N. V. REALTY PVT. LTD., MUMBAI V. DCIT CIR. 7(1), MUMBAI

ITA 2577/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7329 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 07-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMJI RAO
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 2577/MUM/2016 (ASSESSMENT YEAR: 2010-11) M/S. NV REALTY PVT. LTD. G-4, GR. FLOOR, KHETAN BHAVAN 198, JAMSHEDJI TATA ROAD MUMBAI 400020 VS. DCIT, CIRCLE 7(1) AAYAKAR BHAVAN M.K. ROAD MUMBAI 400020 PAN AACCD2669P APPELLANT RESPONDENT ITA NO. 2588/MUM/2016 (ASSESSMENT YEAR: 2010-11) DCIT, CIRCLE 7(1) AAYAKAR BHAVAN M.K. ROAD MUMBAI 400020 VS. M/S. NV REALTY PVT. LTD. G-4, GR. FLOOR, KHETAN BHAVAN 198, JAMSHEDJI TATA ROAD MUMBAI 400020 PAN AACCD2669P APPELLANT RESPONDENT ASSESSEE BY: SHRI PERCY PARDIWALA REVENUE BY: SHRI RAMJIRAO PANTULU DATE OF HEARING: 01.05.2018 DATE OF PRONOUNCEMENT: 11.05.2018 O R D E R PER BENCH THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND R EVENUE AGAINST THE ORDER OF THE CIT(A) FOR A.Y. 2010-11 IN THE MATTER OF ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT (HEREINAFTER THE ACT). 2. THE COMMON GRIEVANCE OF BOTH ASSESSEE AND REVENUE R ELATES TO TREATING THE INCOME FROM OPERATION AND MAINTENANCE OF INDUSTRIAL PARK AS INCOME FROM HOUSE PROPERTY IN PLACE OF INCOME FROM BUSINESS. THE AO TREATED THE ENTIRE INCOME FROM INDUSTRIAL PART AS I NCOME FROM HOUSE PROPERTY. BY THE IMPUGNED ORDER THE CIT(A) TREATED THE INCOME FROM FACILITY ITA NOS. 2577 & 2588/MUM/2016 M/S. NV REALTY PVT. LTD. 2 CHARGES, CMA CHARGES, ETC. AS INCOME FROM BUSINESS BUT TREATED THE REMAINING RECEIPT AS INCOME FROM HOUSE PROPERTY. TH E CIT(A) ALSO DISALLOWED PART OF THE EXPENDITURE. AGAINST THE ORD ER OF THE CIT(A), BOTH ASSESSEE AND REVENUE ARE IN FURTHER APPEAL BEFORE U S. 3. AT THE OUTSET THE LEARNED A.R. PLACED ON RECORD CB DT CIRCULAR NO.16/2017 DATED 25 TH APRIL, 2017, WHEREIN IT WAS HELD THAT NO RE- CHARACTERISATION OF THE LEASE RENTAL FROM THE LETTI NG PROPERTY WITH OTHER AMENITIES IN AN INDUSTRIAL PARK/SEZ WAS REQUIRED. W E HAVE CAREFULLY GONE THROUGH THE CBDT CIRCULAR, WHICH READS AS UNDER: - F.NO. 279/MISC./140/2015/ITJ GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES NEW DELHI, 25 TH APRIL, 2017 SUBJECT: LEASE RENT FROM LETTING OUT BUILDINGS/DEVE LOPED SPACE ALONG WITH OTHER AMENITIES IN AN INDUSTRIAL PARK/SEZ- TO BE TREATED AS BUSINESS INCOME. THE ISSUE WHETHER INCOME ARISING FROM LETTING OUT OF PREMISES/ DEVELOPED SPACE ALONG WITH OTHER AMENITIES IN AN IN DUSTRIAL PARK/SEZ IS TO BE CHARGED UNDER HEAD 'PROFITS AND G AINS OF BUSINESS' OR UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' HAS BEEN SUBJECT MATTER OF LITIGATION IN RECENT YEARS. ASSESSEES CLA IM THE LETTING OUT AS BUSINESS ACTIVITY, THE INCOME ARISING FROM WHICH TO BE CHARGED TO TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS', WHE REAS THE ASSESSING OFFICERS HOLD IT TO BE CHARGEABLE UNDER T HE HEAD 'INCOME FROM HOUSE PROPERTY'. 