These two appeals of assessee - one is directed against order d t e d 24-1-2006 of Ld. CIT, Kol.-III passed under section 263 for assessment year 2001-02 and other is directed against order dated 11- 10-2006 of Ld. CIT(A)-VIII, Kolkata for assessment year 2003-04 - are disposed of by this common order since principal issue agitated in both these appeals is substantially same. ITA No. 435/K/06 - Assessment year 2001-02 (Against order of CIT under section 263): 2. This appeal by assessee is directed against order of Ld. CIT, Kol.-III, passed under section 263 of Act for assessment year 2001-02. All grounds originally taken by assessee are in respect of cancellation of assessment under section 263, and issuance of direction to assess income of Rs. 1,75,20,000 under head of 'Income from house property'. Subsequently assessee had taken additional ground challenging assumption of jurisdiction under section 263 of Act by Ld. C.I.T. We shall take up original grounds first, which are as under:- (1) For that on facts and in circumstances of case, Ld. CIT, Kolkata-III erred in cancelling assessment framed by Assessing Officer holding same to be erroneous and prejudicial to interest of revenue. (2) For that Ld. CIT, Kolkata-III erred in holding that Mall management/business centre charges, which was offered and assessed to tax as business income, was taxable under head 'Income from house property'. (3) For that Ld. CIT, Kolkata-III erred in holding that finance charges paid in respect of loan taken for acquiring property at Ahmedabad should have been considered under head "Income from house property" and not as "business expenditure". 3. assessee-company (previously known as Kishore Taxtile Mills Pvt. Ltd.) is engaged in business of construction and management of shopping malls, departmental stores and business centres at Mumbai, Ahmedabad and Kolkata. assessment in this case was completed under section 143(3) by Income-tax Offcer, 7(1)(3), Mumbai on 4-12-2003 on total income of Rs. 5,55,630. Subsequently, case of assessee was transferred to Kolkata. learned CIT, Kol.-III reviewed aforesaid assessment. On such review it, prima facie, appeared to her that said assessment was erroneous and prejudicial to interest of revenue. She therefore, assumed jurisdiction under section 263 of Act, and passed order under said section dated 24-1- 2006, cancelling assessment made under section 143(3) of Act and directing Assessing Officer to revise original assessment by assessing amount of Rs. 1,75,20,000 being mall management and business centre charges, as income from house property instead of as business income. reasons why prima facie it appeared to Ld. CIT that assessment made under section 143(3) was erroneous and prejudicial to interest of revenue necessitating action under section 263, are as under: (a) mall management and business centre charges were assessed as business income against which business expenditure of Rs. 1.5 crores was claimed though receipts should have been taxed as income from house property. (b) In Profit and Loss Account, assessee claimed deduction of interest of Rs. 69,04,530 out of which Rs. 53,82,041 was paid in respect of loan taken for acquiring property at Ahmedabad. Assessing Officer allowed said amount as business expenditure instesd of considering it for computing assessee's income from house property. (c) taxability of amount is determined by its true nature and not by name given to it by assessee. receipt from letting out mall space should have been assessed as property income. Ld. CIT relied upon decision of Hon'ble Supreme Court in case of Sambbu Investment (P.) Ltd. v. CIT [2003] 263 ITR 143. 4. learned counsel of assessee submitted that case was selected for scrutiny and assessment was completed after due serutiny. Assessing Officer had observed in order of assessment that return of income was accompanied by audited Profit & Loss Account, Balance Sheet etc. as well as Audit Report in Form No. 3CA. At hearing stage assessee produced books of account, i.e. cash book/bank book, ledger, purchase/sales register etc. along with bills. assessee had also furnished details of various expenses. These documents were examined by Assessing Officer with view to ascertain veracity of claim made by assessee for allowance of deduction of various expenses debited to Profit & Loss Account. Only thereafter he completed assessment. Thus it can be said that assessee had furnished requisite information/evidences, and Assessing Officer after considering records before him and satisfying himself about correctness of evidences filed, proceeded to complete assessment. From above facts, it necessarily follows that there was proper application of mind on part of Assessing Officer in framing assessment. In other words, decision that he had taken to assess receipt of Rs. 1,75,20,000 being mall management/business centre charges, as business income and to allow deduction of Rs. 1.50 crores, inclusive of interest of Rs. 69,04,530 as business expenditure, was conscious decision taken after conducting necessary inquiries and on due appreciation of relevant facts and law. 4.1 learned counsel further submitted that Hon'ble Supreme Court, in case of Karnani Properties Ltd. v. CIT [1971] 82 ITR 547 very succinctly enunciated unique characteristics of business activity. Apex Court has laid down precise tests that are necessary to determine whether services rendered by assessee to its tenants/recipients of service, are in nature of business activities and income generated therefrom assessable as business income, or not. Hon'ble Court expressed view that if services rendered by assessee are results of its activities