RAJ DADARKAR & ASSOCIATESversusACIT-CC-46

                             [20 i 7] 4 S.C.R. 20


A                   RAJ DADARKAR & ASSOCIATES
                                      v.
                                '
                              ACIT-CC-46
                    (Civil Appeal Nos. 6455-60of2017)
B                              MAY09,2017
                 [A. K. SIKRI AND ASHOK BHUSHAN., JJ.]
                                            '
    Income Tax Act, 1961:
          SS.  22 and 27(iiib) - Assessee firm took leasehold rights of
c   stilt area of a portion of a building in auction, on monthly licence -
    To . run municipal market -After constructing the market area, gave
    the same to various persons on sub-licensing basis - Income from
    the sub-licensed shops whether would be assessed under the head
     "Profits and Gains of Business or Profession" or under the head
     "Income from House Property" - Held: The assessee would be
D
    treated as deemed owner of the premises in terms of s.27(iiib) and
    hence its income from the sub·licensed shops in the premises is liable
    to be assessed under the head "Income from House Property'.'.
    Tax/Taxation:
E         Income tax - Nature of - Held: Income tax is only one tax
    which is levied on the sum total of the income classified and
    chargeable under various heads - It is not collection of distinct
    taxes levied separately on each head of the income._
        , Dismissing the appeals, the Court
F         HELD: 1. It is not in dispute that having regard to the terms
    and conditions on which the leasehold rights were taken by the
    appellant in auction, constructed the market area thereupon aud
    gave the same tO various .persons on sub-licensing basis, the
    appellant would be treated as deemed o_wner of these premises
G   in terms of Section 27(iiib) of the Income Tax Act. The High Court
    took note of the provisions of Section 27(iiib) as well as Section
    269UA(t) of the Act. [Para 10] (27-D]
          2. Section 14 of t_be Act enumerates five beads of income
    for the purpose of charge of income tax and computation of total
    income. These are: Salaries, Income from house property, Profits
H
                                  20
        RAJ DADARKAR & ASSOCIATES v. ACIT - CC-46                          ' 21



  and gains of business or profession, Capital gains and Income              A
  from other sources. A particular income, therefore, has to be
  classified in one of the aforesaid heads. It is on that basis rules
  for computing. income and permissible deductions which arc
  contained in different provisions of the Act for each of the aforesaid
· heads, are to be applied. [Para 13) [29-C-D)
                                                                             B
       3. Income tax is only One Tax which is levied on the sum.
 total of the income classified and chargeable under the various
 heads. It is not a collection of distinct taxes levied separately on
 each head of the income. [Pam 13) (29-E]
       4. There may be instances where a particular income may               c
 appear tQ fall in more than one head. Wherever there is an income
 from leasing out of premises and iCOllecting rent, normally such
 an income is to be treated as in'Chme from house property, in
 case provisions of Section 22 of the Act arc satisfied with primary
 ingredient that the assessee is the owner of the said building or
 lands appurtenant thereto. 'Owner of the house property' is                 D
 defined in Section 27 of the Act which includes certain situations
 where a person not actually the owner shall be treated as deemed
 owner of a building or part thereof. In the present case, the
 appellant is held to be "deemed owner" of the property in
 question by virt~e of Section 27(iiib) of the Act. On the other             E
 band, under certain circumstances, where the income may have
 been derived from letting out of the premises, it can still be
 treated as business income if letting out of the premises itself is
 the business of the asscsscc. [Para 14) [29-E-F, G-H; 30-B)
         5. Merely because there is an entry in the object clause of         F
 the business showing a particular object, would not be the
 determinative factor to arrive at a conclusion that the income is·
 to be treated as income from business. Snch a question would
 depend upon the circumstances of each case. Even otherwise,
 the object clause which. is contained in the partnership firm is to
 take the premises on rent and to sub-let. In the present case,              G
 reading of the object clause would bring out two discernible facts,
 i.e. (a) the business activity is of taking the premises on rent and
 sub-letting them and (b) partnership firm may take any other
 business as may be mutualiy agreed upon by the partners. [Paras·
 15 and 16) (30-D, G-H; 3l·A-C)                                              H
22             SUPREME COURT REPORTS                           [2017] 4 S.C.R.


