We run a shopping mall. Is the income business income or income from house property?
Business income, on these facts. Applying Sultan Brothers, the Supreme Court dismissed the revenue's SLP: the company's objects covered constructing, owning, developing, managing, running, hiring, letting out and leasing malls and multiplexes, and its actual activity matched them, so the letting was the doing of business under s.28.
Decided by the Supreme Court (J.B. Pardiwala J and R. Mahadevan J) on 2024-11-14, reported as SLP (Civil) Diary No. 47812 of 2024; (2024) 469 ITR 428 (SC); 169 taxmann.com 139 (SC); (2025) 302 Taxman 361 (SC), dismissing the SLP against Pr. CIT v. M.P. Entertainment and Developers (P.) Ltd. (2024) 162 taxmann.com 6 / 299 Taxman 211 / 469 ITR 421 (MP), 16 April 2024, IT Appeal Nos. 180, 216, 217 & 218 of 2023. It bears on section 28(i), section 22, section 260A, section 143(3) of the Income Tax Act 1961, in House Property matters.
This is the current authority for treating mall and multiplex income as business income, and it frames the enquiry the way a practitioner needs it framed: was the letting the doing of a business or the mere exploitation of property by an owner, judged from the standpoint of a businessman looking at the circumstances as a whole. It is the counterweight to Raj Dadarkar rather than a contradiction of it - the two turn on what the assessee can show about the activity.
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The assessee company built a shopping-cum-entertainment mall, Malhar Megha Mall, and declared its business as the purchase and development of land and estate structures and rental income from immovable property. Its memorandum and articles gave its main object as the business of constructing, owning, acquiring, developing, managing, running, hiring, letting out, selling out or leasing multiplexes, cineplexes, cinema halls, theatres, shops and shopping malls. For assessment years 2011-12 to 2014-15, with only part of the mall complete, it let shops and other space and returned all its income and loss as business income. The Assessing Officer held the income should be split between house property and business, and for 2013-14 determined Rs 50,21,35,712 as house property income and restricted depreciation to 51.6 per cent of the occupied area. The Commissioner (Appeals) allowed the assessee's appeals on 28 February 2017, deleting the house property income and allowing depreciation of Rs 3,48,31,840. The Tribunal at Indore affirmed on 21 November 2022. The Madhya Pradesh High Court dismissed the revenue's appeals under s.260A on 16 April 2024, and the revenue's special leave petition was dismissed.
The Supreme Court order runs to three paragraphs: delay was condoned, and having heard the Additional Solicitor General and gone through the materials on record the Court saw no reason to interfere with the High Court's order, so the special leave petition was dismissed. It gives no reasons on the merits and lays down no proposition of law. The reasoned decision is the High Court's. That Court held that the rental income from leasing properties in the mall fell under 'income from business' under s.28 and not under 'income from house property': the assessee owned the building, furnished it and let it with furniture, fixtures, lighting and air conditioning under rent agreements, and its memorandum object was precisely that business (para 15). The Assessing Officer had found no material to show that sub-leasing was only part of the assessee's predominant object, and from construction of the mall onwards the assessee had consistently offered the receipts as business income, so the Commissioner (Appeals) and the Tribunal had rightly set the assessment aside (para 18). The Tribunal being the last fact-finding forum, its findings had attained finality and no material showed them to be perverse; no substantial question of law arose (para 19).
The Supreme Court gave no reasons. In the High Court, the revenue argued that the receipts were rental and relied on Shambhu Investment (P.) Ltd. and on Raj Dadarkar & Associates, in which Chennai Properties and Rayala Corporation had been held inapplicable (paras 10-12). The High Court took the test from Sultan Brothers (P.) Ltd.: each case must be looked at from the businessman's point of view to see whether the letting was the doing of business or the exploitation of the property by the owner, and an activity is not a business merely because it concerns an asset with which trade is commonly carried on (para 16). It read Chennai Properties as a case where the assessee's entire income came from letting the properties it owned, which was its business, and Rayala Corporation as resting on the fact that letting was not the company's object at all; Raj Dadarkar was distinguished because that assessee had not produced sufficient material to show that its entire or substantial income came from letting as its principal business activity (paras 16-17). Applied here, the objects clause and the consistent treatment of the receipts pointed to business income (para 18).
Having heard the learned Additional Solicitor General appearing for the petitioner and having gone through the materials on record, we see no reason to interfere with the impugned order passed by the High Court of Madhya Pradesh at Indore.
