Income from Lease Charges on Multiplex is Business Income: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench held that Income from lease charges on multiplex is business income.

The assessee company, Deep Multiplex Pvt Ltd earned income from cinema complex given on lease to PVR Ltd. The assessee filed return of income for A.Y. 2015-16 on 29.09.2015 under Section 139 of the Income Tax Act declaring total income at Rs. NIL and book profit under Section 115JB of Rupees thirteen lakhs on which tax payable at Rupees two lakhs.

The case of the assessee was selected for scrutiny and notice under Section 143(2) and 142(1) of the Income Tax Act was issued and served upon the assessee. The assessment under Section 143(3) of the Income Tax Act was completed determining total income at Rupees fifty-four lakhs which includes addition

Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. Hence the present appeal has been preferred.

The Counsel for the assessee contended that due to bonafide mistake of the assessee the assessee agreed before the Assessing Officer that the lease rent income comes under the head income from other sources at the time of assessment proceedings. The said mistake cannot be taken into account as the assessee has offered the said income as business income in previous years which was accepted by the Revenue.

The Counsel further submitted that merely agreeing to consider the lease charges as income from other sources cannot debar the assessee for claiming the same before the appellate authority as business income

A Bench comprising Pramod M Jagtap, Vice President and Suchitra Kamble, Judicial Member observed that “The assessee consistently followed that the income derived from the lease charges on the multiplex is a business income of the assessee in earlier years as well as in the present year. In light of the decision of the Tribunal in assessee’s own case for A.Y. 2012-13 the issue on merit has been decided in favour of the assessee, therefore, we held that it was a business exploitation by the assessee in respect of lease charges on multiplexes which tantamount to business income.”

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