SEASONS RESTAURANTS,MUMBAI vs. ITO WD 15(2)(3), MUMBAI

O R D E R

Per Sandeep Gosain, Judicial Member.

by the assessee is against challenging the order of Ld. CIT(A) in treating the business as rental income as the assessee has entered into and conducting agreement with M/s S. K. Enterprises since 2004 and consequently using the same method of accounting.

4. We have heard the counsels for Ld. DR the parties and we have also perused the material placed on record as well as the orders passed by revenue authorities.

Before we decide the merits of the case, it is necessary to evaluate the orders passed by Ld. CIT(A). The Ld. CIT(A) has dealt with the above grounds raised by the revenue in para no. 3 to 4 of its order. The operative portion of the order of Ld. CIT(A) is contained in para no. 4.1 & 4.2 of its order and the same is reproduced below:-

4.1 Submission of the Learned A.R together with the facts of the case hav been considered carefully. In this case, the premises with furniture and fixtures is stated to be given on an annual fixed rent of Rs.6 lakh. The expression used 'minimum guarantee income' in the agreement is a misnomer and the appellant is not entitled to anything more or even less than Rs.6 lakh as per the agreement which is apparent. As evident from TDS Certificate, even the other party, M/s. S.K Enterprises has treated the agreement to be a rental agreement. Learned A.R has submitted that the premises does not (A.Y. 2009-10) M/s. Seasons Restaurant vs. CIT(A) belong to the appellant but belongs Shri Karsan Gala one of the partners and therefore, the income of the appellant from the said premises cannot be assessed under 'Income from House Property' since the appellant is not the owner. However, Learned A.R has not shown how the premises owned by Shri Karsan Gala partner of the appellant could be furnished and given on rent by the appellant. No explanation has been given in this regard. The Learned A.R has also not explained the recital of the agreement which reads as under "THIS AGREEMENT is made and entered into at Mumbai on this 1st day of April, 2008 BETWEEN MIS SEASONS RESTAURANT the partnership firm through its partner Karshan Gala having its address at A-i, Bobby Shopping Centre, Dhanukarwadi, Kandivali (West), Mumbal - 400067 hereinafter called and referred to as "THE OWNERS" (which expression shall mean and include its partners and respective partner's representatives, executors, administrators and assignees) of the FIRST PART M/s. S.K ENTERPRISES the partnership firm through its partner SANDHYA P. SHETTY, hereinafter called and referred to as "THE CONDUCTOR" (which expression shall mean and include its partner and respective partner's representatives, executors, administrators and assignees) of the SECOND PART. WHEREAS the Owners have constructed sufficiently entitled to or owners of a Hotel Premises at Sai Darshan Compound, Ganesh Nagar, National Highway, Opp. Cable Company, Borivali (East), Mumbai - 400 066. The business which is carrying under the name (A.Y. 2009-10) M/s. Seasons Restaurant vs. CIT(A) and style as "SEASONS RESTAURANT" is referred to as 'THE SAID BUSINESS'; AND WHEREAS The owners and the Conductor had mutually agreed that the conductor shall conduct and, manage all the affairs of said business on the basis conducting on the terms and condition and on the basis of minimum business guarantee for the period of ten years or as may be extended for further period and therefore executing this present;" 4.2 In the recital, it is clearly mentioned that "Seasons Restaurant" is the owner of the premises and has given the same for conducting to M/s. S.K Enterprises. Further the premises has been given for a period of 10 years. The recital has further reiterated in Clause 4 of the agreement which reads as under :-

The Conductor hereby verifies before executing the presents that the owners are the absolute owner of said business premises. The Conductor agrees and confirms that the said business and business premises, is having absolute ownership of the owners and upon the said business premises, the owners has fixed a sign board showing the name of business as SEASONS RESTAURANT . Therefore, this is a case where the doctrine of Estoppel operates and the appellant are precluded now from arguing that they are not the owners of the said premises or that the income is not assessable under head "income from house property" on this ground of ownership.