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Handle my notice → Ask a CA on WhatsAppBusiness income, on these facts. Applying Sultan Brothers, the Supreme Court dismissed the revenue's SLP: the company's objects covered constructing, owning, developing, managing, running, hiring, letting out and leasing malls and multiplexes, and its actual activity matched them, so the letting was the doing of business under s.28. This was decided by the Supreme Court (J.B. Pardiwala J and R. Mahadevan J) and bears on section 28(i), section 22, section 260A, section 143(3) of the Income Tax Act 1961. It is reported as SLP (Civil) Diary No. 47812 of 2024; (2024) 469 ITR 428 (SC); 169 taxmann.com 139 (SC); (2025) 302 Taxman 361 (SC), dismissing the SLP against Pr. CIT v. M.P. Entertainment and Developers (P.) Ltd. (2024) 162 taxmann.com 6 / 299 Taxman 211 / 469 ITR 421 (MP), 16 April 2024, IT Appeal Nos. 180, 216, 217 & 218 of 2023. This is the current authority for treating mall and multiplex income as business income, and it frames the enquiry the way a practitioner needs it framed: was the letting the doing of a business or the mere exploitation of property by an owner, judged from the standpoint of a businessman looking at the circumstances as a whole. It is the counterweight to Raj Dadarkar rather than a contradiction of it - the two turn on what the assessee can show about the activity. If it applies to you, the first step is this: Set out the objects and, more importantly, evidence that the actual activity matches them; the match between the two is what carried the case.
The assessee company built a shopping-cum-entertainment mall, Malhar Megha Mall, and declared its business as the purchase and development of land and estate structures and rental income from immovable property. Its memorandum and articles gave its main object as the business of constructing, owning, acquiring, developing, managing, running, hiring, letting out, selling out or leasing multiplexes, cineplexes, cinema halls, theatres, shops and shopping malls. For assessment years 2011-12 to 2014-15, with only part of the mall complete, it let shops and other space and returned all its income and loss as business income. The Assessing Officer held the income should be split between house property and business, and for 2013-14 determined Rs 50,21,35,712 as house property income and restricted depreciation to 51.6 per cent of the occupied area. The Commissioner (Appeals) allowed the assessee's appeals on 28 February 2017, deleting the house property income and allowing depreciation of Rs 3,48,31,840. The Tribunal at Indore affirmed on 21 November 2022. The Madhya Pradesh High Court dismissed the revenue's appeals under s.260A on 16 April 2024, and the revenue's special leave petition was dismissed. The matter was decided on 2024-11-14 by the Supreme Court (J.B. Pardiwala J and R. Mahadevan J). On those facts the Supreme Court held as follows. The Supreme Court order runs to three paragraphs: delay was condoned, and having heard the Additional Solicitor General and gone through the materials on record the Court saw no reason to interfere with the High Court's order, so the special leave petition was dismissed. It gives no reasons on the merits and lays down no proposition of law. The reasoned decision is the High Court's. That Court held that the rental income from leasing properties in the mall fell under 'income from business' under s.28 and not under 'income from house property': the assessee owned the building, furnished it and let it with furniture, fixtures, lighting and air conditioning under rent agreements, and its memorandum object was precisely that business (para 15). The Assessing Officer had found no material to show that sub-leasing was only part of the assessee's predominant object, and from construction of the mall onwards the assessee had consistently offered the receipts as business income, so the Commissioner (Appeals) and the Tribunal had rightly set the assessment aside (para 18). The Tribunal being the last fact-finding forum, its findings had attained finality and no material showed them to be perverse; no substantial question of law arose (para 19).
The Supreme Court gave no reasons. In the High Court, the revenue argued that the receipts were rental and relied on Shambhu Investment (P.) Ltd. and on Raj Dadarkar & Associates, in which Chennai Properties and Rayala Corporation had been held inapplicable (paras 10-12). The High Court took the test from Sultan Brothers (P.) Ltd.: each case must be looked at from the businessman's point of view to see whether the letting was the doing of business or the exploitation of the property by the owner, and an activity is not a business merely because it concerns an asset with which trade is commonly carried on (para 16). It read Chennai Properties as a case where the assessee's entire income came from letting the properties it owned, which was its business, and Rayala Corporation as resting on the fact that letting was not the company's object at all; Raj Dadarkar was distinguished because that assessee had not produced sufficient material to show that its entire or substantial income came from letting as its principal business activity (paras 16-17). Applied here, the objects clause and the consistent treatment of the receipts pointed to business income (para 18). In the words reproduced by the source cited on this page: "Having heard the learned Additional Solicitor General appearing for the petitioner and having gone through the materials on record, we see no reason to interfere with the impugned order passed by the High Court of Madhya Pradesh at Indore." The decision followed or applied Pr. CIT v. M.P. Entertainment and Developers (P.) Ltd. [2024] 162 taxmann.com 6 / 299 Taxman 211 / 469 ITR 421 (MP) - SLP dismissed against this judgment; Sultan Brothers (P.) Ltd. v. CIT [1964] 51 ITR 353 (SC) - the test applied by the High Court below (para 16); Chennai Properties & Investments Ltd. v. CIT [2015] 56 taxmann.com 456 / 373 ITR 673 (SC) - considered below; Rayala Corporation (P.) Ltd. v. ACIT [2016] 72 taxmann.com 149 / 386 ITR 500 (SC) - considered below; Raj Dadarkar & Associates v. ACIT [2017] 81 taxmann.com 193 / 394 ITR 592 (SC) - distinguished below; Karnani Properties Ltd. v. CIT [1971] 82 ITR 547 (SC) - relied on by the Tribunal.
