SHREEJI EXHIBITORS Vs. ASSTT. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE above titled appeals have been preferred by two different assessees against the orders of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] dated 10.12.2013 and 26.12.2012 respectively. Since the facts and issues involved therein are identical in nature, hence the same were heard together and are being disposed of by this common order. For the sake of convenience, facts have been taken from ITA No. 640/M/2014. The common issue raised in both the appeals is as to whether the income/loss from letting out of multiplex/shopping mall and cinema theatre along with amenities is to be assessed under head "Income from house property" or as "business income" of the assessee.

(2.) The assessee is a partnership firm (wrongly written by the AO as company) engaged into the business of construction and maintenance of mall, letting out premises on lease and providing amenities therein and exhibition of feature films at multiplex. The assessee constructed a Multiplex complex in Bhayander (West) comprising of multiplex theatres, shops, entertainment and game zone, kiosk, food court, etc. which was commissioned in the previous year ending on 31.03.2009 relevant to the assessment year 2009 -10. The assessee offered income/loss from the above activity as under the head" Income from business or profession" whereas the Assessing Officer treated the same as "Income from house property." The above action of the AO has been further confirmed by the CIT(A). The assessee has thus come in appeal before us.

(3.) THE Ld. AR of the assessee, has brought our attention to the written submissions filed before the Ld. CIT(A) wherein it has been explained that that the assessee is operating Multiplex with 6 screens and parking facilities and balance area is given on rent wherein food court and shops are located. He has been further explained that since, on the films exhibited in the Multiplex screens, entertainment tax is exempted for a period of 5 years from the date of commencement, the complex is required to comply with certain requirements with regard to facilities that are mandatorily to be provided and the entire complex is provided with amenities such as open area as per Municipal Regulations, escalators, air -conditioning facilities, interiors and electrical fittings as per the specifications of the occupants, uninterrupted power supply and security arrangements, which includes Closed Circuit TV Monitoring'(CCT'). It has been thus submitted that assessee's prime motive in embarking on this project was not just to give property on rent but to exploit the same as a commercial venture with business motive and hence attached a lot of importance in concentrating more on providing added amenities with touch of world class facilities added to the venture which will be evident from the amount of investments made in construction and assembly of amenities that were to be made available to tenants. The following amounts were incurred towards capital cost for providing various amenities: