DCIT, CHENNAI V. Ascendas IT Park Chennai Ltd., CHENNAI

ITA 1277/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90698 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 22-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 27-05-2015
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: PRADEEP NARAYANAN
• Keywords: Business income
• Section: 12; 11

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHE NNAI . , . ! ! ! ! , ' ' ' ' # # # # BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A.NOS.1277, 1278 AND 1279/MDS/2015 ASSESSMENT YEARS :2006-07, 2007-08 AND 2009-10 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1(1), CHENNAI 600 034. VS. M/S. ASCENDAS I T PARK CHENNAI LTD., I FLOOR, INTERNATIONAL TECH PARK, TARAMANI ROAD, TARAMANI, CHENNAI 600 113. [PAN: AAECA7979D] ( $% $% $% $% /APPELLANT ) ( &'$% &'$% &'$% &'$% / RESPONDENT ) $% ( ) / APPELLANT BY : SHRI P.B. SEKARAN, CIT-DR &'$% ( ) / RESPONDENT BY : SHRI PRADEEP NARAYANAN, C.A. ( * / DATE OF HEARING : 22.07.2015 +, ( * /DATE OF PRONOUNCEMENT : 24.07.2015 - - - - / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THESE THREE APPEALS FILED BY THE REVENUE PERTAINING TO THE SAME ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS O F THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 1, CHENNAI, ALL DATED 30.01 .2015 RELEVANT TO THE ASSESSMENT YEARS 2006-07, 2007-08 AND 2009-10. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S ENGAGED IN THE BUSINESS OF DEVELOPING, LEASING AND MAINTENANCE OF IT PARKS. THE ASSESSEE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1 11 12 22 277 7777 77 - -- -1 11 12 22 279 7979 79/M/ /M/ /M/ /M/1 11 15 55 5 2 HAS FILED ITS RETURN OF INCOME BY DECLARING LOSS IN THE RETURN OF INCOME; IT HAS CLAIMED LEASE RENTAL INCOME FROM THE I.T. PARK AS B USINESS INCOME. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSES SEE AS BUSINESS INCOME ON THE GROUND THAT THE LEASE RENTAL INCOME FROM I.T . PARK IS AN INCOME FROM HOUSE PROPERTY. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFOR E THE LD. CIT(A) AND THE LD. CIT(A), BY FOLLOWING THE DECISION OF THE TR IBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09 IN I.T.A. NO.1 709/MDS/2013 DATED 11.09.2014, ALLOWED THE CLAIM OF THE ASSESSEE. 4. ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BE FORE THE TRIBUNAL. 5. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09 AND REQUESTED THAT THE SAME MAY BE FOLLOWED. 6. ON THE OTHER HAND, THE LD. DR FAIRLY ACCEPTED T HAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TR IBUNAL IN ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEAR. HOWEVER, HE HAS S UBMITTED THAT THE REVENUE IS IN APPEAL BEFORE THE HONBLE JURISDICTIO NAL HIGH COURT. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1 11 12 22 277 7777 77 - -- -1 11 12 22 279 7979 79/M/ /M/ /M/ /M/1 11 15 55 5 3 7. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ISSUE INVOLVED IN THIS APPEAL IS WHETHER THE INCOME RECEIVED BY THE ASSESSEE FROM TH E I.T. PARK IS INCOME FROM BUSINESS OR INCOME FROM HOUSE PROPERTY? THE VE RY SAME ISSUE HAS COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE ON THE VERY SAME FACTS AND CIRCUMSTANCES AND THE TRIBUNAL HAS DECIDED THAT THE LEASE RENTAL INCOME OF THE ASSESSEE IS A BUSINESS INCOME. THE RE LEVANT PORTION OF THE ORDER OF THE TRIBUNAL IS EXTRACTED AS UNDER: 3. AS STATED IN THE OBJECT CLAUSE OF THE ASSESSEE COMPANY, THE MAIN OBJECT OF THE ASSESSEE IS TO CARRY ON ALL OR ANY OT HER BUSINESS IN INDIA AND ELSEWHERE RELATING TO MANAGEMENT, MARKETING, CO NSULTANCY, CONCEPTUAL AND DETAILED DESIGNING, DEVELOPING, CONS TRUCTING, CONTROLLING, PROMOTING, ESTABLISHING AND MAINTAININ G INFORMATION TECHNOLOGY PARKS, INDUSTRIAL PARKS AND OTHER PROJEC TS WITH FACTORIES, COMMERCIAL OFFICES, RESIDENTIAL