carried on continuously in organised manner, with set purpose and with view to earn profits, those activities would constitute business activities and income arising therefrom would be assessable under section 10 (of 1922 Act, i.e. as business income under section 28 of 1961 Act). In context of order under appeal, it is pertinent to apply above tests to facts of instant case. various services rendered by assessee-company in shopping malls/business centres owned by it at Mumbai, Ahmedabad and Kolkata, as may be noticed from agreements reached in this respect with users, viz., (i) Pantaloon Industries Ltd., (ii) Pantaloon Retail (India) Ltd., and (iii) PFH Entertainment Ltd., are as under: A. Services & Facilities: 1. Security system - manual as well as electronic 2. Providing of cleaning and maintenance staff 3. Providing adequate lighting 4. Installation and maintenance of lifts/escalators/elevators 5. Provision and management of parking space 6. Provision of fire fighting equipments 7. Provision of diesel generator set 8. Insurance of property B. Other amenities: 1. Providing tiled flooring 2. Providing rolling shutters 3. Electrical connected load 4. Air handling units 5. Telephone lines 6. Fax lines 7. Signage boxes 8. Computers 9. Internet lines perusal of agreements would show that activities involved in providing above services/facilities/amenities meet all aforesaid four requirements laid down by Hon'ble Supreme Court to qualify as business activities. To elaborate further, assessee has taken up project for establishing retail chain at various metros of India and already shopping malls started functioning at Mumbai, Ahmedabad and Kolkata. So all these activities constitute ingredients of organised business venture. agreements with users have been made operative for period of 6 to 10 years, thus signifying that services are being rendered continuously during said period. For acquisition/construction of shopping malls/business centres assessee had taken loans from banks. For providing various services as stated above, it had to arrange for/obtain permissions/clearances/facilitations from various Government and other organisations. It had to maintain staff and managers and take various administrative measures to ensure smooth running of shopping malls/business centres. All these are continuous organised activities undertaken for set purpose, purpose being to carry on trade or business as managers and maintainers of shopping malls, which is one of objectives for which assessee-company was incorporated, as mentioned in Memorandum of Association. very fact that assessee received sum of Rs. 1,75,20,000 and incurred various expenses, including interest expenditure by way of pursuing this activity, is proof enough that said activity was carried on to earn profits. Therefore all four criteria preseribed by Hon'ble Supreme Court are satisfied in case of assessee, for its aforesaid activities to qualify as business activities. Consequently income derived from such activities can only be assessed as business income. Viewed from another angle, learned counsel submitted, that in Karnani Properties, tenants had to make monthly payment which included charges for electric current, for use of lifts, for supply of hot and cold water, for arrangement for scavenging, for providing watch and ward facilities as well as other amenities. company further provided for benefit of tenants, electric lifts working day and night. It also maintained separate water pump-house and boiler for supply of hot and cold water to tenants. For all these purposes company had to maintain large number of permanent staff. If may be noticed that services rendered by present assessee to users of its shopping malls/business centres are very similar in nature to those rendered by Karnani Properties Ltd. Therefore, following decision of Hon'ble Apex Court, earnings made by assessee by rendering aforesaid services can legally be assessed only as business income under section 28 of Act. On question that in case of Karnani Properties Ltd. (supra) portion of receipt was found assessable as rental income. Shri Tulsiyan submitted that nature and assessability of said part of receipt was not before Hon'ble Supreme Court for abjudication. Besides, he argued that rental income presupposes existence of owner-tenant relationship between receiver and payer of rent. One of principal characteristics of such relationship is that tenant must enjoy tenancy rights, which he acquires moment he becomes tenant. Section 55(2)(a) of Act even speaks of cost of acquisition of such tenancy rights for purpose of computation of capital gains on transfer thereof. In agreements that assessee-company entered with aforesaid three companies it has been specifically provided that user of services provided by owner shall not have any tenancy rights. relevant clause in agreements states as under: "The benefits granted to User of availing of services provided as set out in this Agreement shall not be construed as creating or vesting any right or title or interest of any kind whatsoever in User to any of said services aforesaid or any machinery or equipment or articles in Business Centre. said Business Centre and all machinery equipment and articles therein belong exclusively to Owner and are in sole control and possession of Owner. User is hereby granted only permissive use of said services being provided therein. Any right contemplated in future by any statute is hereby deemed to have been waived by User." According to learned counsel, only conclusion that can be reached from perusal of this clause of agreements is that, users of shopping malls/business centres of assessee are not its tenants. service charges paid by them therefore cannot be construed as payments of rent. Thus, following principles of law as enunciated by Hon'ble Supreme Court in case of Karnani Properties Ltd. (supra), in case of assessee entire receipts from shopping malls/business centres are assessable only as business income. 4.2 learned counsel of assessee thereafter drew our attention to judgment of Hon'ble Calcutta High Court in case of Everest Hotels Ltd v. CIT [1978] 114 ITR 779 wherein Court had occasion to deliberate on similar issue. facts in said case in nutshell, are that appellant, since 1927 has been carrying on business of hotel under name and style of "Hotel Mount Everest" at Darjeeling. On 23rd October, 1952 appellant executed indenture of lease in favour of Messrs Hotels [1938] private Ltd. with effect from 1st November, 1952, at consolidated leasehold rent of Rs. 75,000 per annum for period of 5 years. entire business of Hotel Everest, its goodwill, buildings, furniture, equipments, etc., were let out to Messrs Hotels (1938) Pvt. Ltd. under this indenture. question was whether assessee's rental income should be taxed as property income under section 9 of Act of 1922 or as business income under section 10 of said Act. On above facts, after elaborate discussion taking into account relevant judicial pronouncements, court held that rental income derived from lease is assessable as business income under section 10 of 1922 Act. learned counsel argued that main consideration of court in said case was whether lease rent received was from commercial utilisation of property. Because only then income would be assessable as business income. He submitted that there are lot of similarities in both purpose as well as activities concerning running of shopping mall and hotel. Both m l l s and hotels constitute building or group of buildings providing accommodation for commercial use thereof. Just as utilisation of accommodation for providing customers with board and lodging is commercial activity utilisation of space for providing shopping facilities to customers is also out and out commercial activity. In management of both shopping mall and hotel predominant activity consists in commercial exploitation of property, either directly by its owner or through some other person. So, income arising therefrom has necessarily to be assessed as business income. He further submitted that question as to whether income from business centre should be treated as business or property income was resolved with reference to facts in Asstt. CIT v. Saptarshi Services Ltd. [2004] 265 ITR 379 (Guj.) where it was found after review of various case laws on subject, that income from developing propery as business centre and providing various services like provision of lift, services as those of receptionist besides secretarial services, data processing conference room, etc. with many facilities, has necessarily to be assessed as business income. Special leave against this decision has also since been refused by Supreme Court [264 ITR (St.) 36]. Referring to observation of Hon'ble Madras High Court in case of CIT v. Kongarar Spinners (P.) Ltd. [1994] 208 ITR 645 he submitted that income derived from only letting out of property simpliciter, without anything more, will fall under category of "income from house property". Since in instant case there is much more than mere letting out of property simpliciter inasmuch as host of services are being provided to user by assessee, income arising therefrom cannot be considered as income from house property. Shri Tulsiyan further submitted that consensus of all these judicial pronouncements point to truism that wherever basic purpose, as evidenced by various related activities, is commercial exploitation of property and letting out is only incidental to carrying on such business, income earned is necessarily to be treated as business income. facts and circumstances show that basic intention of appellant company is commercial exploitation of properties at Mumbai, Ahmedabad and Kolkata by developing these as shopping malls/business centres, and all related activities are geared towards that purpose. So income derived can only be assessed under business head. 4.3. Referring to reliance of CIT on Supreme Court decision in case of Shambhu Investment (P.) Ltd. v. CIT [2003] 263 ITR 143 to justify her contention that income in question should have been taxed under head of 'Income from house property', learned counsel of assessee submitted that said judgment only stated that court saw no reason to interfere with conclusion arrived by High Court on question as framed under section 256(2) of Act. Even question framed has not been quoted in judgment of Hon'ble Supreme Court. order also does not contain any further elaboration about facts of case. So, mere reference to above quoted judgment of Hon'ble Apex Court in paragraph 4 of order under appeal is of little use insofar as ascertainment of relevance of same for deciding issue in question is concerned. Therefore, learned counsel drew our attention to decision of Hon'ble Calcutta High Court in case of said assessee CIT v. Shambhu Investment (P.) Ltd. [2000] 249 ITR 47 which has been affirmed by Hon'ble Supreme Court in aforesaid judgment. He submitted that in said case assessee had let out furnished office to occupants on monthly rental which was inclusive of all charges to assessee. entire cost of property let out to occupants had been recovered as and by way of interest-free advance by assessee. Therefore, Court held, that it could not be said that he was exploiting property for its commercial business activities. learned