SOHAM DATA PROCESSING & FINANCE PRIVATE LIMITED,MUMBAI vs. INCOME TAX CIRCLE 16(2) MUMBAI, MUMBAI

आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE BEENA PILLAI, JM & SHRI ARUN KHODPIA, AM I.T.A. No.1432/Mum/2026 (Assessment Year: 2003-04) Soham Data Processing and Income Tax Circle 16(2), Mumbai, Finance Private Limited Vs. Mahalaxmi Ind Estate LJX Road, Aaayakar Bhavan, Maharshi Karve Mahim West, Mumbai – 400016, Road, New Marine Lines, Mumbai – Mumbai 400020, Mumbai. Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

: Shri Vinod Mehta (Virtually) Assesseeby : Smt B. Brahma Vidya - (Sr. DR) Revenueby Date of Hearing : 14.05.2026 Date of Pronouncement : 11.06.2026

O R D E R Per Arun Khodpia, AM: This captioned appeal is preferred by the assessee, directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, dated 16.01.2026, for Assessment Year 2003–04 arises from the order passed under Section 143(3) r.w.s 254 of the Act, dated 27.03.2022 by the Assessing Officer/NFAC, Delhi. The grounds of appeal raised by the assessee are as under: 1. Under the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the AO's classification of licence and amenities/maintenance receipts as

"Income from Other Sources" instead of "Profits and Gains of Business or Profession", by misappreciating the commercial/organised nature of the assessee's activities and applying an erroneous legal test (as per paras 20-21 of CIT(A) order). 2. Under the facts and circumstances of the case and in law, the Ld. CIT(A) erred in failing to adjudicate the assessee's contentions on audited accounts u/s 44AB (Form 3CA/3CD recording business as letting with maintenance) and consistent prior treatment (including initial AY 2003-04 assessment u/s 143(3) as business income), rendering the order non-speaking u/s 250(6) and vitiated (as per pages 6-7 of CIT(A) order). 3. Under the facts and circumstances of the case and in law, the Ld. CIT(A) erred in sustaining the perverse finding that the assessee merely sub-licensed premises without systematic activity or special services, contrary to the record and evidence (agreements, TDS certificates, submissions) and based on surmises (as per para 20 of CIT(A) order). 4. Under the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that AO complied with ITAT remand (ITA No. 4392/Mum/2012 dated 20/07/2020) for fresh examination. In contrast, the order reiterates prior views without independent adjudication (as per pages 18-19 of the CIT(A) order). 5. Under the facts and circumstances of the case and in law, the Ld. CIT(A) erred in failing to adjudicate and record any finding on the Memorandum of Association of the appellant company, which forms its statutory charter and was specifically relied upon to demonstrate systematic commercial activity. 6. Under the facts and circumstances of the case and in law, the Ld. CIT(A) erred in distinguishing Hon'ble Supreme Court's Chennai Properties & Investments Ltd. on untenable grounds (ownership/sub-leasing), ignoring the explicit remand direction (as per page 16 of the CIT(A) order). 7. Under the facts and circumstances of the case and in law, the Ld. CIT(A) erred in rejecting other precedents (Shreenathji Balaji, Rasik Lal & Co., assessee's Bombay HC case) on non-merit bases (monetary limit/pendency) instead of applying ratios (as per pages 20-21 of CIT(A) order). 8. Without prejudice to Grounds 1-6, the Ld. CIT(A) erred in upholding ad-hoc 50% disallowance of salary/bonus (Rs. 65,000/-) without reasoned findings on incurrence/nexus u/s 57(iii) or rebutting evidence (as per page 19 of CIT(A) order). 9. Without prejudice to Grounds 1-7, the Ld. CIT(A) erred in upholding ad-hoc 40% disallowance of administrative expenses (Rs. 1,98,558/-) without independent examination of nexus/genuineness (as per page 19 of CIT(A) order). 10. Without prejudice to Grounds 1-8, the Ld. CIT(A) erred in upholding the disallowance of entire depreciation (Rs. 9,49,205/-) without adjudicating the head of income or asset-use nexus (as per page 19 of the CIT(A) order). 11. Interest u/s 220(2) and 234D, being consequential, be recomputed per outcome (as per page 22 of CIT(A) order).” 2

