ACIT, CHENNAI V. E-Lights Techno Park Pvt Ltd., CHENNAI

ITA 1993/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9398 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 04-05-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 14-09-2015
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Business income; Depreciation
• Section: 143(3)

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 1993 /MDS/2015 / ASSESSMENT YEAR :201 2 - 1 3 THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2 (1), CHENNAI 600 034 . VS. M/S. E - LIGHTS TECHNO PARK PVT. LTD., PACIFICA TECH PARK, SURVEY NO. 76, NO. 23, RAJIV GANDHI SALAI, OMR, NAVALUR, CHENNAI 603 103. [PAN: AA B C E5285D ] ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI P. RADHAKRISHNAN, J CIT / RESPONDENT BY : SHRI B. RAMAKRISHNAN, FCA / DATE OF HEARING : 04 . 05 .201 6 / DATE OF P RONOUNCEMENT : 06 .0 5 .2016 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 6 , CHENNAI DATED 15 .0 6 .2015 RELEVANT TO THE ASSESSMENT YEAR 201 2 - 1 3 . THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN HOLDING THAT RENTAL INCOME RECEIVED BY THE ASSESSEE IS TO BE TREATED UNDER BUSINESS INCOME. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY HAS DEVELO PED I.T.A. NO. 1993 /M/15 2 AN INFORMATION TECHNOLOGY (IT) PARK AND LET OUT THE SAME TO VARIOUS SOFTWARE COMPANIES. THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.09.2012 DECLARING BUSINESS LOSS OF .6,90,60,140/ - UNDER NORMAL PROVISION. THE CASE OF THE ASSESSEE WAS SELECTED FOR S CRUTINY. THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] ASSESSING TOTAL INCOME OF THE ASSESSEE AT .2,28,26,420/ - BY REJECTING ASSESSEE S CLAIM OF BUSINESS INCOME AND ASSESSED THE RENT AL RECEIPTS FROM THE BUILDING LET OUT UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND OTHER SOURCES. 3. ON APPEAL, BY CONSIDERING THE EXPLANATION OF THE ASSESSEE AND BY FOLLOWING THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR T HE ASSESSMENT YEAR 2011 - 12 DATED 22.05.2015 AND ALSO CONSIDERING THE DECISION OF THE HON BLE HIGH COURT OF MADRAS IN THE CASE OF CIT V. ELNET TECHNOLOGIES LTD. [2013] 213 TAXMAN 129 (MAD), THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO ASSESS THE TOTAL R ENTAL INCOME INCLUDING THE AMENITIES CHARGES COLLECTED, UNDER THE HEAD INCOME FROM BUSINESS . 4. ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE CONSIDERED THE IT PARK DEVELOPED BY IT AS AN INFRASTRUCTURE PROJECT AND THE RESULTING RENTAL I.T.A. NO. 1993 /M/15 3 INCOME IS ASSESSABLE TO TAX UNDER THE HEAD INCOME FROM BUSINESS . HENCE, THE ASSESSEE IN ITS RETURN OFFERED THE INCOME IN THE FORM OF TWO COMPONENTS I.E. (I) RENT COMPONENT OF . 7,29,22,644/ - AND (II) AMENITIES CHARGES OF .13,08,58,985/ - UNDER THE HEAD INCOME FROM BUSINESS AND CLAIMED VARIOUS EXPENSES INCLUDING THE DEPRECIATION ON THE BUILDING. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT MAIN BUSINESS OF THE ASSESSEE IS OPERATING LEASE AND REAL ESTATE AND THEREFORE ASSESSED THE RENT COMPONENT UNDER THE HEAD INCOME FROM HOU SE PROPERTY AND THE AMENITIES CHARGES UNDER THE HEAD INCOME FROM OTHER SOURCES . ON APPEAL, THE LD. CIT(A) HAS OBSERVED AS UNDER: 4.2 I HAVE CONSIDERED THE ASSESSEE'S SUBMISSIONS CAREFULLY. THE HON'BLE HIGH COURT OF MADRAS, IN THE CASE OF CIT V. ELNET TECHNOLOGIES LTD (2013) (213 TAXMAN 129)(MAD), HAD HELD THAT WHERE ASSESSEE - COMPANY HAD TAKEN LAND ON LEASE WITH OBJECTS OF CONSTRUCTING IT COMPANY WITH ALL INFRASTRUCTURE FACILITIES AS PER ITS MEMORANDUM OF ASSOCIATION, INCOME FROM LEASE RENTALS WOULD BE ASSESSABLE AS BUSINESS INCOME IN HANDS OF ASSESSEE. THE FACTS OF THE PRESENT CASE ARE EXACTLY SIMILAR TO THOSE OF THE ABOVE CASE. IN FACT, THE IT PARKS DEVELOPED BY THE ASSESSEE AS WELL AS ELNET TECHNOLOGIES ARE EXACTLY IDENTICAL, DEVELOPED UNDER THE SAME SCHEME AND LOCATED IN THE SAME AREA. FURTHER, ON THE SAME FACTS, I HAVE ALLOWED THE ASSESSEE'S APPEALS IN THE A.Y. 2011 - 12, VIDE MY ORDER IN ITA NO.1898J2013 - 14 DATED 23.10.2014. EVEN THE HON'BLE ITAT OF CHENNAI, VIDE ITS ORDER IN ITA NO.236JMDSJ2015 DATED 22.05.2015, CONFIRMED THE SAME BY HOLDING THAT THE INCOME FROM THE PROJECT IS TO BE ASSESSED UNDER THE HEAD 'BUSINESS INCOME'. FOR THE SAME REASONS, THE ASSESSING OFFICER IS DIRECTED TO ASSESS THE TOTAL RENTAL INCOMES, INCLUDING THE AMENITIES CHARGES COLL ECTED, UNDER THE HEAD 'INCOME FROM BUSINESS'. THE ASSESSEE SUCCEEDS IN ITS APPEAL. