SICOM LIMITED, MUMBAI v. DY.C.I.T., RANGE .3(3), MUMBAI

ITA 3720/MUM/2009 | 2005-2006
Pronouncement Date: 30-11-2011 | Result: Dismissed

Appeal Details

RSA Number 372019914 RSA 2009
Assessee PAN AAACS5524J
Bench Mumbai
Appeal Number ITA 3720/MUM/2009
Duration Of Justice 2 year(s) 5 month(s) 20 day(s)
Appellant SICOM LIMITED, MUMBAI
Respondent DY.C.I.T., RANGE .3(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted J
Tribunal Order Date 30-11-2011
Date Of Final Hearing 24-11-2011
Next Hearing Date 24-11-2011
Assessment Year 2005-2006
Appeal Filed On 09-06-2009
Judgment Text
ITA NOS.3720 & 2965/MUM/2009 & 2965/MUM/2010 SICOM LIMITED MUMBAI PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL 'J' BENCH MUMBAI BEFORE SHRI D.K. AGARWAL JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 3720/MUM/2009 & ITA NO.2965/MUM/2010 (ASSESSMENT YEARS: 2005-06 & 2006-07) SICOM LIMITED DY. COMMISSIONER OF NIRMAL 1 ST FLOOR INCOME TAX RANGE 3(3) NARIMAN POINT MUMBAI MUMBAI 400021 VS PAN AAACS 5524 J APPELLANT RESPONDENT APPELLANT BY: SHRI RAJAN R VORA RESPONDENT BY: SHRI D.S.SUNDER SINGH DR DATE OF HEARING: 24/11/11 DATE OF PRONOUNCEMENT: 30/11/11 O R D E R PER BENCH: THESE ARE APPEALS BY THE ASSESSEE FOR THE ASSESSMEN T YEARS 2005-06 AND 2006-07 AGAINST THE ORDERS OF THE CIT ( A)XXXII MUMBAI DATED 19.03.2009 AND 28.07.2009. THE ISSUE I N THESE APPEALS IS WHETHER THE INCOME EARNED BY THE ASSESSE E BY WAY OF RENTS ON LEASING THE PROPERTY TO BE ASSESSED AS INC OME FROM HOUSE PROPERTY OR INCOME FROM BUSINESS. THE APPEAL FOR AS SESSMENT YEAR 2005-06 WAS FILED BELATEDLY BY 10 DAYS. AFTER CONSI DERING THE AFFIDAVIT AND SUBMISSION THE DELAY IN FILING THE A PPEAL IS CONDONED. 2. BRIEFLY STATED THE ASSESSEE RECEIVED RENTAL INCOM E OF ` 3.2 CRORES AND CLAIMED INTER ALIA DEPRECIATION OF ` 2.15 CRORES AND ` 1.93 CRORES IN THE P&L ACCOUNT. THE ASSESSING OFFICER NO TICED THAT THE ASSESSEE ACQUIRED COMMERCIAL ESTABLISHMENTS IN SOLI TAIRE CORPORATE ITA NOS.3720 & 2965/MUM/2009 & 2965/MUM/2010 SICOM LIMITED MUMBAI PAGE 2 OF 10 PARK IN ANDHERI AND LEASED OUT THE PREMISES TO SAHA RA INDIA COMMERCIAL CORPORATION LTD AND SINCE THE PROPERTY W AS LET OUT FOR A LONG PERIOD HE CONSIDERED THE RECEIPTS AS INCOME F ROM THE HOUSE PROPERTY THEREBY RE-WORKING OUT THE COMPUTATION OF INCOME. IT WAS THE SUBMISSION OF THE ASSESSEE THAT THEY HAVE ACQUI RED THE PROPERTY FOR ITS OWN OFFICE BUT THEY WERE OCCUPYING TWO FLO ORS IN NIRMAL BUILDING AT NARIMAN POINT WHICH WAS DECREED TO BE V ACATED BY MARCH 2010. THE ASSESSEE PURCHASED THE PROPERTY BU T DUE TO EMPLOYEE RESISTANCE THEY COULD NOT SHIFT TO THE AB OVE SAID PROPERTY. HENCE THEY HAVE GIVEN IT ON LEASE TEMPORARILY BY EX PLOITING THE COMMERCIAL