Si No Particulars Rs Rs 1 Rent received 35,50,800 2 Maintenance charge 54,44,700 received Total Receipts 89,95,500 Less : Disallowances i) Rent paid 8,30,400 ii) Maintenance charges 34,50,000 on account of salary and bonus iii) Administrative 2,97,836 charges iv) Salary and Bonus 65,000 Total 46,43,236 Balance 43,52,264 Add : Interest Income 2,60,495 Other Income 18,000 Interest received from 40,068 Hudco Total 3,21,563 Gross Total Income 46,73,827 Less : Deduction 25,000 under chapter VIA Total Income 46,48,827

appeal before the learned CIT(A).

fee and amenities/maintenance receipts, which the assessee had classified as

“Profits and Gains of Business or Profession”, whereas the Assessing Officer was

of the view that such income should fall within the limit of “Income from Other

Sources”.Apart from the aforesaid controversy, certain further consequential

additions and disallowances were also made by the Assessing Officer, which

were restricted by the learned CIT(A) up to 50% of payment of salary/bonus,

40% of administrative expenses, and disallowance of the entire depreciation

claim. 4

“16. The judgement of the above four case laws are not applicable in the instant case. Which are discussed hereunder: 16.1 Chennai Properties :- In the case of Chennai properties Investment Ltd, Hon'ble Supreme Court has given the verdict keeping in view the fact that the entire income of the assessee was through letting out of the properties and there is no other income of the assessee. In the instant case, the assessee company is not the owner of the property has offered for taxation an amount of Rs 3,21,563/- as income from other sources. Further in the case of Chennai properties, the issue adjudicated by the Supreme Court was related to treatment of income earned from the letting out of the property, whether it has to be assessed under the head income from House property or income from business where as in the present case the issue is related to treatment of income earned by the assessee by sub leasing the property whether it has to be assessed under the head income from other sources or income from business or profession. Therefore, the order of Hon'ble Supreme Court in the case of Chennai Properties Investment Ltd is completely distinguishable from the facts of this one. 16.2 Shreenathji Balaji Computech Pvt Ltd :- In this case, the decision given by the Hon'ble ITAT ( ITA No 6251 & 6253/Mum/2012) had not been accepted by the department on merits and appeal u/s 260A was not filed only due to the fact that the tax effect involved in that case was below the prescribed monetary limit. 16.3 Sohan Data Processing and Finance Pvt Ltd :- This case is pending in Hon'ble Bombay High Court for adjudication. 16.4 Rasik Lal & Company :- In the case of Rasiklal& Co Pvt Ltd ( IT Appeal No 580 (Mum) of 2006 (A.Y. 1999-2000), the assets held by the company is a ware house which is owned by the assessee and commercial complex activity was made to exploit the benefit of owned assets while in the case of Soham data processing & Finance Pvt Ltd (The assessee), the assets held by the assessee is a leased asset from Mahalaxmi Engineering Works. Thus the decision of the case cited above is distinguishable from the facts of the case of the assessee.” 8. The Ld. AO further analyzed the facts of the assessee’s case and have observed that, the assessee is a tenant of Mahalaxmi Industrial Estate and was paying rent for the premises. The assessee had taken approximately 10,700Sq ft of built-up area from the said entity and had licensed the premises to M/s Frontier Trading Co and G.E. Countrywide Consumer Finance Services as per agreement. The act of the assessee could not be construed as systematic or organized activity which may connote it in the parlance of business activity. The intention of the assessee to exploit the leased asset is also not established. Since the assessee was 6

not the owner of the impugned property and also is not in the business of letting out of the property and therefore, the maintenance charge and leave and license fees received by the assessee from the aforesaid two tenants were to be held as income from other sources.