2. THE MATTER HAS BEEN CONSIDERED BY THE BOARD. IN COME FROM THE INDUSTRIAL PARKS/SEZ ESTABLISHED UNDER VARIOUS SCHE MES FRAMED AND NOTIFIED UNDER SECTION 80IA(4)(III) OF THE INCOME-T AX ACT, 1961 ('ACT') IS LIABLE TO BE TREATED AS INCOME FROM BUSINESS PROVID ED THE CONDITIONS PRESCRIBED UNDER THE SCHEMES ARE MET. IN THE CASE OF VELANKANI INFORMATION SYSTEMS PVT L TD, THE HON'BLE KARRTATAKA HIGH COURT OBSERVED THAT ANY OTH ER INTERPRETATION WOULD DEFEAT THE OBJECT OF SECTION 80IA OF THE ACT AND GOVERNMENT SCHEMES FOR DEVELOPMENT OF INDUSTRIAL PARKS IN THE COUNTRY. SLPS FILED IN THIS CASE BY THE DEPARTMENT HAVE BEEN DISMISSED BY THE HON'BLE SUPREME COURT. ITA NOS. 2577 & 2588/MUM/2016 M/S. NV REALTY PVT. LTD. 3 IN A SUBSEQUENT JUDGMENT DATED 30.04.2014 IN ITA N O 76 & 78/2012 IN THE CASE OF CIT VS. INFORMATION TECHNOLO GY PARK LTD, THE KARNATAKA HIGH COURT HAS REAFFIRMED ITS-EARLIER VIE WS. IT HAS HELD THAT, SINCE THE ASSESSEE-COMPANY WAS ENGAGED IN THE BUSINESS OF DEVELOPING, OPERATING AND MAINTAINING AN INDUSTRIAL PARK AND PROVIDING INFRASTRUCTURE FACILITIES TO DIFFERENT CO MPANIES AS ITS BUSINESS, THE LEASE RENT RECEIVED BY DIE ASSESSEE F ROM LETTING OUT BUILDINGS ALONG WITH OTHER AMENITIES IN A SOFTWARE TECHNOLOGY PARK WOULD BE CHARGEABLE TO TAX UNDER THE HEAD 'INCOME F ROM BUSINESS' AND NOT UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' . THE JUDGEMENT HAS BEEN ACCEPTED BY THE BOARD. 3. IN VIEW OF THE ABOVE, IT IS NOW A SETTLED POSITI ON THAT IN THE CASE OF AN UNDERTAKING WHICH DEVELOPS, DEVELOPS AND OPER ATES OR MAINTAINS AND OPERATES AN INDUSTRIAL PARK/SEZ NOTIF IED IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY T HE GOVERNMENT, THE INCOME FROM LETTING OUT OF PREMISES/ DEVELOPED SPACE ALONG WITH OTHER FACILITIES IN AN INDUSTRIAL PARK/SEZ IS TO BE CHARGED TO TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS'. 4. ACCORDINGLY, HENCEFORTH, APPEALS MAY NOT BE FILE D BY THE DEPARTMENT ON THE ABOVE SETTLED ISSUE AND THOSE ALR EADY FILED MAY BE WITHDRAWN/NOT PRESSED UPON. 5. THE ABOVE MAY BE BROUGHT TO THE NOTICE OF ALL CO NCERNED. 4. ACCORDINGLY, IT WAS ARGUED BY THE LEARNED A.R. THAT THE DEPARTMENT SHOULD BE DIRECTED TO WITHDRAW THE APPEALS, IF ANY, FILED WITH RESPECT TO SUCH RE-CHARACTERISATION. IN THE INSTANT CASE WE FI ND THAT THE DEPARTMENT IS IN APPEAL AGAINST RE-CHARACTERISATION OF LEASE R ENTAL FROM INDUSTRIAL PARK. FOLLOWING THE CIRCULAR, WE DO NOT FIND ANY ME RIT IN THE SAME. WITH RESPECT TO THE APPEAL FILED BY THE ASSESSEE WE REST ORE THE MATTER BACK TO THE FILE OF THE AO FOR DECIDING ALLOCATION OF VARIO US EXPENSES AFTER TREATING THE ENTIRE RECEIPTS AS INCOME UNDER THE HEAD INCOME FROM BUSINESS. 5. IN THE RESULT, THE APPEAL FILED BY REVENUE IS DISM ISSED WHEREAS THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MAY, 2018. SD/ - SD/ - (RAVISH SOOD) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 11 TH MAY, 2018 ITA NOS. 2577 & 2588/MUM/2016 M/S. NV REALTY PVT. LTD. 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -21, MUMBAI 4. THE PR. CIT - 7, MUMBAI 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.