ESTABLISHMENT. THEREFORE THE INCOME IS TO BE CONSIDERED AS INCOME FROM BUSINESS ONLY. ON AGGRIEV ED BY THE ORDER OF THE ASSESSING OFFICER THE MATTER WAS CARRIED TO THE CIT (A) WHO AFTER CONSIDERING THE STATEMENTS OF THE ASSESSEE AN D RELYING ON THE CASE LAW THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SHAMBHU INVESTMENTS (P) LTD 263 ITR 143 AND FURTHE R THE CASE OF CIT VS. CHENNAI PROPERTIES 266 ITR 685 MADRAS HELD THAT INCOME IS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY. HIS F INDINGS IN PARAS 5.8 TO 5.10 ARE AS UNDER: 5.8 FROM THE ABOVE IT IS AMPLY CLEAR THAT RENTAL INCOME CAN BE TREATED AS BUSINESS INCOME ONLY WHEN THE AIM OF THE ASSESSEE IS TO EXPLOIT IT THROUGH COMPLEX COMME RCIAL ACTIVITIES. SINCE THE AIM OF THE APPELLANT WAS NEVE R TO EXPLOIT THE IMMOVABLE PROPERTY BY WAY OF COMPLEX COMMERCIAL ACTIVITIES; NEITHER ANY SUCH ACTIVITIES HAVE ACTUALLY BEEN CARRIED OUT TO EXPLOIT THE PROPERTY I N QUESTION IN A COMMERCIAL MANNER THE RENTAL INCOME CANNOT BE TREATED AS BUSINESS INCOME. THE AIM WAS I N FACT TO EARN RENTAL INCOME FROM IDLE AND EXTRA SPAR E SPACE IN THE FORM OF CONSTRUCTED RESIDENTIAL UNITS WHICH WERE ACQUIRED EITHER INTENTIONALLY OR OTHERWISE. IN THE CASE OF SHAMBHU INVESTMENT WHICH IS QUITE SIMILAR T O THE CASE OF THE APPELLANT A PART OF PREMISES WAS USED BY THE ASSESSEE ITSELF FOR ITS OWN BUSINESS AND THE RE ST WAS LET OUT. IN THE CASE OF THE APPELLANT AS ALSO IN TH E CASE OF M/S SHAMBHU INVESTMENT IT COULD NOT BE SAID THAT TH EY ITA NOS.3720 & 2965/MUM/2009 & 2965/MUM/2010 SICOM LIMITED MUMBAI PAGE 3 OF 10 WERE EXPLOITING THE PROPERTY THROUGH COMPLEX COMMER CIAL BUSINESS ACTIVITIES AS AVERRED BY HON'BLE SUPREME COURT. SIMILARLY IN THE CASE OF CIT VS. CHENNAI PROPERTIES WHICH IS QUOTED ABOVE THE LAW IN THIS R EGARD HAS BEEN MADE QUITE CLEAR. IN THAT CASE THE ASSESS EE WAS THE OWNER OF THE BUILDING AND WAS ONLY EXPLOITI NG THE PROPERTY AS OWNER BY LEASING OUT THE SAME AND REALIZING INCOME BY WAY OF RENT. BOTH THE CASES ARE QUITE EVIDENTLY APPLICABLE TO THE FACTS OF THE CASE OF TH E APPELLANT. HENCE THE NATURE OF INCOME UNDER CONSIDERATION WOULD BE NOTHING BUT INCOME FROM HOU SE PROPERTY. 5.9. THE OTHER CASE LAWS SUPPORTING THE ABOVE PREPOSITIONS ARE AS UNDER: (A) EAST INDIA HOUSING AND LAND DEVELOPMENT TRUST LTD. VS. CIT (42 ITR 49) (SC) (B) NATIONAL STORAGE PVT. LTD. (66 ITR 596)(BOM.) (C) UNIVERSAL PLAST LTD VS. CIT 237 ITR 454 (SC) (D) KARANPURA DEVELOPMENT COMPANY LTD VS. CIT 44 ITR 362 (SC) (E) KARNANI PROPERTIES LTD VS. CIT WEST BENGAL 82 ITR 47 (SC) (F) CIT VS. NEW INDIA INDUSTRIES LTD. 201 ITR 208 (GUJ.) 5.10. IN VIEW OF THE ABOVE DETAILED DISCUSSION I AM OF THE OPINION THAT INCOME DERIVED BY THE APPELLANT FROM L ETTING OF ITS PROPERTY AT ANDHERI IS IN THE NATURE OF INCO ME FROM HOUSE PROPERTY BECAUSE THE APPELLANT HAS NOT DERIVE D HIS INCOME THROUGH ANY COMMERCIAL COMPLEX OPERATION S. THE INCOME DERIVED IS PRACTICALLY FROM THE BARE LET TING OF THE PREMISES. HENCE I UPHOLD THE ACTION OF THE A.O. SIMILAR ORDER WAS PASSED FOR THE ASSESSMENT YEAR 20 06-07 FOLLOWING THE ABOVE. 