The Mumbai bench of the Income Tax Appellate Tribunal, in a recent ruling, held that the income from mall operations shall be assessed under the head “Business Income” under the provisions of the Income Tax Act, 1961. While accepting the contentions raised by the assessee, the Tribunal observed that the said income cannot be treated as “income from house property” since the object of the assessee was to derive income from running and maintaining the shopping mall.
The assessee-company in the instant case, has filed their income tax returns by admitting their income from Mall operations under the head “business income.”However, the Assessing Officer completed the assessment by treating the same as “income from house property.”On appeal, the Commissioner of Income Tax (Appeals) has sustained the assessment order. Being aggrieved, the assessee preferred an appeal before the Appellate Tribunal.
The Tribunal noticed the recent Apex Court decision in M/s. Rayala Corporation Pvt. Ltd, and held that the impugned income would come under the ambit of “business income” as pointed out by the assessee. The Tribunal further noted the fact that the assessee has constructed a shopping mall as per its objects for which it was incorporated and has derived income from running and maintaining the shopping mall. The activities carried on by the assessee, would show that the assessee is carrying on the activities as its trading/commercial activity.
The Tribunal further relied upon the decision of the Kolkata Bench in the case PFH Mall & Retail management Vs. ITO, in which it was held that income from Mall operation is assessable as business income, since various services & facilities as well as other amenities similar to company’s operations are provided by the assessee.
Read the full text of the order below.
