SRINIVAS THEATRES PVT LTD,CHENNAI vs. DCIT, CORPORATE CIRCLE 6(2), CHENNAI

2 -: 2. Briefly, the facts as per record are that the assessee company has the only source of income is letting out the property. The assessing officer (in short “the AO “) from the perusal of the three rental agreements entered into between the assessee and the tenants, notice that the maintenance charges form the part of the agreement.

Being aggrieved with the assessment order, the assessee went in appeal before the CIT appeal was confirmed the finding of the AO vide para 4.3 of the impugned order.

The learned counsel for the assessee he treated the submissions made before the authorities below and contended that the assessee has the only source of income is rental from leasing out the property and following the rule of consistency assessee’s head of 3 -: income may not be disturbed and he prayed that the assessee should be allowed the benefit of standard deduction and carry forward of capital loss as claimed in the return of income.

Per contra, the learned DR stands by the impugned order. He contended that assessee has leased out a business asset that is a commercial complex with maintenance charges to the tenants which would certainly constitute income under that business and profession..

We have heard the rival contentions, perused the material on record and submissions of both the sides. The learned CIT appeal as discussed that the appellant assessee has intended to construct a theatre on the vacant land owned by the appellant, however he could not construct the same in the absence of approval and therefore he has constructed a multistoried office complex and declared rental income therefrom under the head house property. The CIT appeal has also stated that the appellant has reiterated the same submissions which was considered by the AO in the assessment order.

In the assessment proceedings, the AO has recruited all the contentions of the appellant vide 2.4 to 2.5 on page number 6 to 7 of 4 -: the assessment order. From the directors report, it is clear that the main intention of the assessee company is to manage the office complex as business asset. The CIT appeal as endorsed that the AO has concluded the office complex as business asset of the appellant assessee where the assessee providing services to its tenants including maintenance as per agreement entered into with them with the support of case laws.

The learned counsel contention that the rental income assessed under the head, income from house property in the earlier years is not acceptable as it is settled law that res judicata is not applicable in the income tax proceedings. The case laws relied upon by the learned counsel are distinguishable on the facts of the instant case. In view of the facts of the case in the assessment year under consideration, the AO and the learned CIT appeal have rightly held that the appellant has treated the office complex as business asset as the assessee extended various services to the tenants, the rental income derived there from is to be assessed under the head business income.

In the backdrop of the aforesaid discussion, we are inclined to concur with the finding of the learned CIT appeal in treating the assessee’s rental income business income and denying the applicant assessee claim of standard deduction. Accordingly, the impugned order of the learned CIT appeal is sustained.

In the result, the appeal of the assessee is dismissed.