3. CONTESTING THE ABOVE FINDINGS OF THE CIT (A) IT WA S THE SUBMISSION OF THE ASSESSEE THAT IT IS HAVING AN OFF ICE AT NARIMAN POINT IN A LEASE PREMISES SINCE NUMBER OF YEARS. IN THE YEAR 2000 A DISPUTE AROSE BETWEEN THE ASSESSEE AND LANDLORD WIT H RESPECT TO THE ITA NOS.3720 & 2965/MUM/2009 & 2965/MUM/2010 SICOM LIMITED MUMBAI PAGE 4 OF 10 SAID PROPERTY WHERE BY EVICTION NOTICE WAS ISSUED A ND SUIT WAS FILED IN BOMBAY HIGH COURT. THEREFORE IN ANTICIPATION TH AT THE SUIT WILL GO AGAINST THE ASSESSEE IN THE YEAR 2001 THE ASSES SEE PURCHASED NEW PREMISES IN ANDHERI. AS PER THE DECREE OF THE C OURT DATED 3 RD DECEMBER 2002 ASSESSEE IS TO VACATE THE PREMISES BY 31 ST MARCH 2010. AFTER THE DECREE WAS PASSED THE PARTIES ARRI VED AT CERTAIN CONSENT TERMS. AS PER THE CONSENT TERMS THE ASSESS EE HAD AGREED TO VACATE THE PREMISES BY 31 ST MARCH 2010 SUBJECT TO PAYMENT OF HIGHER RENT. THE ASSESSEE COULD HAVE IMMEDIATELY MO VED TO THE NEW PREMISES. HOWEVER CONSIDERING THE FACT THAT MOST O F THE WORK OF THE ASSESSEE WAS GOVERNMENT RELATED THERE WERE FREQUEN T VISITS TO THE MANTRALAYA AND OTHER GOVERNMENT OFFICES WHICH ARE I N THE VICINITY OF THE PRESENT PREMISES. IN VIEW OF THIS SIGNIFICANT C ONVENIENCE THERE WAS A RESISTANCE FROM THE EMPLOYEES TO SHIFT TO THE NEW PREMISES AND THAT TOO SUDDENLY. THE ATTITUDE ON THE PART OF EMPLOYEES WAS TO DRAG ON TO THE PRESENT PREMISES FOR AS LONG AS POSS IBLE. THE ASSESSEE COULD MANAGE TO STAY NOT ONLY UPTO 31 ST MARCH 2010 BUT TILL 7 TH MARCH 2011 I.E. ALMOST YEAR MORE THAN THE AGREED TERMS AND TO WHICH THE OWNER OF THE PRESENT PREMISES RELUCTAN TLY AGREED. SINCE THE SHIFTING OF THE OFFICE TO NEW PREMISES WA S BEING DRAGGED ON IT WAS DECIDED TO EXPLOIT THE NEW PROPERTY COMM ERCIALLY AND HENCE IT WAS RENTED OUT FOR TEMPORARY PERIOD. 4. THE ASSESSEE MADE THE FOLLOWING PROPOSITIONS. BASED ON THE FACTUAL GROUNDS AS STATED ABOVE THE CASE OF THE AS SESSEE IS TO EXAMINE IN THE LIGHT OF THE PRINCIPLES LAID DOWN BY VARIOUS COURTS. THE ASSESSEE RELIED ON FOLLOWING. 