS NOT CHANGED AND THE INCOME DOES NOT BE COME INCOME FROM TRADE OR BUSINESS IS THE HIRING IS INCLUSIVE O F CERTAIN ADDITIONAL SERVICES SUCH AS HEATING CLEANING LIGH TING OR SANITATION WHICH ARE RELATIVELY INSIGNIFICANT AND ONLY INCIDENTAL TO THE USE AND OCCUPATION OF THE TENEMENTS. 6. IN CASES WHERE THE INCOME RECEIVED IS NOT FRO M THE BARE LETTING OF THE TENEMENT OR FROM THE LETTING ACCOMPA NIED BY INCIDENTAL SERVICES OR FACILITIES BUT THE SUBJECT HIRED OUT IS A COMPLEX ONE AND THE INCOME OBTAINED IS NOT SO MUCH BECAUSE OF THE BARE LETTING OF THE TENEMENT BUT BECAUSE OF THE FACILITIES AND SERVICES RENDERED THE OPERATIONS INVOLVED IN SUCH LETTING OF THE PROPERTY MAY BE OF THE NATURE OF BUSINESS OR TRADIN G OPERATIONS AND THE INCOME DERIVED MAY BE INCOME NOT FROM EXERC ISE OF PROPERTY RIGHTS PROPERLY SO CALLED SO AS TO FALL UN DER SECTION 9 BUT INCOME FROM OPERATIONS OF A TRADING NATURE FALLING UNDER SECTION 10 OF THE ACT; AND 7. IN CASES WHERE THE LETTING IS ONLY INCIDENTAL AND SUBSERVIENT TO THE MAIN BUSINESS OF THE ASSESSEE THE INCOME DE RIVED FROM THE LETTING WILL NOT BE THE INCOME FROM PROPERTY FA LLING UNDER SECTION 9 AND THE EXCEPTION TO SECTION 9 MAY ALSO C OME INTO OPERATION IN SUCH CASES. THE RESPECTIVELY FOLLOWING PRINCIPLES LAID DOWN PA RTICULARLY PRINCIPLES SET OUT IN PARA 5 ABOVE THE AMENITIES AGREEMENT I S INCIDENTAL TO LETTING OUT OF COMMERCIAL BUILDING AND AS NO SERVIC ES ARE BEING RENDERED THE ENTIRE RECEIPT HAS TO BE CONSIDERED A S PART OF RENT OF THE BUILDING. MOREOVER THE PRINCIPLE LAID DOWN BY THE H ONBLE SUPREME COURT IN THE CASE OF SHAMBHU INVESTMENT PVT. LTD. VS. CIT 263 ITR 143 ALSO SUPPORT THE ABOVE OPINION. ACCORDINGLY T HE CIT(A)S ORDER 10 ITA NO .1397/1421/2696/3317 / MUM/2012 UNIQUE CONSTRUCTION & DEVELOPERS MUMBAI IS MODIFIED TO THAT EXTENT AND THE ASSESSEES GROUN DS ARE ALLOWED. AO IS DIRECTED TO ASSESS THE ENTIRE RECEIPT BOTH ON L EAVE AND LICENSE AND AMENITIES AS INCOME FROM HOUSE PROPERTY ONLY. 15. IN THE RESULT ASSESSEES APPEALS ARE ALLOWED A ND THE REVENUES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 . 07 .20 13 $'6 1 45 # ' 7 8$(9 1 : SD/- SD/- ( DR. S.T.M. PAVALAN) ( B.RAMAKOTAIAH) ) $% /JUDICIAL MEMBER '# $% /ACCOUNTANT MEMBER MUMBAI; 8$( DATED 24 / 07/2013 . )( . . / A.K.PATEL PS $'6 $'6 $'6 $'6 1 11 1 . .. .)3;< )3;< )3;< )3;< ='<53 ='<53 ='<53 ='<53 / COPY OF THE ORDER FORWARDED TO : 1. - / THE APPELLANT 2. ./ - / THE RESPONDENT. 3. > ( ) / THE CIT(A)-33 MUMBAI 4. > / CIT 22 MUMBAI 5.