The Tax Publishers2020 TaxPub(DT) 0506 (Bom-HC)

INCOME TAX ACT, 1961

Section 14

Where assessee-company apart from letting out shops in the commercial complex/mall set up by it, also provided various services to the occupants of the said shops such as security services, housekeeping, maintenance, etc., the income derived by the assessee from such arrangement would said to be in the nature of business income, which would be assessed under the head income from business.

Head of income - Letting out of various shops in commercial complex/mall - Income from Business or Income from House Property -

Assessee-company was incorporated with an object of construction and running of commercial and shopping malls. It set up a commercial complex-cum-shopping mall and let out shops in that commercial complex/mall dealing with various products. Apart from letting out the premises, the assessee provided various services to the occupants of the said premises such as security services, housekeeping, maintenance, etc. Further, when the premises were let out on leave and license basis, compensation was also based on the revenue sharing basis. During relevant year under consideration, the assessee declared its income under the head Income from Business; however, AO treated the same as Income from House Property. Held: From MOA of assessee-company, it was clear that the assessee was incorporated with an object to derive income from running and maintaining shopping malls. Further, the assessee was also providing marketing and promotional services and also organizing various events and programs. That being done by the assessee also in the context of revenue sharing agreement. A perusal of one such agreement showed that the assessee received not only license fee of the amounts specified therein and percentage of net revenue. In some of the agreements the compensation was either license fee or percentage of net revenue, whichever was higher. Therefore, the kind of services rendered by the assessee clearly point out that the impugned income was from business and hence, the same would be assessed under the head Income from Business.

REFERRED : Raj Dadarkar & Associates v. ACIT (2017) 81 taxmann.com 193 (SC) : 2017 TaxPub(DT) 1173 (SC), Pr. CIT v. Krome Planet Interiors Pvt. Ltd. (2019) 107 taxmann.com 443 (Bom) : 2019 TaxPub(DT) 3539 (Bom-HC)

FAVOUR : In assessee's favour.

A.Y. :

INCOME TAX ACT, 1961

Section 43B

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