4.1 IN THE CASE OF SHAMBHU INVESTMENT (P) LTD (249 ITR 47) THE CALCUTTA HIGH COURT HAS AFTER CONSIDERING SEVERAL J UDGMENTS OBSERVED IN PARA 7 AS UNDER: ITA NOS.3720 & 2965/MUM/2009 & 2965/MUM/2010 SICOM LIMITED MUMBAI PAGE 5 OF 10 TAKING A SUM TOTAL OF THE AFORESAID DECISIONS IT IS CLEARLY APPEARS THAT MERELY BECAUSE INCOME IS ATTAC HED TO ANY IMMOVABLE PROPERTY CANNOT BE THE SOLE FACTOR FOR ASSESSMENT OF SUCH INCOME AS INCOME FROM PROPERTY WHAT HAS TO BE SEEN IS WHAT WAS THE PRIMARY OBJECT OF THE ASSESSEE WHILE EXPLOITING THE PROPERTY. IF IT I S FOUND APPLYING SUCH TEST THAT THE MAIN INTENTION IS FOR L ETTING OUT THE PROPERTY OR ANY PORTION THEREOF THE SAME MU ST BE CONSIDERED AS RENTAL INCOME OR INCOME FROM PROPERTY . IN CASE IT IS FOUND THAT THE MAIN INTENTION IS TO EXPL OIT THE IMMOVABLE PROPERTY BY WAY OF COMPLEX COMMERCIAL ACTIVITIES IN THAT EVENT IT MUST BE HELD AS BUSINES S INCOME. 4.2 THE SUPREME COURT IN THE CASE OF UNIVERSAL PLAS T LIMITED (237 ITR 455) CONSIDERING SEVERAL DECISIONS ON THE ISSUE HAS LAID DOWN CERTAIN PROPOSITIONS IN PARA-12 WHICH ARE REPR ODUCED AS UNDER: IN THE LIGHT OF THE ABOVE DISCUSSION THE PROPOSIT IONS MAY BE SUMMARIZED AS FOLLOWS: (A) NO PRECISE TEST CAN BE LAID DOWN TO ASCERTAIN WHETH ER INCOME (REFERRED TO BY WHATEVER NOMENCLATURE LEASE AMOUNT RENTS LICENSE FEE) RECEIVED BY AN ASSESSEE FROM LEASING OR LETTING OUT OF ASSETS WOULD FALL UN DER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSI ON. (B) IT IS MIXED QUESTION OF LAW AND FACT AND HAS TO BE DETERMINED FROM THE POINT OF VIEW OF A BUSINESSMAN IN THAT BUSINESS ON THE FACTS AND IN THE CIRCUMSTANCES OF EACH CASE INCLUDING TRUE INTERPRETATION OF THE AGREEMENT UNDER WHICH THE ASSETS ARE LET OUT; (C) WHERE ALL THE ASSETS OF THE BUSINESS ARE LET OUT T HE PERIOD FOR WHICH THE ASSETS ARE LET OUT IS A RELEVA NT FACTOR TO FIND OUT WHETHER THE INTENTION OF THE AS IS TO GO OUT OF BUSINESS ALTOGETHER OR TO COME BACK AND REST ART THE SAME. (D) IF ONLY OR A FEW OF THE BUSINESS ASSETS ARE LET OUT TEMPORARILY WHILE THE ASSESSEE IS CARRYING OUT HIS OTHER BUSINESS ACTIVITIES THEN IT IS A CASE OF EXPLOITING THE BUSINESS ASSETS OTHERWISE THAN EMPLOYING THEM FOR H IS OWN USE FOR MAKING PROFIT FOR THAT BUSINESS; BUT IF THE BUSINESS NEVER STARTED OR HAS STARTED BUT CEASED WI TH NO INTENTION TO BE RESUMED THE ASSETS ALSO WILL CE ASE ITA NOS.3720 & 2965/MUM/2009 & 2965/MUM/2010 SICOM LIMITED MUMBAI PAGE 6 OF 10 TO BE BUSINESS ASSETS AND THE TRANSACTION WILL ONLY BE EXPLOITATION OF PROPERTY BY AN OWNER THEREOF BUT N OT EXPLOITATION OF BUSINESS ASSETS. 4.3 BASED ON THE ABOVE TEST IT MAY BE NOTED THAT T HE ASSESSEE HAD NO INTENTION NOT TO SHIFT TO THE NEW PREMISES. THE ASSESSEE HAD NO OPTION TO REMAIN AT THE SAME PLACE. THE PREMISES AT ANDHERI WERE LET OUT ONLY FOR TEMPORARY PERIOD AND IN ORDER NOT TO KEEP THE ASSETS IDLE THE SAME WERE LET OUT FOR EXPLOITING T HE PROPERTY COMMERCIALLY. 4.4 IF THE ABOVE MENTIONED PROPOSITIONS AS LAID DOW N BY THE SUPREME COURT ARE APPLIED THEN THE LETTING OUT WAS MERELY TO EXPLOIT THE BUSINESS ASSETS AND THE ASSESSEE HAD LE T OUT THE PROPERTY ONLY FOR TEMPORARY PERIOD. 