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THE ISSUE INVOLVED IN THE APPEAL OF THE REVENUE IS SQUARELY COVERED BY THE DECISION OF I.T.A. NO. 1993 /M/15 4 THE COORDINATE BENCH O F THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2011 - 12 , WHEREIN, THE TRIBUNAL HAS OBSERVED AS UNDER: 5. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIALS ON RECORD. WE FIND THAT IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE CO - ORDINATE B ENCH OF THE TRIBUNAL IN THE CASE OF M/S. ASCENDAS IT PARK (CHENNAI) LTD. IN ITA NO.1709/MDS/2013 & CO NO. 162/MDS/2013 DATED 11 TH SEPT., 2014, WHEREIN IT WAS OBSERVED THAT THE ARRANGEMENT BETWEEN THE ASSESSEE AND THE LESSEES IS NOT FOR MERE USE OF THE PROP ERTY SIMPLICITOR BUT FOR THE USE OF PROPERTY ALONG WITH OTHER AMENITIES AND FACILITIES; THE ASSESSEE - COMPANY HAS BEEN FORMED WITH THE INTENTION OF COMMERCIALLY EXPLOITING THE PROPERTY BY DEVELOPING AND MAINTAINING A TECHNOLOGY PARK AND INDUSTRIAL PARK SCHE ME RECOGNISE AND LAYS EMPHASIS ON THE FACT THAT INCOME FROM DEVELOPING, DEVELOPING AND MARKETING, OR MAINTAINING OR OPERATING AN INDUSTRIAL PARK CONSTITUTES A BUSINESS ACTIVITY. THEREFORE SUCH ACTIVITY GIVES RISE ONLY TO BUSINESS INCOME. FURTHER, THE ID. A R HAS RELIED ON THE FOLLOWING JUDGMENTS TO SUPPORT THE VIEW TAKEN BY THE COMMISSIONER OF INCOME - TAX(APPEALS): 1. GLOBAL TECH PARK (P) LTD. V. ACIT, 28 SOT 45(BANG.) 2. PFH MAIL & RETAIL MANAGEMENT LTD. V. ITO, 110 ITD (KOL). 3. ITO V. INFORMATION TE CHNOLOGY PARK LTD., 17 TAXMANN.COM 208 (BANG.) 4. CIT V. VELANKANI INFORMATION SYSTEMS (P.) LTD., 35 TAXMANN.COM 1 (KAR.) 5. DCIT V. M AGARPATTA TOWNSHIP DEVELOPMENT & CONSTRUCTION CO., 32 TAXMANN.COM 63 (PUNE) 6. DCIT V. M/S. ASCENDAS IT PARK (CHENNAI) LTD., ITA NO.1709/MDS/2013 7. ACIT V. M/S. RATTHA HOLDING COMPANY PVT. LTD., ITA NOS. 995 TO 997/MDS/2011. 6. IN VIEW OF THE ABOVE, WE ARE INCLINED TO CONFIRM THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) THAT THE INCOME OF THE ASSESSEE FROM RENTING OF I.T. PARK IS TO BE CONSIDERED AS BUSINESS INCOME ONLY. THUS, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 7. MOREOVER, IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS LTD. V. CIT [2015] 56 TAXMANN.COM 456, THE HON BLE SUPREME COURT HAS HEL D AS UNDER: I.T.A. NO. 1993 /M/15 5 11. WE ARE CONSCIOUS OF THE AFORESAID DICTA LAID DOWN IN THE CONSTITUTION BENCH JUDGMENT. IT IS FOR THIS REASON, WE HAVE, AT THE BEGINNING OF THIS JUDGMENT, STATED THE CIRCUMSTANCES OF THE PRESENT CASE FROM WHICH WE ARRIVE AT IRRESISTIBLE CONCLUSION THAT IN THIS CASE, LETTING OF THE PROPERTIES IS IN FACT IS THE BUSINESS OF THE ASSESSEE. THE ASSESSEE THEREFORE, RIGHTLY DISCLOSED THE INCOME UNDER THE HEAD INCOME FROM BUSINESS. IT CANNOT BE TREATED AS 'INCOME FROM THE HOUSE PROPERTY'. WE, ACCO RDINGLY, ALLOW THIS APPEAL AND SET ASIDE THE JUDGMENT OF THE HIGH COURT AND RESTORE THAT OF THE INCOME TAX APPELLATE TRIBUNAL. NO ORDERS AS TO COSTS. 8. RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS LTD. V. CIT (SUPRA) AS WELL AS THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2011 - 12, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THUS, THE GROUND RAISED IN THE APPEAL OF REVENU E IS LIABLE TO BE DISMISSED. 9 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 6 TH MAY, 20 16 AT CHENNAI. SD/ - SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 06 .05 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.