counsel argued that apparently one of principal factors that persuaded court to hold that receipts in Shambhu Investment (P.) Ltd.'s case (supra) were assessable as rental income is that entire cost of said property was recovered from occupants by way of interest-free advance. He submitted that in appellant's case investment in shopping malls/business centres were made by borrowing of funds from banks. Besides he pointed out that in Shambhu Investment (P.) Ltd.'s case (supra) court also found that there was relationship of landlord and tenant between assessee and persons who hired office accommodation, whereas in instant case no such relationship exists between assessee (owner) and user. He further submitted that in Shambhu Investment (P.) Ltd.'s case (supra) Hon'ble Calcutta High Court, after considerintg ratio of decisions in cases of (i) Sultan Bros. (P.) Ltd. v. CIT [1964] 51 ITR 353 (SC), (ii) CIT v. National Storage (P.) Ltd. [1967] 66 ITR 596 (SC), (iii) CIT v. Admiralty Flats Motel [1982] 133 ITR 895 (Mad.), (iv)CIT v. Associated Building Co. Ltd. [1982] 137 ITR 339 (Bom.), (v) CIT v. K.L. Puri (HUF) [1998] 233 ITR 43 (Delhi), (vi) Saswad Mali Sugar Factory Ltd. v. CIT [1999] 236 ITR 706 (Bom.), (vii) CIT v. Halai-Nemon Association [2000] 243 ITR 439 (Mad.) and (viii) Mukherjee Estate (P.) Ltd v. CIT [2000] 244 ITR 1 (Cal.) came to conclusion that mere fact of attachment of income to any immovable property cannot be sole factor for assessment of such income as income from property. It is necessary to find out primary object of assessee while exploiting property. If it is found that main intention is for letting out property or any portion thereof same must be considered as rental income or income from property. In case it is found that main intention is to exploit immovable property by way of complex commercial activities, in that event it must be held as business income. He argued that if above test is applied to facts and circumstances of instant case, there would be no room for doubting that main intention of assessee is to exploit its immovable properties, i.e. shopping malls/business centres, by engaging in complex commercial activities. It cannot be denied that right from planning stage and arranging finance for its investments, every subsequent activity of assessee has been geared towards taking up mall and business centre management as viable business proposition for earning profit. gradual liberalisation of economy during last decade and half and resultant emergence of powerful consumer base especially in retail sector, empowered with availability of increasing liquidity, provided excellent opportunity for assessee to augment its profitability. All that assessee has done is to grab opportunity in both hands like prudent businessman and embark on new commercial venture that held promise for higher profits in less time. That was primary object of assessee in exploiting immovable properties. So income arising from such commercial exploitation of assets concerned can only be assessed as business income. learned counsel contended that in facts and circumstances of case, ratio of Calcutta High Court decision (subsequently affirmed by Hon'ble Supreme Court) in case of Shambhu Investment (P.) Ltd. (supra) is of little help to Department and actually supports stand of assessee. 5. Ld. Senior Departmental Representative, on other hand, kly supported order under section 263 passed by learned CIT, cancelling assessment made under section 143(3) and directing Assessing Officer to assess income from shopping malls/business centres under head of 'Income from house property'. He submitted that claim of so-called commercial activity of assessee is only facade to disguise its real intention, which is to earn rental income from immovable properties. He echoed observation of Commissioner that particular head, within meaning of section 14 of Act, under which any income is taxable, is not determined by nomenclature given to it by assessee but by its true nature. He relied on Hon'ble Supreme Court decision in case of Shambhu Investment (P.) Ltd. (supra). 6. We have carefully considered relevant facts, arguments 6. We have carefully considered relevant facts, arguments advanced by rival parties and decisions cited. In our view, before arriving at any conclusion about particular head under which income derived by assessee is required to be assessed, it is necessary to examine relevant provisions of agreements that assessee had entered into with users. In all agreements assessee is shown as owner of premises in which shopping malls/business centres are located and other party to agreement is shown as user. assessee, as owners of premises, has t h e responsibility of providing security, communication and other services as specified in agreements. agreements with Pantaloon Industries Ltd., PFH Entertainment Ltd. and Pantaloon Fashions (India) Ltd., are operative for period of six years commencing from 1-4-1999 and that with Pantaloon Retail (India) Ltd. is made operative for period of seven years commencing from date of official launch of mall, or, in any case, on or before 15-3-2000, by which time owner would endeavour to provide user with all services and facilities as mentioned in agreement. agreements provide inter alia that owner, i.e. assessee, would keep open business centres from 9 A.M. to 10 P.M. [(10 A.M. to 10 P.M. as per agreement with Pantaloon Retail (India) Ltd.)] every day. During this period assessee would provide services as mentioned in agreements and would permit employees of user free access to said services. It has been clarified in agreements that similar services are provided to