Deputy Commissioner of Income-tax, Circle - 14, Pune V. M/s. Magarpatta Township Development and Construction Company Limited, Pune

ITA 1734/PUN/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6017 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 17-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MALVIYA
• Keywords: Business income; Question of law
• Section: 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER . / ITA NO . 1734 /PUN/201 7 / ASSESSMENT YEAR : 20 11 - 12 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 14, PUNE ....... / APPELLANT / V/S. M/S. MAGARPATTA TOWNSHIP DEVELOPMENT AND CONSTRUCTION COMPANY LIMITED, MEGA SPACE, 13, SOLAPUR BAZAR ROAD, OFF EAST STREET, CAMP, PUNE 411001 PAN : AABCM2461K / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI ALOK MALVIYA / DATE OF HEARING : 1 3 - 02 - 2020 / DATE OF PRONOUNCEMENT : 13 - 0 2 - 20 20 / ORDER PER GEORGE MATHAN, JM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 3, PUNE IN APPEAL NO. PN/CIT(A) - 3/RG - 3, PN/145/2014 - 15 DATED 27 - 02 - 2017 FOR THE ASSESSMENT YEAR 2011 - 12. 2 ITA NO.1734/PUN/2017, A.Y. 2011 - 12 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS : 1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HONBLE CIT(A) WAS JUSTIFIED IN UPHOLDING THE RENTAL INCOME RECEIVED FROM CYBERCITY PROJECT AS INCOME FROM BUSINESS INSTEAD OF INCOME FROM HOUSE PROPERTY OF THE INCOME TAX ACT, 1961. 2) FOR THE FACTS AND SUCH OTHER REASONS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE LD. COMMISSIONER OF (APPEALS) - 3, PUNE MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3) THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 3. SHRI NIKHIL PATHAK REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI ALOK MALVIYA REPRESENTED ON BEHALF OF THE REVENUE. 4. IT WAS SUBMITTED BY THE LD. DR THAT THE ASSESSEE IS A COMPANY WHICH HAD UNDERTAKEN DEVELOPMENT OF INTEGRATED TOWNSHIP. THE ASSESSEE HAD CLAIMED THE LICENSE FEES RECEIVED FROM THE PERSONS FOR THE USE OF THE IT PARKS PROVIDED ALONG WITH VARIOUS INFRA STRUCTURAL AND OTHER FACILITIES AND SERVICES UNDER THE HEAD INCOME FROM B USINESS. HOWEVER, THE AO HAD CONSIDERED THE SAME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IT WAS FAIRLY AGREED BY BOTH THE SIDES THAT THE LD. CIT(A) HAD FOLLOWED THE DECISION OF CO - ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSES SMENT YEAR 2010 - 11 WHEREIN FOLLOWING THE DECISION OF CO - ORDINATE BENCH OF THIS TRIBUNAL IN RESPECT OF ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007 - 08, IT HAS BEEN HELD THAT THE INCOME GENERATED BY LETTING OUT OF THE PREMISES IN CYBERCITY WAS LIABLE TO BE A SSESSED ONLY UNDER THE HEAD INCOME FROM BUSINESS. IT WAS FURTHER SUBMITTED BY THE LD. AR THAT THE REVENUE HAD NOT ACCEPTED THE ORDER OF TRIBUNAL AND THE ISSUE HAD BEEN RAISED BEFORE THE HONBLE JURISDICTIONAL HIGH COURT AT BOMBAY IN RESPECT OF ASSESSME NT YEAR 2009 - 10 AND THE QUESTION OF LAW WHICH HAS BEEN RAISED BY THE REVENUE HAD NOT BEEN PRESSED AND CONSEQUENTLY THE APPEAL OF REVENUE HAD BEEN DISMISSED , T HEREBY , THE ISSUE ATTAINING FINALITY. 