Case Law Details
Case Name : Assistant Commissioner of Income Tax Vs M/s Steller Developers P. Ltd. (ITAT Mumbai)
Appeal Number : I.T.A. No.6512/Mum/2011
Date of Judgement/Order : 08/07/2015
Related Assessment Year : 2008-09
Brief of the case:
The ITAT Mumbai in the case of M/s Steller Developers P. Ltd. held that if the letting out of property is with intention to commercially exploit and it is the main object of assessee company then income from such leasing/letting is assessable under business head and not as house property.
Facts of the case:
- The assessee has leased out commercial properties and offered the income from the same as business income. The Assessing officer assessed the same under the head house property as income as the same is covered by charging section 22 of House Property Income.
- The CIT (A) decided the case in favour of assessee as the same has been decided by tribunal in assessee’s favour in previous assessment years.
Contention of Assessee:
- The identical issue has been decided by tribunal in the favour of assessee in previous assessment year.
- Further, it was submitted that the on the same facts Hon’ble Supreme Court in the case of Chennai Properties Ltd. decided the issue in favour of assessee and held that if the complex letting of properties is the main object of company then the same is taxable as business income and cannot be taxed under house property merely because the rental income is from house property.
Contention of Revenue:
Revenue supported the order of AO that since the income is from letting out of house property it is covered within the ambit of charging sec 22 and the fact that such letting was complex letting and assessee’s main object do not suppress the applicability of sec 22.
Held by ITAT Mumbai:
- The point of dispute is that whether the leasing of commercial properties is taxable as business income or income from house property.
- The deciding factor is that if the main intention is to simply let out property or any part of it, resultant income must be assured assessed as income from house property but if main intention is exploitation of property by way of commercial activities, then resultant income must be held as business income.
- In the present case the assessee has developed shopping malls/business centres on properties owned by it and let out same by providing host of services and amenities in the said malls/ business centres, which indicate that that basic intention of assessee was commercial exploitation of its properties by developing them as shopping malls/business centres, therefore, income derived therefrom is assessable as business income.
- Further , even the in the Memorandum of Association (MOA) of the company it purchase and/or acquire property and to give on lease and/or on license basis along with complex commercial activities is the main object of assessee company.
Thus, the facts of the case are identical with that of the Chennai Properties Ltd. wherein the Hon’ble Supreme court held that the income from complex letting where letting is main business as per MOA is assessable