other clients also. owner would determine precise hours during which stock-in-trade or wares may be brought into business centres to obviate any inconvenience to use of said business centre and to facilitate free movement of visitors within said building. As per agreements users are not permitted to allow any person to sleep or stay in any part of building nor to use same for residential puposes. agreements specifically stipulate that user is only granted permissive use of services and facilities provided in premises by assessee. user would not be vested with or enjoy any right, title or interest of any kind in services and facilities provided by assessee, any machinery, equipments and articles in business centre or any part or portion of building. agreements also provide that any right contemplated by any statute in future is also deemed to have been waived by user. Thus users do not enjoy even any tenancy right as per agreements. service charges payable by users have been determined at fixed rate. Failure to make payments of service charges in time would attract charge of interest at steep rate (21% and 24% compounded quarterly). fixed service charges do not include charges for telephone and FAX facilities and electricity charges or charges for any other similar facilities provided by owner to users. These are to be paid by users on actual basis. assessee is responsible for payment of ground rent/lease rent, maintenance charges, municipal and other taxes, rates and cesses as well as other such outgoings. However, in case of increase in assessee's liabilities on account of increase in taxes, charges, dues or liabilities payable to any governmental body or authority, fees payable by users for enjoying services and facilities provided by assessee may be proportionately increased at discretion of assessee. Thus assessee has contractual obligation for providing services to its customers (users) like electricity, telephone, watch and ward, etc. As per terms of agreement customers had no right of occupancy. They have only limited access to use space for purpose of their business, and that too, in respect of certain activities, during specific hours of day only. Furthermore keys of premises are kept by assessee meaning thereby that premises are fully in control of assessee. 6.1 At this juncture it would be pertinent to focus our attention to some undisputed facts pertaining to this case. assessee has given up its business of trading in textiles and embarked on setting up shopping malls/business centres at various metros in India in big way. For this purpose it had secured loans from banks, observed various formalities and obtained necessary permissions. Apart from providing various services, in subsequent years it has also taken up, as part and parcel of its mall management activities, job of marketing as well as that of selling agency of ready-made garments and other articles. No doubt in changing economic scenario of country assessee correctly recognised immense opportunity that retail shopping malls would provide for making big money. That is why it lost no time in discarding its earlier business to venture into this new field. Hon'ble Supreme Court in Karnani Properties Ltd.'s case (supra) had observed: "From facts found by Tribunal it follows that services rendered by assessee to its tenants were result of its activities carried on continuously in organized manner, with set purpose and with view to earn profits. Hence, those activities have to be considered as business activities." Applying above test to facts of present case we find that assessee has directed all its activities in organised manner for purpose of developing properties as shopping malls/business centres. From agreements it is apparent that management and administration of shopping malls is sole responsibility of assessee. Obviously assessee is required to employ good number of personnel on permanent basis to discharge such responsibility. various arrangements that assessee has to make on daily basis, to ensure availability of services and amenities to users in accordance with agreements, reflect clear manifestation of organised activity. duration of agreements and various legal and other commitments that each party to agreement(s) are required to honour, indisputably show that activities are continuous. So clearly activities of assessee that generated income from shopping malls/business centres can be categorized as continuous organised activities for set purpose. There is also no doubt that assessee engaged in such activities with view to earn profit. Clearly assessee is engaged in complex set of activities, purpose of which cannot be regarded as merely earning of rental income. various features of agreements, as stated above, also indicate that there is much more than letting out of properties simpliciter for earning rental income. 6.2 Hon'ble Bombay High Court in case of CIT v. National Storage (P.) Ltd. [1963] 48 ITR 577, while laying down principles to be followed in determining particular head under which income is to be assessed, observed: "In cases where income received is not from bare letting of tenement or from letting accompanied by incidental services or facilities, but subject hired out is complex one and income obtained is not so much because of bare letting of tenement but because of facilities and services rendered, operations involved in such letting of property may be of nature of business or trading operations and income derived may be of nature of business or trading operations and income derived may be income not from exercise of property rights properly so-called so as to fall under section 9 but income from operations of trading nature falling under section 10 of Act;" facts in instant case undoubtedly show that income obtained is not merely because of bare letting of premises but also because of facilities and services rendered. Thus income derived by assessee cannot be regarded as simply from exercise of property rights. Rather income is derived by assessee from complex operations of trading nature. 