Case Law Details
DCIT Vs. Magnus Properties (P) Ltd. (ITAT Mumbai)
Conclusion: Income derived by assessee from leave and licence fee was to be treated as income from house property not as business income as assessee company’s primary object was not to construct, develop and lease property out for earning rental income but to engage itself as real estate developer.
Held: The issue arose for consideration was whether the income derived by assessee from leave and licence fee was to be treated as income from house property as claimed by assessee or as income from business as held by AO. It was held AO had treated the income generated from leave and license fee as income from business primarily for the reason that the unsold flats had been shown as stock-in-trade in the books of the assessee. Accounting entry or accounting treatment given by assessee in its books of account was not conclusive. What was required to be examined was the intention of assessee whether to exploit the property as owner or engage itself in an organized and systematic activity of constructing, developing and building house property and giving them on lease along with other services for earning rental income. As could be seen from the objects of assessee as contained in the Memorandum and Articles of Association, the primary object of assessee was not to construct, develop and lease property out for earning rental income but to engage itself as real estate developer. Therefore, the business of assessee was not letting out properties for earning rental income but income was chargeable as property income.
FULL TEXT OF THE ITAT JUDGMENT
Aforesaid appeals by the Revenue are against separate orders passed by the learned Commissioner (Appeals)–20, Mumbai, pertaining to assessment years 2007–08, 2009–10, 2010–11 and 2011–12.
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