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Case Law Details

Case Name : Oberoi Building & Investment (P) Limited Vs CIT – II (Calcutta High Court)
Appeal Number : ITA/ 168/20 10
Date of Judgement/Order : 15/12/2023
Related Assessment Year : 2005-06
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Oberoi Building & Investment (P) Limited Vs CIT – II (Calcutta High Court)

Background: The case of Oberoi Building & Investment (P) Limited versus the Commissioner of Income Tax (CIT) – II, arose from an order dated 23.07.2010, in ITA 330 (Kol) of 2008 [assessment year 2005-06]. The Income Tax Appellate Tribunal, ‘C’ Bench, Kolkata, had previously passed this order. The Calcutta High Court framed two substantial questions of law for consideration:

i. Whether income from sub-licensing of shops and establishment, along with various services, can be treated as income liable to be assessed under Section 22 of the Income Tax Act, or as composite income arising from part exploitation of shops and establishment under Section 28 of the Act?

ii. Whether the license agreement dated 25th April 1972 could be construed to constitute a transfer under Section 269UA(f), making the assessee a deemed owner under Section 27(iiib) of the Income Tax Act?

Facts: Oberoi Building & Investment (P) Ltd., a Private Limited Company, entered into a leave and license agreement with East India Hotels Limited (now EIH Limited) on 25.04.1972, securing 5665 sqft. of office space for 50 years at Oberoi Sheraton Hotel, Bombay. The company sub-licensed this space for various commercial activities, primarily in the business of gems, jewelry, and gift articles. The dispute arose when the Income Tax Department assessed the income derived from sub-licensing as “income from house property” instead of “business income.”

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