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Income Tax Appellate Tribunal, ‘C’ BENCH, BENGALURU
Before: SHRI INTURI RAMA RAO & SHRI LALIT KUMAR
Date of hearing : 07/11/2017 Date of pronouncement : 17/01/2018 O R D E R
Per INTURI RAMA RAO, AM :
This is an appeal filed by the revenue directed against the order of the learned Commissioner of Income Tax (Appeals)-12, [CIT(A)], Bangalore, dated 29/08/2016 for the assessment year 2011-12.
The revenue raised the following grounds of appeal:
Brief facts of the case are that the assessee is a company duly incorporated under the provisions of the Companies Act 1956. It is engaged in the business of operation and maintenance of Forum Value Mall situated in Whitefield, Bangalore. The return of income for assessment year 2011-12 was filed on 29/09/2011 declaring loss of Rs14,16,55,766/-. Against the return of income, assessment was completed by the Dy.CIT, Circle 12(2), Bangalore vide order dated 28/03/2014 at loss of Rs.54,37,097/-. While doing so, the Assessing Officer assessed rental income from the Mall under the head ‘income from house property’ after placing reliance on the decision of the Hon’ble Supreme Court in the case of 263 ITR143 and the jurisdictional of High Court decision in the case of CIT vs. Bhoopalan Commercial Complex (262 ITR 517).
Being aggrieved, an appeal was preferred before the ld.CIT(A), who vide impugned order, held that having regard to the objects of the company, rental income should be assessed under the head ‘income from business’.
Page 3 of 4 5. Being aggrieved, the revenue is in appeal before us 6. The learned DR contended that the ld.CIT(A) was not justified in treating rental income derived from the Mall as business income in the light of the decision of the Hon’ble Supreme Court in the case of Shambhu Investments (263 ITR 143) and jurisdictional High Court in the case of Bhoopalam Commercial Complex (supra). On the other hand, the learned AR of the assessee submitted that this issue is covered in favour of the assessee company by the order of this Tribunal in the assessee’s own case for earlier years in for the assessment year 2010-11 and also the decision of the jurisdiction High Court in the case of CIT vs Prestige Estate Private Limited (ITA No.119/ 2014 dated 03/06/3014 and CIT vs. M/s.Toyota Techno Park India (P) Ltd., in ITA No.73/2014.
We heard rival submissions and perused material on record. The only issue in the present appeal is whether rental income derived from the Mall owned and operated by the assessee can be assessed under the head ‘income from business’ or ‘ income from house property’. This issue requires adjudication having regard to the objects of the company for which company was incorporated. The ld.CIT(A), after extracting the objects of the company had come to the conclusion that the intention of the assessee-company is to exploit commercial property for profits and therefore had come to the conclusion that the rental income should be assessed under the head ‘income from business’. The approach and the rationale of the decision of ld.CIT(A) had been approved by the Hon’ble Apex Court in the case of Chennai Properties & Investments Ltd. vs. CIT (373 ITR 673) and also the Page 4 of 4 decision of the jurisdiction High Court in the case of CIT vs. Velankani Information Systems (P) Ltd. (218 Taxman 88)(Kar). Therefore, we do not find fallacy in the reasoning adopted by the ld.CIT(A). Hence, grounds of appeal filed by the revenue are dismissed.
In the result, the appeal filed by the revenue is dismissed.
Order pronounced in the open court on 17th January, 2018.