6.3 In case of Everest Hotels Ltd. (supra) it has been held by Hon'ble Calcutta High Court that running of hotel being commercial activity, income derived from lease rent by letting out hotel premises is assessable as business income. This is because lease rent received was from commercial utilisation of property. Hon'ble Calcutta High Court enunciated following principles in this respect: "(1) In order to be business income within meaning of section 10 there must be evidence of exploitation of commercial asset. (2) Exploitation of commercial asset does not necessarily mean exploitation by assessee himself at all material times. assessee may temporarily cause it to be exploited by another person against payment of consideration and for this purpose may also execute lease for fixed period even with clauses of option to renew. (3) But in order that income derived from lease may be taxable under section 10 it must be shown that lessor's intention was that during period of lease asset leased out must remain and be treated as commercial asset and exploited as such. (4) This intention of lessor referred to above has to be ascertained from cumulative effect of all terms of lease and other material circumstances." 6.4 We agree with learned counsel of appellant that there are lot of similarities in both purpose as well as activities concerning running of hotel and that of shopping mall. Indeed both malls and hotels constitute building or group of buildings providing accommodation for commercial use thereof. In management of both hotels and shopping malls predominant activity is commercial exploitation of property. We feel that there is lot of sense in contention of learned counsel of appellant that just as utilisation of accommodation for providing customers with board and lodging is commercial activity, utilisation of space for providing shopping facilities to customers is also commercial activity. So applying above principles laid down by court irresistible conclusion would be that income derived by assessee from shopping malls/business centres is to be assessed as business income. 6.5 In case of Saptarshi Services Ltd. (supra), Hon'ble Gujarat High Court summarily dismissed appeal of revenue against decision of Tribunal that income from developing property as business centre constitutes business income. decision of Tribunal is based on finding that assessee is providing number of services, e.g. having EPABX machine facilitating telephone services to occupants of business centre, services of lift, services of receptionists, secretarial services, data processing, conference room, etc. Thus what assessee is providing in reality happens to be working place along with aforesaid facilities. It is apparent that various services and facilities provided by present assessee are very similar in nature. Therefore, it can be justifiably inferred that here too assessee is actually providing working place for doing business with attendant facilities. In this view of matter, irresistible conclusion is that what appellant has earned is business income and same should be assessed under head of 'Profits and gains from business and profession'. 6.6 In case of Kongarar Spinners (P.) Ltd. (supra), Hon'ble Madras High Court held that only letting out of property simpliciter without anything more will fall under category income from house property. But where assessee is already running factory and has built another factory and gives it on rent for running it, it is not case of letting out property simpliciter. From nature of services provided by appellant coupled with some of provisions of agreements (notably one regarding denial of any kind of right to user) it can be said with certainty that instant case also is not one of letting out of property simpliciter. 6.7 revenue relied heavily on decision of Hon'ble Supreme Court in case of Shambhu Investment (P.) Ltd. (supra). said judgment consists only of operative portion, affirming decision of Hon'ble Calcutta High Court in CIT v. Shambhu Investment (P.) Ltd. [2000] 249 ITR 47. In said decision Calcutta High Court observed: "Taking sum total of aforesaid decisions it clearly appears that merely because income is attached to any immovable property that cannot be sole factor for assessment of such income as income from property. What has to be seen is what was primary object of assessee while exploiting property. If it is found applying such test that main intention is for letting out property or any portion thereof same must be considered as rental income or income from property. In case it is found that main intention is to exploit immovable property by way of complex commercial activities in that event it must be held as business income." Clearly, in instant case primary object of assessee is to earn income by commercial exploitation of property. From planning stage and arranging finance for its investments, every subsequent activity of assessee has been directed towards developing properties as shopping malls/business centres and taking up business of management of same. way agreements have been drafted gives ample evidence of such intention of assessee. fact that Apex Court held that income earned by Shambhu Investment Pvt. Ltd. is assessable as property income has no relevance in facts and circumstances of present case. Because in that case facts showed that main intention was to earn rental income. That was why entire cost of property was recovered from tenants by way o f interest-free advance. In instant case, on other hand, assessee had taken bank loans to finance his projects like any other businessman. As discussed hereinabove, every action of present assessee appears to be with sole object of commercial exploitation of premises. sole object of commercial exploitation of premises. 