4.5 FURTHER THE CALCUTTA HIGH COURT IN THE SAME OF SHAMBHU INVESTMENTS P LTD (249 ITR 47) HELD THAT THE PRIME OBJECT OF THE ASSESSEE UNDER THE SAID AGREEMENT WAS TO LET OUT TH E PORTION OF THE SAID PROPERTY TO VARIOUS OCCUPANTS BY GIVING THEM A DDITIONAL RIGHT OF USING THE FURNITURE AND FIXTURES AND OTHER COMMO N FACILITIES FOR WHICH RENT WAS BEING PAID. THUS IN THE SAID CASE I T CAN BE SEEN THAT THE INTENTION OF THE ASSESSEE WAS TO EARN RENT AL INCOME. 4.6 HOWEVER IN THE CASE OF THE ASSESSEE THE INTEN TION WAS NOT TO EARN RENTAL INCOME BUT WAS TO UTILIZE THE IDLE BUSI NESS ASSETS IN ORDER TO KEEP THEM IN GOOD CONDITION TILL THE TIME THE ASSETS WOULD BE USED BY THE ASSESSEE FOR ITS OWN BUSINESS. THERE FORE BARRING THE SHELL NO OTHER SERVICES FACILITIES LIKE FURNITURE ETC WERE PROVIDED. THUS THE INTENTION TO LET OUT THE PROPERTY WAS ONLY FOR TEMPORARY PERIOD TILL THE TIME THE SAME PROPERTY CAN BE PUT T O USE IN ITS OWN BUSINESS. 4.7 RELIANCE WAS PLACED ON THE DECISION OF SUPREME COURT IN THE CASE OF VIKRAM COTTON MILLS LTD (169 ITR 597) WHER EIN THE COURT ITA NOS.3720 & 2965/MUM/2009 & 2965/MUM/2010 SICOM LIMITED MUMBAI PAGE 7 OF 10 HAS HELD THAT WHERE THE ASSESSEE LEASES ITS ASSETS AND THE INTENTION IS TO LEASE OUT THE ASSETS FOR A TEMPORARY PERIOD A S A PART OF THEIR EXPLOITATION THE LEASE RENT DERIVED FROM LETTING O UT THE ASSETS IS ASSESSABLE AS BUSINESS INCOME. 4.8 ALSO IN THE CASE OF KOHINOOR TOBACCO PRODUCTS L TD (283 ITR 162 (MP) THE ASSESSEE HAD LET OUT SOME OF ITS GODO WNS WHICH WERE NOT IMMEDIATELY REQUIRED BY IT DUE TO REDUCTION IN BIDI MANUFACTURING BUSINESS ON ACCOUNT OF LABOR PROBLEMS . THE HIGH COURT HELD THAT INCOME FROM TEMPORARY LETTING OF BU SINESS PREMISES TO GENERATE INCOME WITH A VIEW TO KEEP THEM IN GOOD USABLE CONDITION SO THAT THEY CAN BE EXPLOITED FOR THE REG ULAR BIDI MANUFACTURING BUSINESS OF THE ASSESSEE WAS ASSESSAB LE AS BUSINESS INCOME AND NOT AS INCOME FROM HOUSE PROPERTY. 4.9 IN THE CASE OF SEWARI CHEMICALS (P) LTD (1 SOT 549 MUM) THE ASSESSEE LET OUT ITS FACTORY PREMISES ALONG WITH PL ANT & MACHINERY FOR A SHORT PERIOD OF THREE YEARS ON LEAVE AND LICE NSE BASIS DURING SUSPENSION OF ITS MANUFACTURING ACTIVITY ON ACCOUNT OF BAD MARKET CONDITION. THE ITAT HELD THAT INCOME FROM SUCH LETT ING CONSTITUTED BUSINESS INCOME REGARDLESS OF THE FACT THAT THE PLA NT & MACHINERY WAS SUBSEQUENTLY SOLD BY THE ASSESSEE. 