July 2019

Section 28 (i) Business income vs. income from house property Income received from leasing out of shops and other commercial establishments Also received common amenities charges, maintenance charges, advertisement charges Held to be assessable as business income

Ajay R. Singh
Advocate

12 Pr. CIT-6 vs. Krome Planet Interiors Pvt. Ltd. [Income-tax appeal No. 282 of 2017; dated 15th April, 2019 (Bombay High Court)]

 

[Krome Planet Interiors Pvt. Ltd. vs. ACIT; A.Y.: 2008-09; Mum. ITAT]

 

Section 28 (i) Business income vs. income from house property Income received from leasing out of shops and other commercial establishments Also received common amenities charges, maintenance charges, advertisement charges Held to be assessable as business income

 

The assessee is a private limited company engaged in the business of leasing out shop space in shopping malls. The assessee had filed his return for the A.Y. 2008-2009 declaring the income received from such activity of leasing out of shops and other commercial establishments to various persons as business income. In addition to rental income, the assessee had also received certain charges from the licensees such as common amenities charges, maintenance charges and advertisement charges.

 

However, the assessing officer (AO) held that the income was from house property and not business income.

 

The issue eventually reached the Tribunal. The Tribunal, by the impugned judgement held that the income was business income. It noted that the assessee had entered into a leave and license agreement with the licensee which shows that the building was constructed for the purpose of a shopping mall with the approval of the Pune Municipal Corporation. The assessee was providing various facilities and amenities apart from giving shopping space on lease. The agreement contained the list of facilities to be provided by the assessee. The charges for the facilities and utilis

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