DCIT, CHENNAI V. AR Holdings & Electronics Ltd., CHENNAI

ITA 1743/CHNY/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96381 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2015
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 02-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 10-09-2013
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Business income

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NOS.1741, 1742 & 1743/MDS/2013 / ASSESSMENT YEARS : 2006-07, 2007-08 & 2008-09 THE DY. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE I(2) CHENNAI VS. M/S A R HOLDINGS & ELECTRONICS LTD DR. RADHAKRISHNAN ROAD MYLAPORE, CHENNAI - 4 [PAN AAECA 5650 K ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : DR. B NISCHAL, JCIT /RESPONDENT BY : SHRI A.S . SRIRAMAN, ADVOCATE / DATE OF HEARING : 02 - 1 1 - 2015 ! / DATE OF PRONOUNCEMENT : 13 - 11 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THESE APPEALS OF THE REVENUE ARE DIRECTED AGAINST THE COMMON ORDER OF THE COMMISSIONER OF INCOME-TAX (AP PEALS)-VI, CHENNAI, DATED 19.3.2013 FOR ASSESSMENT YEARS 2006- 07, 2007-08 AND 2008-09. SINCE COMMON ISSUE ARISES FOR CONSIDERATIO N IN ALL THE APPEALS, WE HEARD THEM TOGETHER AND DISPOSING OF TH E SAME BY THIS COMMON ORDER. ITA NO.1741, 1742 & 1743/13 :- 2 -: 2. DR. B. NISCHAL, LD. DEPARTMENTAL REPRESENTATIVE SUB MITTED THAT THE ONLY ISSUE RAISED BY THE REVENUE IS THAT T HE AMENITY CHARGES RECEIVED BY THE ASSESSEE HAS TO BE TAXED AS BUSINE SS INCOME. 3. THE LD. DR SUBMITTED THAT THE ASSESSEE OWNED A BUI LDING AT PERUNGUDI, CHENNAI. THE ASSESSEE LEASED OUT THE B UILDING TO THREE PERSONS VIZ. SHRI HARINDER SINGH, SHRI HARBINDER SI NGH AND SHRI GURBINDER SINGH. THE ASSESSING OFFICER CLASSIFIED THE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY. THE ASSESSEE CLAIMED B EFORE THE ASSESSING OFFICER THAT THE RENTAL INCOME FOR THE BU ILDING HAS TO BE TREATED AS INCOME FROM HOUSE PROPERTY, HOWEVER, THE AMENITY CHARGES FOR THE AMENITIES HAS TO BE CLASSIFIED AS BUSINESS INCOME. THE CIT(A) FOUND THAT THE AMENITY CHARGES HAS TO BE CLASSIFIED AS INCOME FROM BUSINESS. THE LD. DR POINTED OUT THAT THE ASSESSE E HAS NOT RENDERED ANY SERVICE, THEREFORE, THE AMENITIES ARE PART OF T HE BUILDING, HENCE, THE ENTIRE RENTAL INCOME INCLUDING THE AMENITY CHAR GES ARE TO BE CLASSIFIED AS INCOME FROM HOUSE PROPERTY AND NOT IN COME FROM BUSINESS. 4. ON THE CONTRARY, SHRI A.S. SRIRAMAN, LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT THE ASSESSEE DEVELOPED AN INDUSTRIAL AND IT PARK. THE WHOLE PROCESS OF DESIGNING AND DEVELOPI NG AN INDUSTRIAL PARK INVOLVES SUPERIOR TECHNICAL SKILLS. THE IT PA RK WAS IN FACT LET OUT ITA NO.1741, 1742 & 1743/13 :- 3 -: TO THREE PERSONS. THE ASSESSEE HAS TO PROVIDE UNI NTERRUPTED POWER SUPPLY/COMMUNICATION NETWORK AND OTHER ACCESSORIES AND AMENITIES NECESSARY FOR IT INDUSTRIES. THEREFORE, THE TENANT HAS PAID CHARGES FOR AMENITIES SEPARATELY OTHER THAN THE RENT OF THE BUI LDING. SINCE THE ASSESSEE WAS PROVIDING SERVICE TO THE TENANT, THE A MENITY CHARGES HAS TO BE CLASSIFIED AS INCOME FROM BUSINESS. THE LD. COUNSEL PLACED HIS RELIANCE ON THE JUDGMENT OF THE APEX COURT IN CHENN AI PROPERTIES VS CIT IN CIVIL APPEAL NO.4494 OF 2004 DATED 9.4.2015, THE COPY OF WHICH IS FILED BY THE LD. COUNSEL FOR THE ASSESSEE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. NOR MALLY WHEN THE BUILDING WAS LET OUT, THE RENTAL INCOME HAS TO BE A SSESSED UNDER THE HEAD INCOME FROM BUSINESS. IN THIS CASE, THE AS SESSEE CLAIMS THAT THE BUILDING WAS LET OUT FOR RUNNING DEVELOPMENT OF SOFTWARE IN THE NATURE OF IT PARK. THE ASSESSEE HAS PROVIDED UNIN TERRUPTED POWER SUPPLY, NETWORKING AND OTHER FACILITIES WHICH ARE E SSENTIAL FOR IT PARKS. THEREFORE, THE CIT(A) FOUND THAT THE ASSESSEE IS P ROVIDING A SYSTEMATIC SERVICE, HENCE, IT HAS TO BE CONSIDERED AS BUSINESS. WHEN THE ASSESSEE PROVIDED UNINTERRUPTED POWER SUPPLY, MAINTENANCE OF NETWORK SYSTEM AND OTHER ACCESSORIES AND AMENITIES ESSENTIAL FOR AN IT INDUSTRY, NATURALLY, THE AMENITY CHARGES IS FOR BUSINESS, THEREFORE, THE CIT(A) HAS RIGHTLY FOUND THAT IT HAS TO BE CLAS SIFIED AS BUSINESS ITA NO.1741, 1742 & 1743/13 :- 4 -: INCOME. THIS TRIBUNAL DO NOT FIND ANY REASON TO IN TERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONF IRMED. 6. IN THE RESULT, ALL THE THREE APPEALS OF THE REVENU E STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH NOVEMBER, 2015, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 13 TH NOVEMBER, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF