High Court Of Karnataka
CIT & Anr. vs. Mysore Intercontinental Hotels (P) Ltd.
Section 24, 28, 56
Asst. Year 2004-05, 2005-06
D.V. Shylendra Kumar & N. Ananda, JJ.
IT Appeal Nos. 784 & 785 of 2009
7th January, 2010
Counsel Appeared :
M.V. Seshachala, for the Appellants
JUDGMENT
D.V. Shylendra Kumar, J. :
These appeals by the Revenue filed under s. 260A of the IT Act, 1961, are directed against the order dt. 23rd June, 2009 passed by the Tribunal in ITA No. 1411/Bang/2008, for the asst. yr. 2004-05 and ITA No. 1412/Bang/2008, for the asst. yr. 2005-06 respectively.
The Revenue is aggrieved by this order whereunder the Tribunal was of the view that the income as returned by the assessee for these two assessment years, particularly, the income attributable to the renting out of premises fitted with some fittings to make it suitable for a tenant to use it as an office premises for carrying on software business activities, should be apportioned in the ratio of 60 : 40 in respect of the income assessable under the head ‘Income from house property’ and the income assessable under the head ‘Income from business or profession’ etc., while the assessing authority was of the view that such income attributable to the premises should be brought to tax under the head ‘Income from house property’ and ‘Income from other sources’ at about 90 per cent and 10 per cent respectively.
The first appellate authority had affirmed this view but the Tribunal had instead indicated under the impugned order that it should be apportioned at 60 per cent under the head ‘Income from house property’ and 40 per cent under the head ‘Income from business or profession’.
Aggrieved by this redetermination of tax liability by the varied manner of apportionment of the income, the Revenue is in appeals before us. Submission of Sri Seshachala, learned senior standing counsel appearing for the Revenue, is that the Tribunal should not have disturbed the view taken by the assessing authority and as affirmed by the first appellate authority; that the law in this regard is reasonably well-settled and while the view taken by this Court in one such matter is that the income attributable to the facilities should be taken at 15 per cent and the balance 85 per cent should be taken at income under the head ‘House property’ the Tribunal has varied the percentage of apportionment and therefore the order is bad in law.
Learned senior standing counsel for the Revenue places reliance on the decision of this Court in the case of CIT vs. Shankaranarayana Hotels (P) Ltd. (1993) 109 CTR (Kar) 196 and also on the reported judgment of the Supreme Court in the case of East India Housing & Land Development Trust Ltd. vs. CIT (1961) 42 ITR 49 (SC) to submit that in a situation where the facility purpose is not substantial, the entire income should be taken as the income under the head ‘House property’.
We find that neither judgment relied upon by the learned senior standing counsel is attracted nor relevant for the present case, as upto what percentage of the income received by way of rent or by any other name, which is a composite amount received in respect of the business the facilities provided in the building should be apportioned either under the head ‘Income from house property’ or under the head ‘Other sources’ or even under the head ‘Business income’ is a question depending on the facts and circumstances of each case and in our opinion, it does not give rise to question of law of substantial importance. That apart, in the present case, if the Tribunal was of the view that the income assessable under the head ‘Income from house property’ should be taken at 60 per cent of the composite amount received, having regard to the terms and conditions indicated in the agreement between the parties and if for the facilities provided for 40 per cent of the amount is apportioned, we do not think we can interfere on such finding, which is essentially a finding of facts, in an appeal under s. 260A of the Act.
Even with regard to the shifting of the income from the head ‘Other sources’ to the head ‘Business’ though is a question of law that again is a question rightly answered by the Tribunal for the reason that the assessee itself is carrying on business in hotel industry. The income has to be assessed only under the head ‘Business’ and not under the head other sources is with or without furniture and fittings and when the assessee makes a profit out of it.
The Tribunal has rightly answered this question in favour of the assessee and against the Revenue, for the reason that when the assessee is having an income under the head ‘Income from business or profession’, 40 per cent income even from out of total amount received under the agreement does not get into the head other sources as this gets exhausted under the head ‘Income from business or profession’ and therefore, we do not find any question of law on the first aspect or any question of law wrongly decided on the second aspect of changing the heads of income, warranting an interference in this appeal.
Therefore, these two appeals are dismissed at the admission stage itself.
[Citation : 322 ITR 116]