A           Sultan Bros. (P) Ltd. v. CIT, [1964) 5 SCR 807 - followed.
             6. Apart from relying upon the clause in the partnership
      deed to show its objective, the appellant has not produced or
      referred to any material. On the other hand, ITAT had specifically
      adverted to this issue and recorded the findings on this aspect.
B     The ITAT being the last forum insofar as factual determination is
      concerned, its findings have attained finality. The appellant did
     ·not make any efforts to show as to how the findings were perverse.
      It was for the appellant to produce sufficient material on record
      to show that its entire income or substantial income was from
      letting out of the property which was the principal business activity
c     of the appellant. [Paras 17 and 18) [31-D; 32-B]
            Chennai Properties and Investments Limited, Chennai
            v. Commissioner of Income Tax Central !IL Tamil Nadu
            & Anr. [2015) 4 SCR 413 : 2015 (14) SCC 793; Raya/a
            Corporation Private Limited v. Assistant Commissioner
D           of Income Tax (2016) 15 SCC 201 - held inapplicable.
            Karanpura Development Co. Ltd. v. CIT (1962) 44 ITR
            362; East India Housing and Land Development Trust
            Ltd. v. CIT (1961) 42 ITR 49 - referred to.
                                                          -<
E                      ·-    Case Law Reference
     J2015J 4 SCR413              held inapplicable              Paras 12, 19
     (2016) 15 sec 201            held inapplicable              Paras 12, 19
     J1964J 5 SCR 807             followed                       Para 15
F    (1962) 44 ITR 362            referred to                    Para 19
     (1961) 42 ITR 49             referred to                    Para 19
           CIVIL APPELLATE JURISDICTION: Civil Appeal No. 64SS-
     6460 of2017.               ' -~
G       ~  From the Judgment and Order dated 19.09.2014 of the High Court
     ofJudicature at Bombay in I. T.A. No. 588, 713, 720, 721, 722 & 723 of
     2012.
           Salil Agarwal, Bhargava V. Desai, Ms. Saumya Mehrotr!I, Uma
      Shankar, Adv. for the Appellant.
H

                                                      0
        RAJ DADARKAR & ASSOCIATES v. ACIT - CC-46                              23


 Maninder Singh, ASG, Rupesh Kumar, T. M. Singh, Mrs. Anil Katiyar,            A
 Advs. for the Respondent.
        The Judgment of the Court was delivered by
       A. K. SIKRI, J. 1. The substantial questions of law which have
 been raised .Qy the appellant in these appeals, which wlre also the •. ,
 questions before the High Court on which High Col!rt has r~ndered the~. B
 impugnedjudgment, are the following:
                   ~             ~
                                                    ..-    - -       .,:
        "( 1) Whether in the facts and circumstarices of the case, and in
        law, the Tribunal erred in holding that the appellant was owner of
        the shopping centre within the meaning of Section 22 read with
        Section 27 of the Income Tax Act, 1961?                                c
        (2) Whether in the facts and circumstances of the case, and in
        law, the Tribunal was right iri holding that the income earned by
        the appellant from the shopping centre was required to be taxed
        under the head "income from House Property" instead of the
        head "Profits and Gains from the Business or Profession" as            D
        claimed by the Appellant?
        (3) Whether on the facts and circumstances of the case, and in
        law, the order of the Tribunal, confirming the action of the
        Respondent, is perverse inasmuch as the same is based on
        surmises, conjectures and suspicions by taking into account            E
        incorrect, irrelevant and extraneous consideration while ignoring
        relevant materials and considerations?"
        2. Few facts giving the background in' which aforesaid questions
 have arisen for consideration, may first be taken note of. These are
 recapitulated hereinafter:                                                     F
          The Maharashtra Housing and Developing Authority ("MHADA")
_ had constructed buildings known as Shyam Sunder Cooperative Society,
  Ram Darshan Cooperative Society and Sindhu Coo-perative Society at
  Jariwala Compound Market, Opposite Navjivan Post Office, Lamington
  Road, Mumbai - 400088. However, there was a reservation for                  G
  Municipal retail market on the plot on which MHADA had put up the
  construction. Therefore, MHADA handed over the ground floot [stilt
  portion] of the above ~aid buildings and admeasuring around 17,925 sq.
  ft. (hereinafter referred to as the "market portion") to Market Department
                                                                               H
24              SUPREME COURT REPORTS                            [2017] 4 S.C.R.