3 ITA NO.1734/PUN/2017, A.Y. 2011 - 12 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL O F DECISION OF CO - ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007 - 08 IN ITA NO. 822/PN/2011 DATED 18 - 09 - 2012 SHOWS THAT THE CO - ORDINATE BENCH HAS HELD AS UNDER : IN THIS BACKGROUND, IT IS CLEAR THAT ASSESSEE HAS PROVIDED VARIOUS COMPLEX INTEGRATED SERVICES AS MENTIONED IN SCHEDULE - II TO THE LEASE AGREEMENT WITH THE I.T. COMPANY. THE SERVICES ARE VAST AND THE AMENITIES PROVIDED WERE IN THE NATURE OF PLANT AND MACHINERY AS CONTENDED BY THE ASSESSEE AND IT HAS BEEN ESTABLISHE D BY THE CLAUSES OF THE AGREEMENTS THAT THE COST OF PROVIDING THESE SERVICES WAS ALSO INCLUDED IN THE LEASE RENT OF RS.14.30 PER SQ.FT.. THE ASSESSEE ALSO CLARIFIED THAT COST INVOLVED IN THE SERVICES PROVIDED TO THE PARTICULAR COMPANY I.E., EXL SERVICES.CO M WAS RS.2.83 CRORES WHICH WAS ALMOST 40% OF THE LAND AND BUILDING COST OF THAT TOWER. BY NO STRETCH OF IMAGINATION SUCH EXTENSIVE AND SPECIALIZED SERVICES WHICH COULD ONLY BE UTILIZED BY THE IT/SOFTWARE/BPOS BUSINESSES TO BE LOCATED IN THE I.T. PART COULD BE TREATED AS FORMING PART OF INCOME FROM HOUSE PROPERTY. IT IS CERTAINLY A CONSTITUTION OF ORGANIZED STRUCTURE FOR CARRYING OUT BUSINESS ACTIVITIES. SECTION 22 PROVIDES ONLY FOR RENTAL INCOME OUT OF BUILDING OR LAND APPURTENANT THERETO, WHEREAS IN THE CA SE BEFORE US, COMPLEX AND VARIED SERVICES PROVIDED AND THE HUGE INVESTMENT THEREIN WERE IN THE NATURE OF PLANT AND MACHINERY WHICH COULD BE INCLUDED WITHIN THE EXPRESSION BUILDING OR LAND APPURTENANT THERETO. THUS, THE ASSESSEE HAS CONDUCTED SYSTEMATIC ACT IVITY TO EARN PROFIT AND ACCORDINGLY INCOME WAS TO BE ASSESSED AS INCOME FROM BUSINESS. IN VIEW OF THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE, AND ANALYSIS OF VARIOUS CLAUSES AND SCHEDULE - II OF THE AGREEMENT ENTERED WITH THE I.T. COMPANY, CIT(A) WAS JU STIFIED IN HOLDING THAT IN ASSESSEES CASE THE SAID INCOME WAS TO BE ASSESSED AS BUSINESS INCOME. THIS REASONED FACTUAL FINDING NEED NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 6. FURTHER, A PERUSAL OF THE DECISION OF CO - ORDINATE BENCH OF THIS TR IBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009 - 10 IN ITA NO. 2114/PN/2012 DATED 27 - 05 - 2014 SHOWS THAT THE CO - ORDINATE BENCH OF THIS TRIBUNAL HAS ADJUDICATED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN PARA 13 OF ITS ORDER BY FOLLOWING THE DECI SION OF CO - ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007 - 08. A PERUSAL OF DECISION OF HONBLE JURISDICTIONAL OF BOMBAY IN ASSESSEES OWN CASE IN INCOME TAX APPEAL NO. 318 OF 2015 DATED 19 - 12 - 2017 SHOWS THAT BEFORE THE HON BLE JURISDICTIONAL HIGH COURT OF BOMBAY THE QUESTION OF LAW RAISED WAS : (B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT INCOME DERIVED FROM LETTING OUT OF THE PREMISES OF THE I.T. PARK WAS TO BE ASSESSED AS BUSINESS INCOME WHEN THE TRUE CHARACTER OF THE INCOME DERIVED IS INCOME FROM PROPERTY. 4 ITA NO.1734/PUN/2017, A.Y. 2011 - 12 7. THE HONBLE HIGH COURT FURTHER HELD THAT THE QUESTION WAS NOT PRESSED BY THE REVENUE IN VIEW OF THE CBDT CIRCULAR NO. 16 OF 2017 DATED 25 T H APRIL, 2017 WHEREIN IT HAS BEEN CLARIFIED THAT INCOME ARISING FROM THE LETTING OUT OF THE PREMISES IN AN INDUSTRIAL PARK/SEZ, ARE TO BE CHARGED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS AND NOT UNDER THE HEAD INCOME FORM HOUSE PROPERTY. THUS, BEI NG SO, RESPECTFULLY FOLLOWING THE DECISION OF CO - ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE REFERRED SUPRA HAS ALSO CONSIDERED THE FACTS THAT THE REVENUE HAS WITHDRAWN ITS APPEAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT OF BOMBAY ON THE QUE STION OF LAW RAISED, WE FIND NO ERROR IN THE ORDER OF CIT(A). 8. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH FEBRUARY, 2020 . SD/ - SD/ - (ANIL CHATURVEDI) ( GEORGE MATHAN ) ACCOUNTANT MEMBER JUDICIAL MEMBE R / PUNE; / DATED : 13 TH FEBRUARY, 20 20 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 3, PUNE 4. THE PR. CIT - 2, PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. // // TRU E COPY // / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE