Receipts from leasing of cinema hall with furniture & fixtures, plant & machineries and other amenities, was “business income”

During the course of hearing judgment of Hon’ble jurisdictional High Court in the case of CIT Vs. Tirupati Organizers P.Ltd.(supra) which ...

During the course of hearing judgment of Hon’ble jurisdictional High Court in the case of CIT Vs. Tirupati Organizers P.Ltd.(supra) which has been relied upon by the ld.counsel of the assessee. In this case, the assessee entered into a joint business agreement with three other parties in which the assessee had to provide infrastructure, including electrical installation, lifts, plant & machinery, security system, canteen and house-keeping etc. The assessee also had undertaken responsibility for operation and maintenance of such facilities, and to provide skilled work force. In turn, the assessee would receive a guaranteed monthly amount of Rs.6,00,000/- or rupees one for inward carat of diamond. The AO treated such income of the assessee as income from house property. However, that view did not meet approval of the ld. Commissioner, who held that income of the assessee is to be assessed under the head “business income”. In that case also the AO has relied upon the judgment of Hon’ble supreme Court in the case of Shambhu Investment P.Ltd. reported in 263 ITR 143 wherein Hon’ble Supreme Court has upheld the decision of Hon’ble Kolkatta High Court. The Hon’ble Gujarat High Court has considered judgment of Hon’ble Supreme Court in the case of Shambhu Investment and held that in the present case, the income of the assessee is to be assessed under the head business income.

On an analysis of all these facts, in the light of authoritative pronouncements of Hon’ble Gujarat High Court as well as Hon’ble Supreme Court in the case of Excel Industries (supra), I find that there is no justifiable reason for the AO to deviate from view taken in earlier years, in this year. Neither the AO nor the ld. CIT(A) has pointed out what are the changes in the facts and circumstances from the earlier years. Even otherwise, if looked from angle of Revenue sharing from operation of multiplex as well as other liabilities of the assessee, it would demonstrate that it was a business exploitation by the assessee, and it has only given a portion of the complex for a period of ten years to PVR. Therefore, its income ought to be assessed under the head business income.