A     of Municipal Corporation Greater Bombay ("MCGB"). This land was
      acquired by the MCGB from the MHADA by recovering the necessary
      cost.
                                        ~




             3. In 1993, the Market Department of the MCGB auctioned the
     market portion on a monthly license [stallage charges] basis to rim
B    municipal market." The appellant firm participated in the auction to acquire
     the right to conduct the market on the market portion. The appellant was
     the successful bidder and was handed over possession of the market
     portion on 28.05.1993. The terms and'conditio1,1s subject to which the
     appellant was given the said market portion to run and maintain municipal
c market contained in the terms and conditions of the auction dated
     11.03 .1993. The premises allotted to the appellant was a l,Jare structure,
     on stilt; that is, pillar/column, sans even four walls. In terms of the auction,
     it was the appellant who had to make the entire premises fit to be used
   · a market, including construction of walls, construction of entire common
     amenities Ii.ke toilet blocks, etc. Accordingly, after taking possession of
D    the premises, the appellant spent substantial amount on additions/
     alternations of the entire premises, including demolishing the existing
     platform and, thereafter, reconstructing the same according to the new
     plan sanctioned by the MCGB. [Rs. 1,83,61,488/- spent from Financial
     Year 1'993-1994 to 2001-2002] The appellant constructed 95 shops and
     30 stalls of different carpet areas on the pr~mises under the market
     name "Saibaba ShoppingCentre". The appelTant also obtained, in terms
     of the conditions of the auction, necessary registration certificate for
     running a business under the Shop and Establishment Act ,and other
     licenses/permissions from MCGB and other Government and semi-·
     Government bodies for carrying on trading activities on the said premises.
F. The appellant firm was responsible for day-to-day maintenance,
     cleanliness and upkeep of the market premises. The appellant also had
     to incur/pay water charges, electricity charges, taxes and repair charge.s.
            Essentially, the appellant collected the following types of receipt
      from the sub-licensees:
G
             (a) Compensation from sub-licensees [same rate of stallage
                 charges and on the same terms and condition as given to the
                 appellant the MCGB].
             (b) Leave & License fees. ·
H
              RAJ DADARKAR & ASSOCIATES v. ACIT - CC-46                            25
                          [A. K. SIKRI, J.l

             (c) Service Charges for providing various services, including         A
                 security charges, utilities, etc.

~--
              4. The. appellant filed the returns of income and right from th.e
       year 1999 till 2004, it had been offering the income from the aforesaid
       shops and stalls sub-licensed by it under the head "Profits and Gains of
       Business or Profession" of the Income Tax.Act, 1961 (hereinafter referred   B
       to as the 'Act'). The income was also assessed accordingly. However,
       the case of the appellant for the Financial Year 1999-2000 was reopened
       by the respondent by issuing notice under Section 148 of the Act and in
       response to the same ~he appellant filed its return on 12.12.2003.
       Thereafter; notice under Section 143(2) of the Act dated. 10.01.20.05
       was issued and served by the respondent. Reassessment order. was
                                                                                   c
       framed, computed the income from the shops, and the stalls under head
       "Income from House Property" of the Act. The reasons given by the
       respondent for so computing the income under the head "Income from
       House Property" were:                                              ·
             (i) By virtue of Section 27(iiib) of the Act, the appellant was       D
                 "deemed owner" of the premises as it had acquired lea.sehold
                 right in the land for more than 12 years;                ,
             (ii) In agreements for sub-licensing the words "lease
                  compensation" were used instead of ~'license fees" and
                  deposits were referred as "sub-lease deposits". Further, in      E
                  some correspondence, like loan application, etc., the words,
                  "lease" were used;
             (iii) Property tax has been levied on the appellant.
             Accordingly, the respondent held that the income received by the
      ~~pellant from the market stalls was assessable as "Income from House
       Property" under the Act.                •
              5. Being aggrieved by the above mentioned reassessment order
       dated 29.03.2005, the appellant filed an appeal before the Commissioner
       of Income Tax (Appeals) ["CIT (Appeals)"] on 13.04.2005. The CIT G
       (Appeals) allowed the appeal of the appellant and reversed the action of ,
       the respondent on 30.12.2005'. Aggrieved by the order dated 30.12.2005
       of the CIT (Appeals), the respondent as well as appellant filed appeals
       before the Income Tax Appellate Tribunal ("!TAT"). The !TAT reversed
       the orderof the CIT (Appeals) and confirmed the action of the Assessing
                                                                                  H
26            SUPREME COURT REPORTS                            [2017] 4 S.C.R.