to organize lease and license arrangements with integrated maintenance service constitutes a business by only legal test as laid down by Hon’ble Apex Court.

referred as under:- “4. To acquire by concession, grant, purchase, licence or otherwise either absolutely or conditionally and either alone or jointly with others land, buildings, machinery, plants, utensils, works, conveniences and such other movable and immovable properties of any description and any patents, trademarks, concessions, privileges, brevets, d'invention, licences, protections and concessions conferring any exclusive or limited rights to any inventions, information which may seem necessary for any of the objects of the Company and to construct, maintain and alter any building or work, necessary or convenient for the business of the Company and to pay for such land, buildings, works, property or rights or any such other property and rights purchased or acquired by or for the Company by shares, debentures, debenture stock, bonds or such other securities of the Company or otherwise and manage, develop or otherwise dispose of in such manner and for such consideration as may be deemed proper or expedient to attain the main objects of the Company.” 12. The learned AR further drew our attention to the audited financial statements of the assessee company placed at page 77 of the paper book. According to the

financial statements, the assessee has shown income from operations of Rs.93,17,063/- for the relevant assessment year, which was further broken up under in the following heads:- SCHEDULE - 'I' : INCOME FROM OPERATIONS SR.NO. PARTICULARS CURRENT YEAR PREVIOUS YEAR 1 MAINTAINENCE 5,444,700.00 5,992,900.00 CHARGES 2 RENT RECEIVED 3,550,800.00 3,968,100.00 3 INTEREST ON FIXED 263,495.33 124,424.28 DEPOSIT 4 OTHER INCOME 18,000.00 - 8 5 INTEREST FROM 40,068.00 - HUDCO TOTAL Rs. 9,317,063.33 10,085,424.28

10. We have heard the rival contentions and perused the record. In the facts of the present case assessee, as per its object clause in the Memorandum of Association, was permitted to perform business of taking on lease and earning income from the same. It had taken premises on lease which in turn was sublet to M/s. American Express Bank. The issue arising before us is in relation to assessability of such lease income earned by the assessee. The claim of the assessee before the authorities below and even before us is that such income being in continuation of its object as per the Memorandum of Association, is to be assessed as business income in its hands. Whereas the case of the Revenue is that assessee was engaged in subletting of the property, which in turn it had obtained on lease and hence the income arising there from is assessable in the hands of the assessee as income from other sources, since the assessee was not the owner of the property. The assessee had entered into lease agreement with American Express Bank in the earlier year and admittedly the rental income declared by the assessee was assessed as business income in the hands of the said decision was accepted by the authorities below from assessment year 1993- 94 onwards for which the assessment was completed under section 143(3) of the Act and copy of the assessment order is filed at pages 32-42 of the paper book. Similarly, for assessment year 2001-02 the assessment was completed under the head income from business in the assessment order passed under section 143(3) of the Act, which in turn is placed at pages 43 to 49 of the paper book. The assessee continues to earn income from same lease agreement as in the past and the income declared during the year under consideration was received from American Express Bank, which will also be sub-lessee in the earlier years. The Hon'ble High Court, while adjudicating the appeal of the assessee, had noted all the above said facts and also noted that there were no distinguishing features before the Tribunal to justify in giving a different treatment for the assessment year in question, whereas similar income was assessed as income from business in the hands of the assessee in the prior years. On verification of the records available we find that in assessment years 1993-94 and 2001-02 the income had been assessed under the head income from business. Though the Hon'ble High Court had restored the issue back to the file of the Tribunal but with the direction that the said issue be decided with regard to the circumstances of the case. 11. In the facts of the present case assessee had leased out the premises to American Express Bank Ltd. w.e.f. October 1992. The said lease agreement continued upto 31.03.2003 and was in application during the financial year 2002-03, i.e. in the year which is in appeal before us. The said leasing of the premises by the assessee was as per the objects provided in Memorandum of Association. A perusal of the earlier order passed by the Tribunal in assessee's own case reflects that the Tribunal, vide para 4 of its order had acknowledged that under clause 53, 109, 129 and 131 of the object clause (other objects) of Memorandum of Association of the assessee, assessee was permitted to pursue the business of taking on lease and earning income from the same. Where it is the intention of the assessee to lease out various premises and then sublet the same on leave and licence basis to different parties, then such activity carried on by the assessee in line with its objects is business activity undertaken by the assessee. The income arising from such exploitation of the assets which had been taken by the assessee on lease and had been further sublet by it is a systematic and organized activity of carrying on its business. Undoubtedly, 10