It was decided by the Supreme Court on 2024-11-14 and is reported as SLP (Civil) Diary No. 47812 of 2024; (2024) 469 ITR 428 (SC); 169 taxmann.com 139 (SC); (2025) 302 Taxman 361 (SC), dismissing the SLP against Pr. CIT v. M.P. Entertainment and Developers (P.) Ltd. (2024) 162 taxmann.com 6 / 299 Taxman 211 / 469 ITR 421 (MP), 16 April 2024, IT Appeal Nos. 180, 216, 217 & 218 of 2023. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 28(i), section 22, section 260A, section 143(3), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Supreme Court order runs to three paragraphs: delay was condoned, and having heard the Additional Solicitor General and gone through the materials on record the Court saw no reason to interfere with the High Court's order, so the special leave petition was dismissed. It gives no reasons on the merits and lays down no proposition of law. The reasoned decision is the High Court's. That Court held that the rental income from leasing properties in the mall fell under 'income from business' under s.28 and not under 'income from house property': the assessee owned the building, furnished it and let it with furniture, fixtures, lighting and air conditioning under rent agreements, and its memorandum object was precisely that business (para 15). The Assessing Officer had found no material to show that sub-leasing was only part of the assessee's predominant object, and from construction of the mall onwards the assessee had consistently offered the receipts as business income, so the Commissioner (Appeals) and the Tribunal had rightly set the assessment aside (para 18). The Tribunal being the last fact-finding forum, its findings had attained finality and no material showed them to be perverse; no substantial question of law arose (para 19). It arises in House Property matters, on section 28(i), section 22, section 260A, section 143(3) of the Income Tax Act 1961, and was decided by J.B. Pardiwala J and R. Mahadevan J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Frame the submission as the Sultan Brothers question - business or exploitation of property - rather than arguing about the form of the receipt. Cite the High Court judgment alongside the Supreme Court order, given the limits on what an SLP dismissal establishes.
Validity check could not be completed. The Supreme Court order dismisses the revenue's special leave petition in three paragraphs, after hearing counsel and going through the record but without reasons on the merits, so it declares no law. The reasoned authority is the Madhya Pradesh High Court judgment of 16 April 2024, reported at (2024) 162 taxmann.com 6 / 299 Taxman 211 / 469 ITR 421. No later decision applying, following or affirming either has been verified, and nothing doubting them was found. The point remains one of fact on the Sultan Brothers test, and the decision sits alongside rather than against Raj Dadarkar & Associates v. ACIT (2017) 394 ITR 592 (SC), which the High Court distinguished on the ground that the assessee there had not shown its entire or substantial income came from letting as its principal business. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The Supreme Court order is three paragraphs dismissing the revenue's special leave petition. It was not dismissed in limine - the Court heard the Additional Solicitor General and went through the record - but it gives no reasons on the merits and lays down nothing, so it carries limited precedential weight. Everything this case is cited for comes from the Madhya Pradesh High Court judgment of 16 April 2024, which applied the Sultan Brothers test, read Chennai Properties and Rayala Corporation, and distinguished Raj Dadarkar & Associates on the footing that the assessee there had not shown its entire or substantial income came from letting as its principal business activity. The dispute also had a second limb the entry did not carry: the Assessing Officer had restricted depreciation to the occupied proportion of the mall, and the Commissioner (Appeals) restored it. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Supreme Court order runs to three paragraphs: delay was condoned, and having heard the Additional Solicitor General and gone through the materials on record the Court saw no reason to interfere with the High Court's order, so the special leave petition was dismissed. It gives no reasons on the merits and lays down no proposition of law. The reasoned decision is the High Court's. That Court held that the rental income from leasing properties in the mall fell under 'income from business' under s.28 and not under 'income from house property': the assessee owned the building, furnished it and let it with furniture, fixtures, lighting and air conditioning under rent agreements, and its memorandum object was precisely that business (para 15). The Assessing Officer had found no material to show that sub-leasing was only part of the assessee's predominant object, and from construction of the mall onwards the assessee had consistently offered the receipts as business income, so the Commissioner (Appeals) and the Tribunal had rightly set the assessment aside (para 18). The Tribunal being the last fact-finding forum, its findings had attained finality and no material showed them to be perverse; no substantial question of law arose (para 19).
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