A    Officer vide its decision dated 10.09 .2009. Being aggrieved by the order
     of the ITAT, the appellant preferred an appeal before the High Court.
     The High Court, by the impugned order dated 19.09.2014, dismissed the
     appeal filed by the appellant.
           6. It is this judgment of the High Court against which present
B    appeals, via Special Leave to Appeal, have been filed.
             7. The learned counsel for the appellant submitted that the High
     Court, or for that matter the ITAT, committed grave error in approaching
     the entire matter from an erroneous angle. Referring to the discussion
     contained in the impugned judgment, the learned counsel pointed out
c    that the High Court confined its discussion only on one aspect viz. as to
     whether the appellant was 'deemed owner' of the properties in question
     within the meaning ofSection27(iiib) of the Act and after holding it to be
     so, it treated the Income as "income from house property". The learned
     counsel argued that the ~ntire focus of the High Court was on the aforesaid
     aspect and, in the process, it was totally ignored that the main business
D    of the appellant was to take the premises on rent and to sub-let those
     premises. Thus, sub-letting the premises was the business .of the appellant
     firm and income earned, as a result, was the business income.
            8. In order to support the aforesaid contention, Mr. Agarwal,
     learned counsel for the appellant, referred to the deed of partnership
E    firm of appellant which was constituted on 02.04.1993 under the
     provisions of Indian Partnership Act. He referred to the object clause
     of the firm as per the partnership deed, which reads as under:
            "The Partnership shall take the premises on rent and to sub-let or
            any other business as may be mutually agreed by the parties from
F           time to time."
            According to him, it was in furtherance of the aforesaid object
     that, as a business activity, the appellant participated in the auction held
     by a Market Department of the MCGB. Thus, the sole intention of the
     appellant was to establish a retail hub wherein various small retailers
 G   could come together and carry on their business in an organised and
     systematic manner. Thus, sub-licensing the premises was only a part of
     this predominan!..Qbjectofthe appellant. This was the sole and the only
     activity of the appellant. The appellant,· being a partnership firm,
     maintained full and complete records of!hese business activities. Right
                                                "-~.:..   ..

H
       RAJ DADARKAR & ASSOCIATES v. AClT - CC-46                               27
                   [A. K. SIKRI, J.]

from the year 1999 till 2004, the appellant had been offering the income       A
from the shops and stalls sub-licensed by it under the head "Profits and
Gains of Business or Profession" of the Act.
       9. Mr. Maninder Singh, learned Additional Solicitor General, on
the other hand, refuted the aforesaid arguments by referring to the order
of the Assessing Authority and submitted that the appellant had argued         B
before the Assessing Officer that it was not the lessee of the market
area but was only a licensee and, therefore, deeming provisions of Section
27(iiib) of the Act would not apply. This argument was rightly rejected
by the Assessing Officer. He also referred to the order of the !TAT
which had specifically repelled the argument that this income was
business income. Therefore, no question oflaw arises for determination.        c
        10. We have considered the aforesaid submissions of counsel for
the parties in the light of legal provisions contained iil the Act. We may
remark at the outset that it is not in dispute that having regard to the
terms and conditions on which the leasehold rights were taken by the
appellant in auction, constructed the market area thereupon and gave           D
the same to various persons on sub-licensing basis, the appellant would
be treated as deemed owner of these premises in tenris of Section 27(iiib)
of the Act. We may point out that the High Court took note of the provisions
of Section 27(iiib) as well as Section 269UA(f) of the Act which reads
as under:                                                                      E
      "Section 27(iiib) - a person who acquires any rights (excluding
      any rights by way of a lease from mo11th to month or for a period
      not exceeding one year) in or with respect to any building or part
      thereof, by virtue of any such transaction as is referred to in clause
      (f) of section 269UA, shall be deemed to be the owner of that            F
      building or part thereof;
       Section 269UA(f) - "transfer",-
      (i)    in relation to any immovable property referred to in sub-
            clause (i) of clause (d), means transfer of such property by
            way of sale or exchange or lease_for a term of nqt less than       G
            twelve years, and includes allowing the possession of such
            property to be taken or retained in part performance of a
            contract of the nature referred to in section 53A of the
            Transfer of Property Act, 1882 (4of1882).
                                                                               H
28             SUPREME COURT REPORTS                           [2017] 4 S.C.R.