assessee was not the owner of the premises but was only a lessee of the premises, which in turn had been sublet by the assessee with the intention of exploiting the same and the receipts arising there from are assessable in the hands of the assessee as income from business and the necessary related expenditure has to be allowed as deduction in the hands of the assessee. 12. The Hon'ble Supreme Court in the case of Chennai Properties and Investment Ltd. (supra) has appreciated the facts before it, wherein the assessee had acquired properties in the city of Madras and in turn let out those properties and the rental income received by it was shown as income from business, it was held that where main object of the assessee company as per its Memorandum of Association was to acquire properties and to let out those properties as well as make advances upon the security of land and building, then it was held that " what we emphasis is that holding the aforesaid properties and earning income by letting out these properties is the main objective of the company". The Hon'ble Supreme Court, however, noted that in the return of income the entire income which had accrued and assessed in the hands of the assessee was from letting out of the said property and there was no other income arising to the assessee. The Hon'ble Supreme Court made reference to the ratio laid down by the Constitution Bench of the Apex Court in the case of Sultan Brothers (P) Ltd. vs. CIT [(1964) (5) SCR 807] and the ratio laid down in the case of Karanpura Development Co. Ltd. vs. CIT reported in 44 ITR 362 (SC) and observed as under: - "8. Before we refer to the Constitution Bench judgment in the case of Sultan Brothers (P) Ltd., we would be well advised to discuss the law laid down authoritatively and succinctly by this Court in 'Karanpura Development Co. Ltd. v. Commissioner of Income Tax, West Bengal' [44 ITR 362 (SC)]. That was also a case where the company, which was the assessee, was formed with the object, inter alia, of acquiring and disposing of the underground coal mining rights in certain coal fields and it had restricted its activities to acquiring coal mining leases over large areas, developing them as coal fields and then sub-leasing them to collieries and other companies. Thus, in the said case, the leasing out of the coal fields to the collieries and other companies was the business of the assessee. The income which was received from letting out of those mining C.A. No. 1494/2004 etc. 5 Page 6 leases was shown as business income. Department took the position that it is to be treated as income from the house property. It would be thus, clear that in similar circumstances, identical issue arose before the Court. This Court first discussed the scheme of the Income Tax Act and particularly six heads under which income can be categorised / classified. It was pointed out that before income, profits or gains can be brought to computation, they have to be assigned to one or the other head. These heads are in a sense exclusive of one another and income which falls within one head cannot be assigned to, or taxed under, another head. Thereafter, the Court pointed out that the deciding factor is not the ownership of land or leases but the nature of the activity of the assessee and the nature of the operations in relation to them. It was highlighted and stressed that the objects of the company must also be kept in view to interpret the activities. In support of the aforesaid proposition, number of judgments 11