4.10 IN THE CASE OF SKIPPER PROPERTIES (P) LTD (113 ITD 56 (DEL) THE ASSESSEE COMPANY HAD ON ACCOUNT OF LULL IN BUSINESS TEMPORARILY LET OUT ITS THEATRE PREMISES ON HIRE. THE ITAT HELD THAT THE INCOME FROM TEMPORARY LETTING WAS ASSESSABLE AS BUSINESS I NCOME SINCE THERE WAS NO INTENTION OF THE ASSESSEE TO REMAIN OU T OF BUSINESS. THE ITAT CAME TO THE CONCLUSION AFTER DULY CONSIDER ING THE SUPREME COURT DECISION IN THE CASE OF SHAMBHU INVES TMENTS (263 ITR 143) RELIED UPON BY THE ASSESSING OFFICER IN TH IS CASE. 4.11 ALSO IN THE CASE OF CIT VS. K. VIJAYAKUMAR (24 3 ITR 685) IT WAS HELD THAT IN CERTAIN CIRCUMSTANCES AN ASSESSEE MAY BE FOUND TO BE ITA NOS.3720 & 2965/MUM/2009 & 2965/MUM/2010 SICOM LIMITED MUMBAI PAGE 8 OF 10 CARRYING ON LETTING ACTIVITIES WHICH ARE INTER-TWI NED WITH ITS OWN BUSINESS. IN SUCH CASES WHERE LETTING IS INEXTRICAB LY LINKED WITH THE BUSINESS OF THE ASSESSEE THE INCOME FROM SUCH LETT ING WOULD CONSTITUTE BUSINESS INCOME. THE SIMILAR PRINCIPLE H AS ALSO BEEN LAID OUT BY THE PUNJAB HIGH COURT IN THE CASE OF DELHI C LOTH & GENERAL MILLS LIMITED (59 ITR 152). 4.12 FURTHER IT MAY BE NOTED THAT THE SAID PROPERTY HAS BEEN LET OUT SINCE THE YEAR 2002. THE ASSESSEE IS CLAIMING THE I NCOME FROM LETTING OUT OF THESE PROPERTY AS BUSINESS INCOME FR OM DAY ONE AND THE DEPARTMENT APPRECIATING THE ABOVE FACTS HAS AC CEPTED THIS FACTUAL POSITION OF THE ASSESSEE IN ALL THE EARLIER YEARS. NOW ON THE SAME SET OF FACTS DEPARTMENT CANNOT CHANGE ITS POS ITION. 4.13 IN VIEW OF THE ABOVE DISCUSSION THE ASSESSEE SUBMITTED THAT IF THE PROPERTY IS LET OUT FOR EXPLOITING THE SAID PRE MISES FOR TEMPORARY PERIOD THE LEASE RENTALS EARNED WOULD CONSTITUTE B USINESS INCOME AND ASSESSING OFFICER MAY BE DIRECTED TO TREAT THE RENT RECEIVED AS BUSINESS INCOME. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE IN REPLY HO WEVER REITERATED THE FACTS ON RECORD AND RELIED ON THE OR DERS OF THE CIT (A). 6. WE HAVE CONSIDERED THE ISSUE. AS SEEN FROM THE FACT S OF THE CASE THE ASSESSEE HAS LET OUT THE PROPERTY BY THE LEAVE AND LICENSE AGREEMENT DATED 31.07.2006 PLACED ON RECORD IN PAPE R-BOOK AT PAGE NOS. 14 TO 35 FOR A FURTHER PERIOD OF 33 MONTH S UPTO 31.01.2009. BEFORE THIS AGREEMENT WHICH IS PLACED O N RECORD ABOVE IT REFERS TO ANOTHER LEAVE AND LICENSE AGREEMENT DA TED 21.07.2003 AND 08.09.2003. THIS INDICATES THAT THE ASSESSEE HA S ENTERED INTO LEAVE AND LICENSE AGREEMENT WITH THE LICENSEE FOR A LONGER PERIOD. PRESENT AGREEMENT PLACED ON RECORD DOES INDICATE TH AT THE LICENSEE WAS REQUIRED TO PAY ANY REVISION OF MUNICIPAL TAX E VEN FOR AN EARLIER PERIOD I.E. W.E.F. 21.07.2002. THIS AGREEMENT WAS U PTO 31.01.2009. ITA NOS.3720 & 2965/MUM/2009 & 2965/MUM/2010 SICOM LIMITED MUMBAI PAGE 9 OF 10 THIS INDICATES THAT FOR A PERIOD OF 7 YEARS OR MORE THE PROPERTY WAS ON LEAVE AND LICENSE BASIS. HENCE IT CANNOT BE SAID THAT THE PROPERTY WAS GIVEN ON TEMPORARY BASIS. AS SEEN FROM THE ORDE R OF THE CONCERNED DECREE BETWEEN THE PARTIES VIDE THE