6.8 After carefully analysing facts of instant case, and following consensus of judicial opinion on issue, our considered view is that, mere fact that income is attached to immovable property, cannot be sole criterion for assessment of such income as income from house property. It is necessary to dig further to find out what is primary object of assessee while exploiting property. If it is found, that main intention is for simply letting out of property or any portion thereof, resultant income must be assessed as income from house property. If, on other hand, main intention is found to be exploitation of immovable property by way of commercial activities, then resultant income must be held as business income. In instant case, we found that services rendered by assessee were result of its activities carried on continuously in organized manner with set purpose and with view to earn profit. Hence, all these activities are in nature of commercial activities. Accordingly we hold that income derived by assessee from shopping malls/business centres is to be assessed as business income and not as income from house property. 7. appellant has prayed for admission of following additional ground:- "That on facts and in circumstances of case learned CIT Kolkata-III erred in wrongly assuming jurisdiction under section 263 of Income-tax Act, 1961, and hence, order passed by him under said section is bad in law and nullity." 7.1 learned Departmental Representative did not seriously oppose admission of Additional Ground. Clearly Additional Ground relates to legal issue that has arisen from facts, which are on record. Keeping in view provisions of rule 11 of Income-tax (Appellate Tribunal) Rules, 1963 and decision of Hon'ble Supreme Court in case of National Thermal Power Co. v. CIT [1998] 229 ITR 383, we deem it proper to admit this Ground. 7.2 As may be noticed, in additional ground appellant has challenged legal validity of assumption of jurisdiction by CIT under section 263 of Act. learned counsel of assessee submitted that that if o n any issue two views are possible, Commissioner cannot substitute view of Assessing Officer by imposing his own through assumption of jurisdiction under section 263, merely because view taken by Assessing Officer would result in loss of revenue. Unless there is infirmity in order of Assessing Officer resulting in loss of revenue, no order can be revised by taking recourse to section 263. He submitted that having regard to facts of case and ratio of various decisions referred to earlier, view that income from shopping malls/business centres are assessable as business income is also not only quite possible, but, in fact, more appropriate view. Referring to decision of Cuttack Bench of Tribunal in case of T.K. International Ltd. v. Asstt. CIT [2005] 275 ITR (AT) 101 he submitted that section 263 of Act does not visualise case of substitution of judgment of Commissioner for that of Assessing Officer who passed order, unless decision is held to be erroneous. Where Assessing Officer has exercised quasi-judicial powers vested in him in accordance with law and arrived at conclusion such conclusion cannot be termed to be erroneous, simply because Commissioner does not feel satisfied with conclusion. In such case fact that in opinion of Commissioner order in question is prejudicial to interests of Revenue by itself will not be enough to vest Commissioner with power of suo motu revision because first requirement namely that order is erroneous is absent. In order to clothe Commissioner with power of exercising jurisdiction under section 263, order has to be both erroneous as well as prejudicial to interest of revenue. learned counsel also relied on decision of Kolkata Bench of Tribunal in case of J.K. Industries Ltd. v. Asstt. CIT [2006] 283 ITR (AT) 101 to argue that merely because it results in loss of revenue, Commissioner cannot revise order, unless he proves that order resulting in such loss was also erroneous. proceedings under section 263 can only be invoked if basis adopted by Assessing Officer is patently wrong or deduction or relief was allowed in contravention of statutory provisions. On any issue where more than one view or course are permissible, and Assessing Officer follows one of permissible views, order of Assessing Officer cannot be held to be erroneous unless view or course adopted by Assessing Officer is unsustainable in law. learned counsel also referred to decisions of Hon'ble Supreme Court in case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, ITAT, Chennai in case of First Leasing Co. of India Ltd. v. Asstt. CIT [2001] 250 ITR (AT) 1 (SB) and Gujarat High Court in case of CIT v. Mehsana District Co-operative Milk Producers Union Ltd. [2003] 263 ITR 645 in this connection. Relying on judgment of Hon'ble Gauhati High Court, in case of Bongaigaon Refinery & Petrochemicals Ltd. v. Union of India [2006] 287 ITR 120 he contended that jurisdiction exercisable under section 263 of Act being supervisory in nature, permitting suo motu review of any assessment already made, statutorily enjoined sanctions circumscribing it have to be rigorously