A                  Explanation.-Forthe purposes of this sub-clause, a lease
                   which provides for the extension of the term thereof by a
                   further term or terms shall be deemed to be a lease for a
                   term of not less than twelve years, if.the aggregate of the
                   term for which such lease is to be granted and the fwiher ,.....,_
                   term or terms for which it can be so extended is not less than
B
                   twelve years ;
             (ii) in relation to any immovable property of the nature referred
                 . to in sub-clause (ii) of clause (cl), means the doing ofanything
                   (whether by way of admitting as a member of or by way of
                   transfer of shares in a co-operative society or company or
c                  other association of persons or by way of any agreement or
                   arrangement or in any other manner whatsoever) which has
                   the effect of transferring, or enabling the enjoyment of, such
                   property."
           · 11. Thereafter, the High Court pointe~ out the circumstances under
D    which the Market Department ofMCGB had auctioned the market area
     wherein the appellant was the successful tenderor; the BMC permitted
      sub-letting of the shops and stalls in stilt portion; the appellant was
     permitted to carry out additions and alterations which he did; the manner
      in which the appellant after making necessary constructions sub-I icensed
     to various types of traders etc. On that basis, the High Court concluded
E    that reading of various clauses harmoniously as per which the rights
      were given to the appellant in the said property, pointed out towards the
      appellant acquiring rights in or in respect of the building or part
     .thereof, which rights were clearly traceable to Section 269UA(f) of the
     Act.
F
            12. As pointed out above, the aforesaid conclusion is not even
     disputed by the learned counsel for the appellant. The submission was,
     as noted above, even if the appellant is deemed owner of the premises in ·
     question, sin ct: the letting out the place and earning rents therefrom is
     the main business activity of the appellant,• then the income generated
G    from sub-licensing the market area and earned by the appellant should
     be treated as income from business and not income .from the house
     property. His submission was that the dominant test has to be applied
     and once it is found that dominant intention behind the activity was that
     of a business, the rental income would be business income. In support,
H    Mr. Agarwal referred to the following two judgments:
       RAJ DADARKAR & ASSOCIATES v. ACIT - CC-46                             29
                   [A. K. SIKRI, J.]

      (i) Chemuti Properties (Ind Investments Limited, Chennai v.            A
          Commissioner of Income Tax Centr(I/ Ill, T"mil Nadu &
          Anr., (2015) 14 sec 793.
      (ii) Ray(l/a Corporation Private Limited v. Assisf(lnf
          Commissioner of Income Tax, (2016) 15 SGC 20 I.
        13. Before dealing with the respective contentions, we may state,    B
in a summary form, scheme of the Act about the computation of the
total income. Section 4 of the Act is the charging Section as per which
the total income of an assessee, subject to statµtory exemptions, is
chargeable to tax. Section -H pf the Act enumerates five heads of income
for the purpose of charge of income tax and computation of total income.     c
These are: Salaries, Income from house property, Profits and gains of
business or profession, Capital gains and Income from other sources. A
particular income, therefore, has to be classified in one of the aforesaid
heads. It is on that basis rules for computing income and permissible
deductions which are contained in different provisions of the Act for
each of the aforesaid heads, are to be applied. For example, provisions      D
for computing the income from house property are contained in Sections
22 to 27 of the Act and profits and gains of business or profession are to
be computed as per the provisions contained in Sections 28 to 44DB of
the Act. It is also to be borne in mind that income tax is only One Tax
which is levied on the sum total of the income classified and chargeable     E
under the various heads. It is not a collection of distinct taxes levied
separately on each head of the income.
        14. There may be instances where a particular income may appear.
to fall in more than one head. These kind of cases of overlapping have
frequently arisen under the two heads with which we are concerned in         F
the instant case as well, namely, income from the house property on the
one hand and profits and gains from business on the other hand. On the
facts of a particular case, income has to be either treated as income
from the house property or as the business income. Tests which are to
be applied for determining the real nature of income are laid down in
judicial decisions, on the interpretation of the provisions of these two     G
heads. Wherever there is an income from leasing out of premises and
collecting rent, normally such an income is to be treated as income from
house property, in case provisions ofSection 22 of the Act are satisfied
with primary ingredient that the assessee Is the owner ofthe said building
or lands appurtenant thereto. S~ction 22 of the Act makes 'annual value'     H
30             SUPREME COURT REPORTS                            (2017] 4 S.C.R.


