DCIT, CHENNAI V. Khivraj Tech Park Ltd., CHENNAI

ITA 1181/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8704 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 18-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYARAM RAIPURA
• Assessee Lawyers: AJITH KUMAR CHORADIA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.1181, 1182 & 1183/MDS/2015 ( )( / ASSESSMENT YEARS : 2009-10, 2010-11 & 2011-12 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 4(2), CHENNAI - 600 034. V. M/S KHIVRAJ TECH PARK LTD., 1, SIDCO INDUSTRIAL ESTATE, GUINDY, CHENNAI - 600 032. PAN : AACCK 4418 P (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI JAYARAM RAIPURA, CIT -.+, / 0 / RESPONDENT BY : SHRI AJITH KUMAR CHORADIA, CA 1 / 2% / DATE OF HEARING : 07.06.2016 3') / 2% / DATE OF PRONOUNCEMENT : 24.08.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: ALL THE THREE APPEALS OF THE REVENUE ARE DIRECTE D AGAINST THE COMMON ORDER PASSED BY THE COMMISSIONER OF INCO ME TAX (APPEALS) II, CHENNAI, DATED 03.11.2014 AND PERTA IN TO ASSESSMENT YEARS 2009-10, 2010-11 AND 2011-12. SIN CE COMMON ISSUE ARISES FOR CONSIDERATION IN ALL THESE APPEALS , WE HEARD THESE APPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2 I.T.A. NOS.1181 TO 1183/MDS/15 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IN ALL T HE THREE APPEALS IS WITH REGARD TO DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80-IA OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 3. SHRI JAYARAM RAIPURA, THE LD. DEPARTMENTAL REPRE SENTATIVE, SUBMITTED THAT THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80-IA OF THE ACT IN RESPECT OF RENTAL INCOME RECEIVED FRO M BUILDING. ACCORDING TO THE LD. D.R., IT IS NOT THE BUSINESS O F THE ASSESSEE TO LEASE OUT THE PROPERTIES, THEREFORE, THE INCOME HAS TO BE CLASSIFIED AS INCOME FROM HOUSE PROPERTY. HENCE, ACCORDING TO THE LD. D.R., THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SE CTION 80-IA OF THE ACT. 4. ON THE CONTRARY, SHRI AJITH KUMAR CHORADIA, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE CONSTRUCTED A BUILDING CALLED OLYMPIA TECH PARK. IT HAS ALL INFRASTRUCTURE FACILITIES WITH ALL SPECIFICATIONS A ND AMENITIES REQUIRED FOR IT PARK. UNDER NORMAL CIRCUMSTANCES, THE RENTA L INCOME FROM PROPERTY HAS TO BE CLASSIFIED AS INCOME FROM HOUSE PROPERTY. IN THE INSTANT CASE, ACCORDING TO THE LD. REPRESENTATIVE, THE OLYMPIA TECH PARK IS LOCATED IN STPI NOTIFIED AREA AND CBDT ALSO APPROVED THE 3 I.T.A. NOS.1181 TO 1183/MDS/15 BUILDING FOR DEDUCTION UNDER SECTION 80-IA(4)(III) OF THE ACT BY AN ORDER DATED 15.11.2006. THEREFORE, ACCORDING TO TH E LD. REPRESENTATIVE, WHEN THE ASSESSEE IS SYSTEMATICALLY PROVIDING SERVICES TO THE SOFTWARE DEVELOPMENT COMPANIES, BY PROVIDING SPECIFIED AREA IN THE BUILDING AND OTHER INFRASTRUC TURE FACILITY, THIS HAS TO BE CLASSIFIED AS BUSINESS OF THE ASSESSEE, T HEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE RENTAL INC OME HAS TO BE NECESSARILY CLASSIFIED AS INCOME FROM BUSINESS. ACCORDING TO THE LD. REPRESENTATIVE, THE CIT(APPEALS) BY PLACING REL IANCE ON THE JUDGMENT OF MADRAS HIGH COURT IN CIT V. ELNET TECHN OLOGIES LTD. (2013) (213 TAXMAN 129), FOUND THAT THE INCOME FROM LETTING OUT HOUSE PROPERTY HAS TO BE TREATED AS INCOME FROM BUS INESS, THEREFORE, ELIGIBLE FOR DEDUCTION UNDER SECTION 80- IA OF THE ACT. IN VIEW OF THE ABOVE, ACCORDING TO THE LD. REPRESENTAT IVE, THE CONTENTION OF THE LD. D.R. THAT THE INCOME HAS TO B E CLASSIFIED AS INCOME FROM HOUSE PROPERTY IS NOT JUSTIFIED. REFER RING TO THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE, THE LD. R EPRESENTATIVE SUBMITTED THAT THE JUDGMENT OF MADRAS HIGH COURT IN CIT V. CHENNAI PROPERTIES AND INVESTMENTS LTD. (266 ITR 685) WAS R EVERSED BY THE APEX COURT, THEREFORE, THE JUDGMENT OF APEX COURT I N CHENNAI 4 I.T.A. NOS.1181 TO 1183/MDS/15 PROPERTIES AND INVESTMENTS LTD. WOULD SUPPORT THE C ASE OF THE ASSESSEE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE ESTABLISHED OLYMPIA TECH PARK FOR PROVIDING INFRASTRUCTURE FACILITIES TO SOFTWARE DEV ELOPMENT COMPANIES. IT IS IN STPI NOTIFIED AREA. THE ONLY CONTENTION OF THE REVENUE IS THAT THE INCOME FROM BUILDING HAS TO BE CLASSIFIED AS INCOME FROM HOUSE PROPERTY, THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IA OF THE ACT. THE BUILDING OF THE ASSESSEE IS NOT A MERE BUILDING. IT HAS INFRASTRUC TURE FACILITIES FOR THE PURPOSE OF DEVELOPMENT OF SOFTWARE. THE ASSESS EE IS SYSTEMATICALLY PROVIDING SERVICES BESIDES LETTING O UT THE PROPERTY. THEREFORE, THE JUDGMENT OF APEX COURT IN CHENNAI PR OPERTIES AND INVESTMENTS LTD. V. CIT (2015) (373 ITR 673) WOULD SQUARELY APPLICABLE TO THE PRESENT CASE. HENCE, THIS TRIBUN AL IS OF THE CONSIDERED OPINION THAT THE INCOME FROM LETTING OUT OF THE PROPERTY HAS TO BE CLASSIFIED AS INCOME FROM BUSINESS AND THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IA OF THE A CT. THEREFORE, THIS 5 I.T.A. NOS.1181 TO 1183/MDS/15 TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRM ED. 6. IN THE RESULT, ALL THE THREE APPEALS FILED BY TH E REVENUE STAND DISMISSED. ORDER PRONOUNCED ON 24 TH AUGUST, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 24 TH AUGUST, 2016. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-II, CHENNAI 4. 1 92 /CIT-II, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.