of other jurisdictions, i.e. Privy Counsel, House of Lords in England and US Courts were taken note of. The position in law, ultimately, is summed up in the following words: - "As has been already pointed out in connection with the other two cases where there is a letting out of premises and collection of rents the assessment on property basis may be correct but not so, where the letting or sub-letting is part of a trading operation. The dividing line is difficult to find; but in the case of a company with its professed objects and the manner of its activities and the nature of its dealings with its property, it is possible to say on which side the operations fall and to what head the income is to be assigned." 13. The Apex court also noted the fact that in Sultan Brothers (P) Ltd. (supra) the Constitution Bench had clarified that that merely an entry in the object clause showing a particular object would not be determinative factor to arrive at a conclusion whether the income has to be treated as income from business and such question would depend upon the circumstances of each case, i.e. whether a particular business is letting out or not. After noting down the above said decisions the Hon'ble Apex Court held that the circumstances of the case have to be considered and in view of the facts before it and its circumstances the Hon'ble Supreme Court held that letting of the properties was the business of the assessee and assessee, therefore, rightly disclosed the income under the head 'income from business'. 14. The facts before us are similar to the facts before the Hon'ble Supreme Court in Chennai Properties & Investment Ltd. As pointed out by us herein above assessee, in furtherance of its object of Memorandum of Association, had leased out the premises, which in turn was subleased on leave and licence basis, thus the intention of the assessee was to exploit the asset leased by it, by way of letting out the same, then such letting out activity is in furtherance of assessee's intention to carry out the business in a systematic and organized manner. Consequently we hold that the rental income declared by the assessee is to be assessed as income from house property. Another aspect to be kept in mind is that similar income offered by the assessee on account of similar rent received from same tenant in earlier years were assessed as income from business in the hands of the assessee. Another aspect to be kept in mind is that during the year under consideration, i.e. at the close of the year on 31.03.2003 the agreement with American Express Bank had come to an end and the assessee entered into a fresh agreement with British High Commission again establishes the case of the assessee, that it is involved in a systematic and organized activity of leasing out its premises, which in turn are not owned by the assessee. In the totality of the above facts and circumstances we hold that the lease rent received by the assessee is assessable as income from business in the hands of the assessee and the related expenditure has to be allowed in the hands of the assessee. The AO shall accordingly compute the income in the hands of the assessee in line with our directions after affording reasonable opportunity of hearing to the assessee. This ground of appeal, which was restored back to the file of the Tribunal by the Hon'ble High Court is allowed.

decisions having bearing on the issue in hand. The summary of such case laws is

reproduced as under:-

“PART VII — CASE LAW COMPENDIUM The following decisions are relied upon on behalf of the Appellant. The full text of each judgment is filed in the physical Paper Book at Part VII thereof. Each entry identifies the issue to which the decision applies, the outcome, the governing ratio, and a note on its specific relevance and any limitations on its application.

[1] Karanpura Development Co. Ltd. v. Commissioner of Income Tax, West Bengal

Citation / Court: (1962) 44 ITR 362 — Supreme Court of India — Three-Judge Bench Applicable to Issue: Applicable to Ground No. 1 — Head of Income (Activity Test; Lessee Sub-Letting) Decided in favour of the assessee. Lessee's sub-letting income held to be business income. Outcome: Governing Ratio: The test for determining whether income from letting or sub-letting is business income or property income is the nature of the activity, not the ownership of the property. Where a company takes head-leases and grants sub-leases as part of its commercial trading operations, the receipts are business income. The assessee in that case was a lessee, not an owner. The governing principle is: 'Where there is a letting out of premises and collection of rents the assessment on property basis may be correct but not so, where the letting or sub- letting is part of a trading operation. The dividing line is difficult to find; but in the case of a company with its professed objects and the manner of its activities and the nature of its dealings with its property, it is possible to say on which side the operations fall and to what head the income is to be assigned.' Applicability Note: This case is directly applicable. Soham Data is also a lessee. The activity test applies.