construed. learned counsel further submitted that assessment order would reveal that in instant case assessee furnished all relevant documents and did give necessary explanation regarding its claim that income from shopping malls/business centres is assessable as business income. By its letter dated 30-9-2003 assessee explained to Assessing Officer that during relevant year of account it shifted its business focus from textile trading to mall management. On other hand, it is apparent from order under appeal, purportedly passed under section 263 of Act that Commissioner did not base her decision to revise assessment made under section 143(3), on any specific material on record. She was merely influenced by Supreme Court judgment in case of Shambhu Investment (P.) Ltd. (supra). Referring to decision of Madhya Pradesh High Court in case of CIT v. Associated Food Products (P.) Ltd. [2006] 280 ITR 377 learned counsel contended that exercise of power under suo motu revision is not merely administrative act. It is act of quasi-judicial authority and based on formation of opinion on basis of adequate material that decision taken by Assessing Officer is erroneous as well as prejudicial to interests of Revenue. expression "prejudicial to interests of Revenue" applies only to order that has not been passed in consonance with principles of law which has affected realisation of lawful revenue by State. Shri Tulsiyan submitted that no material has been brought on record to show that order under section 143(3) was not passed in consonance with principles of law and that has affected realisation of lawful revenue by State. 8. learned Departmental Representative submitted that assessment order of Assessing Officer is cryptic. It is based on incorrect assumption of fact and law. Hence assessment order is erroneous and prejudicial to interest of revenue. In reply, learned counsel for assessee, relying on decision of ITAT, Mumbai in case of Dhruv N. Shah v. Dy. CIT [2005] 273 ITR (AT) 59 (TM) submitted that even in cases where Assessing Officer had not elaborated reason for his taking particular view in body of order, still assumption of jurisdiction under section 263 by Commissioner would be unsustainable in law, unless there is material to show that view so taken is erroneous insofar it is prejudicial to interest of revenue. Tribunal in said case held that where assessee had given detailed explanation regarding his claim and Assessing Officer passed order in which he did not make elaborate discussion, Commissioner would not have power to exercise revisionary jurisdiction under section 263. 9. We have carefully considered relevant facts, arguments advanced and decisions cited. In our view, Hon'ble Supreme Court very succinctly enunciated principles of law on this issue in case of Malabar Industrial Co. Ltd. (supra). Court observed: "A bare reading of section 263 of Income-tax Act, 1961, makes it clear that prerequisite for exercise of jurisdiction by Commissioner suo motu under it, is that order of Income-tax Officer is erroneous insofar as it is prejudicial to interests of Revenue. Commissioner has to he satisfied of twin conditions, namely, (i) order of Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to interests of Revenue. If one of them is absent - if order of Income-tax Officer is erroneous but is not prejudicial to Revenue or if it is not erroneous but is prejudicial to Revenue - recourse cannot be had to section 263(1) of Act. provision cannot be invoked to correct each and every type of mistake or error committed by Assessing Officer, it is only when order is erroneous that section will be attracted. incorrect assumption of facts or incorrect application of law will satisfy requirement of order being erroneous. In same category fall orders passed without applying principles of natural justice or without application of mind. phrase 'prejudicial to interests of Revenue' is not expression of art and is not defined in Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. scheme of Act is to levy and collect tax in accordance with provisions of Act and this task is entrusted to Revenue. If due to erroneous order of Income-tax Officer, Revenue is losing tax lawfully payable by person, it will certainly be prejudicial to interests of Revenue. phrase 'prejudicial to interests of Revenue' has to be read in conjunction with erroneous order passed by Assessing Officer. Every loss of revenue as consequence of order of Assessing Officer, cannot be treated as prejudicial to interests of Revenue, for example, when Income-tax Officer adopted one of courses permissible in law and it has resulted in loss of revenue, or where two views are possible and Income-tax Officer has taken one view with which Commissioner does not agree, it cannot be treated as erroneous order prejudicial to interests of Revenue unless view taken by Income-tax Officer is unsustainable in law." On analysis of relevant facts we have to hold that this is case where conceivably two views are possible. We have also to hold that view taken by Assessing Officer cannot be considered as unsustainable in law. As matter of fact, on merits, we have already held that income derived by assessee from shopping malls/business centres is required be assessed as business income. Under circumstances we hold that assumption of jurisdiction under section 263 of Act by learned Commissioner of Income- tax is without sanction of law. order under section 263 is accordingly cancelled. 9.1 In result, appeal of assessee is allowed. 10. to 19. [These paras are not reproduced here as they involved minor issues.] *** PFH MALL & RETAIL MANAGEMENT LTD. v. INCOME TAX OFFICER