A    of such a property as income chargeable to tax under this head. How
     annual value is to be determined is provided in Section 23 of the Act.
     'Owner of the house property' is defined in Section 27 of the Act which
     includes certain situations where a person not actually the owner shall
     be treated as deemed owner of a building or part thereof. In the present
     case, the appellant is held to be "deemed owner" of the property in
B
     question by virtue-of Section 27(iiib) of the Act. On the other hand,
     under certain circumstances, where the income may have been derived
     from letting out of the premises, it can still be treated as business income
     if letting out of the premises itself is the business of the assessee.
            15. What is the test which has to be applied to determine whl!ther
c    the income would be chargeable under the head "income from the house
     property" or it would be chargeable under the head "Profits and gains
     from business or profession", is the question. It may be mentioned, in
     the first instance, that merely because there is an entry in the object
     clause of the business showing a particular object, would not be the
D    determinative factor to arriV;e at a conclusion that the income is to be
     treated as income from busines~. Such a qu~stion would depend upon
     the circumstances of each case'. It is so held by the Constitution Bench
     of this Court in Sultan Bros. (P) Ltd. v. CIT, ( 1964) 5 SCR 807 and we
     reproduce the relevartt portion thereof:

E           "7 .... We think each case has to be looked at from a businessman's
            point of view to find out whether the letting was the doing of a
            business or the exploitation of his property by an owner. We do
            not further think that a thing can by its very nature be a commercial
            asset. A commercial asset is only an asset used in a business and
            nothing else, and business may be carried on with practically all
F           things. Therefore, it is not possible to say that a particular activity
            is bu~iness because it is concerned with an asset with which trade
            is commonly carried on. We find nothing in the cases referred, to
                 I   •.   -                                                           ,

            support the proposition that certain assets are commercial assets
            in their very nature."
 G          16. In view thereof, the object clause, as contained in the partnership
     deed, would not be the conclusive factor. Matter has to be examined on
     the facts of each case as held in Sultan Bros. (P) Ltd. case. Even
     otherwise; the object clause which is contained in the partn~rship finn is
     to take the premises on rent and to sub-let. In the present case, reading
 H
       RAJ DADARKAR & ASSOCIATES v. ACIT - CC-46                                31
                   [A. K. SIKRI, J.]

of the object clause would bring out two discernible facts, which are as        A
follows:
       (a) The appellant which is a partnership finn is to take the premises
            on rent and to sub-let those premises. Thus, the business
            activity is of taking the premises on rent and sub-letting them.
                 In the instant case, by legal fiction contained in Section · B
           27(!iib) of the Act, the appellant is treated as "deemed owner".
      (bLThe aforesaid clause also mentions that partnership firm may
           take any other business as may be mutually agreed upon by
         · the partners.                                    ·
                                                                                c
       17. In the instant case, therefore, it is to be seen as to whether the
activity in question was in the nature of business by which it could be
said that income received by the appellant was to be treated as income
from the business. Before us, apart from relying upon the aforesaid
clause in the partnership deed to show its objective, the learned counsel
                                                                                D
for the appellant has not produced or referred to any material. On the
other hand, we find that ITAT had specifically adverted to this issue and
recorded the findings on this aspect in the following manner:
       "26. :..On this issue facts available on record are that the assessee
       let out shops/stalls to various occupants on a monthly rent. The
                                                                                E
       assessee collected charges for minor repairs, maintenance, water
       and electricity. As per the terms of allotnient by the BMC, the
       assessee was bound to incur all these expenses. The assessee, in
       turn, collected extra money from the allottees. The assessee
       collected 20% of monthly rent as service charges. Such ser\iice
       charges were also used for providing services like watch and             F
       ward, electricity, water etc. This in our opinion was inseparable
       from basic charges of rent. The assessee has made bifurcation of
      .the receipt from the, occupiers of the shops/stalls as rent and
       service charges. As rightly held by the Assessing Officer, decision
       of Hon'ble Supreme Court in the case of Shambu Investment
                                                                                G
       Pvt. Ltd., 263 ITR 143 will apply. The assessee has not established
       that he was engaged in any systematic or organized activity of
       providing service to the occupiers of the· shops/stalls so as to
       constitute the receipts from them as business income. In our
       opinion, the assessee received income by letting out shops/stalls;
                                                                                H
              SUPREME COURT REPORTS                           [2017] 4 S.C.R.