[2] S.G. Mercantile Corporation (P) Ltd. v. Commissioner of Income Tax, Calcutta

Citation / Court: (1972) 83 ITR 700 — Supreme Court of India — Four-Judge Bench Applicable to Issue: Applicable to Ground No. 1 — Head of Income (Lessee Sub-Letting — Most Directly Applicable) Outcome: Decided in favour of the assessee. Lessee's sub-letting income held to be business income. Governing Ratio: A lessee who, as part of its essential trading activity, takes premises on lease and sub-lets parts thereof with a view to making profits earns business income. The Supreme Court specifically stated: 'We are concerned in the instant case with an assessee who is a lessee and not the owner of the property in question. The assessee, in the cited case of Karanpura Development Co. Ltd., too was lessee... So far as such assessees are concerned, who as part of their essential trading activity take lease of property and sublet parts thereof with a view to make profits, the dictum laid down above, in our opinion, would hold good and the profits would have to be treated as business income.' Applicability Note: This is the most directly applicable precedent. Soham Data is a lessee. The four-judge bench decision is binding. This case was not cited or addressed by either the AO or the CIT(A).

[3] M/s. Chennai Properties & Investments Ltd. v. Commissioner of Income Tax

Citation / Court: (2015) 373 ITR 673 — Supreme Court of India Applicable to Issue: Applicable to Ground Nos. 1 and 3 — Head of Income (also specifically directed to be applied by ITAT Remand Order) Decided in favour of the assessee. Letting income held to be business income. Outcome: Governing Ratio: Where the dominant object of the company as set out in its Memorandum of Association is to acquire and hold properties and let them out, and the actual activity of the company is consistent with that object, the income from letting is business income. The Karanpura principle that letting or sub-letting as part of a trading operation yields business income was applied. Distinctions sought to be drawn on ownership are not determinative where the dominant activity is commercial exploitation of property rights. Applicability Note: Specifically directed to be applied by the ITAT's 2020 remand order. The AO dismissed it in one paragraph on ownership grounds — which are legally unsound for the reasons set out in Proposition 1 and Ground 1 above.

[4] Sultan Brothers (P) Ltd. v. Commissioner of Income Tax

Citation / Court: (1964) 51 ITR 353 — Supreme Court of India — Constitution Bench Applicable to Issue: Applicable to Ground No. 1 — Principle of businessman's test only (see Note below) Outcome: Decided against the assessee on its own facts. Income held to be house property income. Governing Ratio: Whether a particular letting amounts to business must be determined from the businessman's point of view in the circumstances of each case. A commercial asset is one used in a business. The question in each case is whether the letting was the doing of a business or the exploitation of property by an owner.

Applicability Note: CAUTION: The outcome in Sultan Brothers on its own facts was against the assessee — the income was held to be house property income. This case is cited only for the principle of the businessman's test, not as authority for a pro-assessee result in letting cases. The Revenue may cite Sultan Brothers. The answer is: applying the businessman's test to the facts of Soham Data — a corporate lessee with MOA objects, formal agreements, audited accounts, tax-audit compliance, and organised commercial operations — the activity is plainly a business.

[5] Dhakeswari Cotton Mills Ltd. v. Commissioner of Income Tax, West Bengal

(1954) 26 ITR 775 — Supreme Court of India Citation / Court: Applicable to Issue: Applicable to Grounds Nos. 5 and 6 — Ad-Hoc Disallowances Without Rejection of Books Outcome: Decided in favour of the assessee. Assessment based on pure guess set aside. 'In making the assessment under section 23(3), the Income-tax Officer is not fettered by Governing Ratio: technical rules of evidence and pleadings, and he is entitled to act on material which may not be accepted as evidence in a court of law, but the Income-tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all and there must be something more than bare suspicion to support the assessment.' Directly applicable to both ad-hoc disallowances. No defect in books or vouchers has been Applicability Note: identified. The application of 50% and 40% reductions without nexus analysis is estimation by pure guess.

[6] Shreenathji Balaji Computech Pvt. Ltd. v. ITO

Citation / Court: ITA Nos. 6251 & 6253/Mum/2012 — Income Tax Appellate Tribunal, Mumbai Bench Applicable to Issue: Applicable to Ground Nos. 1 and 3 — Head of Income (Binding on AO; persuasive before Tribunal; specifically directed by ITAT Remand Order) Outcome: Decided in favour of the assessee. Income from similar commercial letting held to be business income. Depreciation and all deductions directed to be allowed. Governing Ratio: In a case involving commercial letting of premises by an assessee holding the property through a licence or leave-and-licence arrangement, the Tribunal directed treatment as business income and allowance of all deductions including depreciation on assets. Applicability Note: Specifically directed to be applied by the ITAT's 2020 remand order. Binding on the AO. The Revenue's non-filing of an appeal to the High Court on account of the monetary limit has no bearing on the decision's precedential value — see Ground No. 8 above.

