M/S RAYALA CORPORATION P LTD vs. THE ASSISTANT COMMISSIONER O

T.C.A.No.813 of 2019 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 26.02.2020 CORAM : THE HONOURABLE MR.JUSTICE N.KIRUBAKARAN and THE HONOURABLE MR.JUSTICE P.VELMURUGAN T.C.A.No.813 of 2019 M/s.Rayala Corporation (P) Ltd., 144/7, Old Mahabalipuram Road, Kottivakkam, Chennai 600 041.

... Appellant Vs The Assistant Commissioner of Income Tax, Company Circle - V(3), Chennai - 600 034.

...Respondent PRAYER: Tax Case Appeal filed under Section 260A of Income Tax Act, 1961 against the order dated 08.05.2014 in I.T.A.No.605/Mds/2014 on the file of the Income Tax Appellate Tribunal, 'C' Bench, Chennai. For Appellant : Mr.Venkat Narayanan for Mr.Subbaraya Aiyar. For Respondent : Mr.T.Ravikumar.

1/6 http://www.judis.nic.in T.C.A.No.813 of 2019 J U D G M E N T (Judgment of the Court was delivered by N.KIRUBAKARAN, J)

This tax case appeal has been filed against the order passed by the Tribunal relating to the assessment year 2010-2011 confirming the order of the Commissioner of Income Tax arising out of the order of the Assistant Commissioner of Income Tax passed under Section 143 (3) of the Income Tax Act, 1961. 2.Heard Mr.Venkat Narayanan, learned Counsel for the appellant and Mr.T.Ravikumar, learned Counsel for the respondent. 3.This Tax Case Appeal is admitted on the following substantial question of law; "Whether on the facts and circumstances of the case, the Tribunal was justified in upholding the assessment of the Income received by the appellant by a)leasing and renting of immovable properties with all infrastructural facilities with providing maintenance and related activities of the said immovable properties sub-leasing of already leased out property; and 2/6 http://www.judis.nic.in T.C.A.No.813 of 2019 b)maintenance charges and air conditioning hire charges as income from house property and not income from business, having regard to the fact that the appellant company is pursuing the main object of the company as provided in the Memorandum and Objects?" 4.Mr.M.Venkat Narayanan, learned Counsel for the appellant would submit that in the assessee's own case in "Rayala Corporation Pvt. Ltd., Vs. Assistant Commissioner of Income Tax" reported in "[2016] 386 ITR 500 (SC)", the Hon'ble Supreme Court has reversed the Judgment of this Court holding that the assessee's income from the house property should be treated as business income and therefore, he would submit that the appeal has to be allowed. 5.However, Mr.T.Ravikumar, learned Counsel for the respondent would submit that the issue covered in the Judgment of Supreme Court is only with regard to treating the lease income or rental income from the property of the assessee as income from business or profession. However, the issue regarding the maintenance charges and 3/6 http://www.judis.nic.in T.C.A.No.813 of 2019 air conditioning hire charges, land rent, ground rent etc., is not covered in the Judgment of the Hon'ble Supreme Court. 6.A perusal of the Judgment of the Hon'ble Supreme Court would show that it only treats the assessee's income by leasing out the property as income from business and profession as claimed by the assessee. However, the said Judgment does not deal with the income under other heads and no finding has been given by the Hon'ble Supreme Court. Making it clear as stated above, as no finding has been given with regard to any other heads, this Court is of the view that as per the Judgment of the Hon'ble Supreme Court, the rental income derived from the house property should be treated as business income. Hence, the question of law viz., 1 (a) is answered in favour of the assessee. 7.With regard to question of law viz., 1 (b) as to whether income from maintenance charges and air conditioning hire charges should be treated as business income, it should not be treated as business income as it is covered by the Judgment of this Court in the case of "Tarapore & Co. Vs. Commissioner of Income Tax" reported in "(2002) 70 CCH 0748 ChenHC", "(2003) 180 CTR 0472 : (2003) 259 4/6 http://www.judis.nic.in T.C.A.No.813 of 2019 ITR 0389 : (2002) 125 TAXMAN 0446" wherein this Court has held that Service charges received from tenants are liable to be assessed as "income from other sources" and not as "income from house property". Hence, the question of law viz.,1 (b) is answered in favour of the Revenue. 8.With the above observations, this appeal is disposed of . No costs.

(N.K.K.,J.) (P.V.,J.) 26.02.2020 ay To The Assistant Commissioner of Income Tax, Company Circle - V(3), Chennai - 600 034. 5/6 http://www.judis.nic.in T.C.A.No.813 of 2019 N.KIRUBAKARAN, J. and P.VELMURUGAN, J. ay T.C.A.No.813 of 2019 Dated:26.02.2020 6/6 http://www.judis.nic.in