A          and therefore, the same has to be· held as income from house
           property."
            18. The ITAT being the last forum insofar as factual determination
     is concerned, these findings have attained finality. In any case, as
     mentioned above, the learned counsel forthe appellant did not argue on
B    this aspect and did not make any efforts to show as to how the aforesaid
     findings were perverse. It was for the appellant to produce sufficient
     material on record to show that its entire income or substantial income
     was from letting out of the.property which was the principal business
     activity of the appellant. ·No such effort was made.
c            19. Reliance placed by the appellant on the judgments of this Court
     in Cliennai Properties.& Investments Ltd. and Raya/a Corpormion
     (P) Ltd. would be of no avail. In Cl1e1111ai Properties & Investments
     Ltd. where one of us (Sikri, J.) was a part of the Bench found that the
     entire income of the appellant was through letting out of the two properties
     it owned and there was no other income of the assessee except the
D    income from letting out of the said properties, which was the business of
     the assessee. On those facts, thi5'>Geurt came to the conclusion that
     judgment of this Court in Karanpura Development Co. Ltil v. CIT,
                                                                 ,--'

     (1962) 44 ITR362 was applicable and the judgment of this Court in
     East I11dia Housi11g (llld L"11d Developme11t Trust Ltd. v. CIT, ( 1961)
E    42 ITR 49 was held to be distinguishable. In the present case, we find
     that situation is just the reverse. The judgment in East India llousing
     andL"11dDevelopme11t Trust Ltd. which would be applicable which is
     discussed in para 8 of Cllemwi Properties & Investments Ltd. case
     and the reproduction thereof would bring home the point we are
     canvassing:
F
            "8. With this background, we first refer to the judg1,11ent of this
            Court in East !11dia.Housing and Land Development Trust Ltd.
            case [East India Housing and Land Development Trust
            Ltd. v. CIT, (1961) 42 ITR 49 (SC)] which has been relied upon
            by the High Court. That was a case where the company,was
G·          incorporated with the object of buying and developing lai1ded
            properties and promoting and developing markets. Thus, the main
            objective of the company was to develop the landed properties
            into markets. It so happened that some shops and stalls, which
            were developed by it, had been rented out and income was derived
H           from the renting of the said shops and stalls. In those facts, the
        RAJ DADARKAR & ASSOCIATES v. ACIT - CC-46                             33
                           [A. K. SIKRI, J.]

       question which arose for consideration was: whether the rental A
       income that is received was to be treated as income from the .
       house property or tge income from the business? This Court while
       holding that the income shi;ill be treated as income from the house
       property, rested its decision in the context of the.main objective of
       the company and took note of the fact that letting out of the
                                                                             B
       property was not the object of the company at all. The Court was
       therefore, of the opinion that the character of that income which
       was from the house property had not altered because it was
       received by the company formed with the object of developing
       and setting up properties."
       20. In R"yala Corporation (P) Ltd., fact situation was identical       c
to the case of C/1enn"i Properties & Investments Ltd. and for this
reason, R"yala .Corpor"tion (P) Ltd. followed Clienn"i Properties &,
Investments Ltd., which is held to be inapplicable in the instant casi!.'
      2 h For the aforesaid reasons, we are of the opinion that these
appeals lack merit and are, accordingly, dismissed with cost.                 D


Kalpana K. Tripathy                                      Appeals dismissed.