ORDER DATED 3 RD DAY OF DECEMBER 2002 THE ASSESSEE ADMITTED TO VACATE THE NARIMAN POINT OFFICE BY MARCH 2010 ONLY. THE DATE OF LEASE FROM 2 1.07.02 ALSO INDICATE THAT PROPERTY WAS LEASED PRIOR TO THE DATE OF DECREE ( 03-12- 02) SO THE REASONS STATED BY ASSESSEE FOR NON-OCCU PATION FOR OWN USE IS NOT EMPLOYEES RESISTANCE AS SUBMITTED. NOT O NLY THAT AGREEMENT DO INDICATE THAT THE ASSESSEE WAS NOT INV OLVED IN DAY TO DAY MANAGEMENT OR MAINTENANCE OF THE PREMISES AND E XCEPT GIVING THE PROPERTY ON LEAVE AND LICENSE BASIS THERE ARE NO COMPLEX COMMERCIAL ACTIVITIES INVOLVED IN THIS AGREEMENT. THE AGREEMENT WAS ALSO REGISTERED BY VIRTUE OF MAHARASHTRA RENT C ONTROL ACT AND THERE ARE NO OTHER PLANT AND MACHINERY SO AS TO CON SIDER THAT THE ASSESSEE IS EXPLOITING IT ON COMMERCIAL BASIS. THER EFORE WE ARE OF THE OPINION THAT THE CIT (A) HAS COME TO CORRECT CO NCLUSION THAT THE RENTAL INCOME HAS TO BE TREATED AS INCOME FROM HOUS E PROPERTY. 7. BEFORE US THE LEARNED COUNSEL ALSO PLACED RELIANCE ON VARIOUS CASE LAW STATED ABOVE. IN ALL THE CASES EIT HER THERE WAS A TEMPORARY LULL IN THE BUSINESS OR EXISTING BUSINESS WAS LEASED OUT FOR SHORT PERIOD WITH AN INTENTION TO RESUME THE BU SINESS ACTIVITIES. IN THOSE CIRCUMSTANCES THE INCOMES WERE CONSIDERED AS INCOME FROM BUSINESS. HOWEVER IN THE PRESENT CASE AFTER A CQUIRING THE PROPERTY THE PROPERTY WAS NOT OCCUPIED BY THE ASSE SSEE FOR ITS OWN USE FOR ITS BUSINESS AND WAS LET OUT FROM THE TIME IT WAS ACQUIRED ON LEAVE AND LICENSE BASIS FOR A LONGER PERIOD OF 3 3 MONTHS EACH TIME. IN VIEW OF THIS CASE LAW RELIED ON BY THE AS SESSEE DO NOT HELP AS THEY ARE NOT APPLICABLE TO THE FACTS OF THE ASSE SSEES CASE. IN VIEW OF THIS WE UPHOLD THE ORDER OF THE CIT (A) WHICH F OLLOWED THE ITA NOS.3720 & 2965/MUM/2009 & 2965/MUM/2010 SICOM LIMITED MUMBAI PAGE 10 OF 10 JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F SHAMBHU INVESTMENT (P) LTD (263 ITR 143) AND ALSO DECISION OF CIT VS. CHENNAI PROPERTIES (266 ITR 685). WITH REFERENCE TO THE CLAIM OF DEPRECIATION THE SAME CANNOT BE ALLOWED IN THE COMP UTATION OF INCOME FROM HOUSE PROPERTY BUT THE W.D.V OF THE PR OPERTY CAN BE DETERMINED AND DEPRECIATION CAN BE ALLOWED AS AND W HEN ASSESSEE USE THE PROPERTY IN ITS BUSINESS AS PER THE PROVIS IONS OF THE ACT. ACCORDINGLY THE GROUND RAISED BY THE ASSESSEE IN R ESPECTIVE YEARS ON THIS ISSUE IS REJECTED. 8. IN THE RESULT ASSESSEES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER 2011. SD/- SD/- (D.K. AGARWAL) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER VNODAN/SPS MUMBAI DATED 30 TH NOVEMBER 2011. COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR J BENCH ITAT MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES MUMBAI