COMPLEXES AND OTHER ALLIED FACILITIES, AMENITIES AND EXECUTION OF TURNKEY PROJECTS AND ALL MATTERS ANCILLARY THERETO. IN THIS CONTEXT, ITAT, BANGALORE BENCH HAS CONSIDERED A CASE RELATING TO THE ASSESSEE COMPANYS ASSOCIATE IN ITO VS. INFORMATION TECHNOLOGY PARK LTD., 49 SOT 491. THE TRIBUNAL HAS HELD THAT THE ARRANGEMENT BETWEEN THE ASSESSEE AND THE LESSEES IS NOT FOR MERE USE OF THE PROPERTY SIMPLICITOR BUT FOR THE USE OF PROPERT Y ALONG WITH OTHER AMENITIES AND FACILITIES; THAT THE MEMORANDUM OF AS SOCIATION INDICATES THAT THE COMPANY HAS BEEN FORMED WITH THE INTENTION OF COMMERCIALLY EXPLOITING THE PROPERTY BY DEVELOPING AND MAINTAINI NG A TECHNOLOGY PARK; THAT SEC.80IA OF THE ACT AND THE INDUSTRIAL P ARK SCHEME RECOGNIZE AND LAYS EMPHASIS ON THE FACT THAT INCOME FROM DEVE LOPING, DEVELOPING AND MARKETING, OR MAINTAINING OR OPERATING AN INDUS TRIAL PARK CONSTITUTES A BUSINESS ACTIVITY. THEREFORE, SUCH AC TIVITY GIVES RISE ONLY TO BUSINESS INCOME. 4. THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS CON SIDERED THE ABOVE DECISION OF THE ITAT, BANGALORE BENCH ALONG W ITH A SERIES OF DECISION COVERED BY DIFFERENT BENCHES OF THE TRIBUN AL. IN ALL THOSE CASES, THE TRIBUNAL HAVE CONSISTENTLY HELD THAT RUN NING AN IT PARK IS A I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1 11 12 22 277 7777 77 - -- -1 11 12 22 279 7979 79/M/ /M/ /M/ /M/1 11 15 55 5 4 BUSINESS ACTIVITY AND, THEREFORE, THE LEASE AMOUNT COLLECTED BY THE ASSESSEE IS IN THE NATURE OF BUSINESS INCOME. 5. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS AL SO DISTINGUISHED THE FACTS CONSIDERED BY THE HONBLE S UPREME COURT IN THE CASE OF SHAMBHU INVESTMENTS LTD. V. CIT, 263 ITR 14 3, THE HONBLE MADRAS HIGH COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS LTD., 266 ITR 685 ETC. IN THE CASE OF SHAMBHU INVES TMENTS LTD. V. CIT, 263 ITR 143, WHAT WAS LET OUT TO THE TENANT IS TAB LE SPACE AND IN SUCH CIRCUMSTANCE THE HONBLE APEX COURT HAS HELD THAT I T WAS A CASE OF LETTING OUT THE PROPERTY. IN THE CASE OF CHENNAI PR OPERTIES & INVESTMENTS LTD., 266 ITR 685, THE ASSESSEE WAS OWN ING TWO BUILDINGS AND WAS RECEIVING RENTAL INCOME FROM THEM. AS RIGHT LY HELD BY THE COMMISSIONER OF INCOME-TAX(APPEALS), THE CASES RELI ED ON BY THE REVENUE ARE NOT APPLICABLE TO THE FACTS OF THE PRES ENT CASE. IN THE PRESENT CASE, THE ASSESSEE IS RUNNING AN INDUSTRIAL PARK AS A BUSINESS PROPOSITION WITH A LOT OF FUNCTIONAL FACILITIES NEC ESSARY FOR THE SMOOTH WORKING OF THE SOFTWARE, WHO ARE THE TENANTS. AS PO INTED OUT BY THE ASSESSEE, THE IT PARKS ARE RECOGNIZED FOR THE PURPO SE OF DEDUCTION UNDER SEC.80IA AND THE STATUTE ITSELF HAS CONSIDERE D THESE TYPES OF VENTURES AS A BUSINESS ACTIVITY. THEREFORE, WE AG REE THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ARRIVED AT A PROPER FINDING ON THIS ISSUE. THE APPEAL FILED BY THE REVENUE IS L IABLE TO BE DISMISSED. 8. RESPECTFULLY FOLLOWING THE DECISION OF THE COOR DINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09, THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IS DISMISSED. 9. IN SO FAR AS ASSESSMENT YEARS 2007-08 AND 2009- 10 ARE CONCERNED, THE ISSUE RAISED BY THE REVENUE IS SIMILAR ON IDENT ICAL FACTS. THEREFORE, BY FOLLOWING OUR ABOVE DECISION, WE DISMISS THE APPEAL S FILED BY THE REVENUE FOR THE ASSESSMENT YEARS 2007-08 AND 2009-10 ALSO. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1 11 12 22 277 7777 77 - -- -1 11 12 22 279 7979 79/M/ /M/ /M/ /M/1 11 15 55 5 5 10. IN THE RESULT, ALL THE APPEALS FILED BY THE RE VENUE ARE DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 24 TH OF JULY, 2015 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 24.07.2015 VM/- - ( &'*./ 0/,* /COPY TO: 1. $% / APPELLANT, 2. &'$% / RESPONDENT, 3. 1 ( ) /CIT(A), 4. 1 /CIT, 5. /2 &'*' /DR & 6. 3! 4 /GF.