Revenue, submitted that the assessee is a lesser having taken the premises from

other entities. The assessee is not the owner of the properties which are sub-let to

other tenants. The main business of the assessee is not letting out properties and, 15

therefore, the activity of licensing such properties cannot be treated as a business activity of the assessee. Accordingly, the Assessing Officer has rightly categorized the activities of the assessee and accordingly the AO has rightly categorized the activities of the assessee and other activity and income generated from such activity is “Income from Other Sources”.In view of the above facts, the Assessing Officer has rightly decided the issue by adopting the nature of income earned by the assessee as income from other sources, and the learned CIT(A) has also judiciously upheld the same.

further comments had preferred to acknowledge the findings of the Assessing Officer and had confirmed the addition.

may be correct but not so, where the letting or subletting is part of a trading operation.The dividing line is difficult to find; but in the case of a company with its professed object and the manner of its activities and the nature of its dealings with the property, it is possible to say on which side the operation falls and to what head the income is to be assigned.” It is held that “Where a company takes head-leases and grants sub-leases as part of its commercial trading operations, the receipts are business income.” 19. Further reliance was placed upon the decision in S.G. Mercantile Corporation (P.) Ltd. vs. CIT [(1972) 83 ITR 700 (SC)], wherein the Hon’ble Apex Court held that lease of property, development, sub-lettingof shops and stalls shall be treated as income from business and profession. The income from other sources is the residuary in nature, if the income of assessee does not fall within the definition of specific heads, then only the income from other sources can be resorted to. 20. The similar findings were made by the Hon’ble Apex Court in case of Chennai Properties & Investments Ltd. vs. CIT (supra), wherein it is categorically held that whether the company was incorporated with the main object of buying and developing leased properties and promoting and developing market in course of business if so happened that some shops and stalls which are developed and had been rented of and income was derived from renting of said shops and stalls. In those facts question arose for consideration was whether the rental income received was to be treated as income from house property or 18

income from business. The Court while holding that the income shall be treated as income from house property rested its decision in the context of main object of the company and took note of the fact that letting out was not the object of the company at all. The court was therefore of the opinion that character of that income, which was from house property had not altered because it was received by the company with the object of developing and setting up of property. After deliberations, referring to the different orders of other Hon’ble Apex Court, itis concluded that letting out of properties is in fact the business of assessee, the assessee therefore rightly disclosed the income under the head income from business which cannot be treated as the income from house property. We accordingly allowed the appeal and set-aside the judgment of High Court and restored the matter back to the Income Appellate Tribunal. 21. On a thoughtfully perusal and considering the law emerging from aforesaid decisions, in the facts and circumstances of the present case, we find that the assessee is mainly involved in the business of lease of the properties and charging maintenance charges from entities to whom such properties are leased out. The financials of the assessee as well as memorandum and articles of the assessee company also supports such aspect, that the assessee maininvolvementis in the activity of taking premises on rent and then further leasing/licensing the same to other parties. In view of such facts, the main activity of the assessee can be construed to be of licensing and sub-letting of the properties,therefore the

same has to be treated as business of the assessee,and any income generated from such activity shall constitute its business income.

business activity and therefore the income generated from such activity shall be treated as business income of the assessee.

any other allegation qua the genuineness of such expenses by the revenue, since the main income of assessee from letting out and maintenance charges has been contemplated as income from business and profession. Ground No.9 of assessee is accordingly allowed.

Mumbai, Dated : 11-06-2026. Ranganath, Sr. PS 22 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai