Appeal details
Counselvise Citation
[2018] 121 COUNSELVISE.COM (IT) 5296 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
18-04-2018
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
B
Assessment Year
2007-2008
Appeal Filed On
17-11-2017
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , ! BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.2772/CHNY/2017 ( / ASSESSMENT YEAR: 2007-08) THE DCIT, CORPORATE CIRCLE 2(1), CHENNAI. VS M/S. ELNET TECHNOLOGIES LTD., NO.ELNET SOFTWARE CITY, TS-140 BLOCK, NO.2&9, RAJIV GANDHI SALAI, TARAMANI, CHENNAI 600 113. PAN: AAACE0785D ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MS. R. ANITHA, , JCIT / RESPONDENT BY : MS. A. SUSHMA HARINI, ADVOCATE /DATE OF HEARING : 12.04.2018 /DATE OF PRONOUNCEMENT : 18.04.2018 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)-6, CHENNAI, DATED 01.09.2017 IN ITA NO.112/CIT(A)-6/20 09-10 FOR THE ASSESSMENT YEAR 2007-08 PASSED U/S.250(6) R.W.S. 14 3(3) OF THE ACT. 2 THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL:- 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2 ITA NO. 2772/CHNY/2017 2.1 THE CIT(A) ERRED IN HOLDING THAT INCOME DERIVED FROM THE LEASING OUT OF THE PROPERTY WITH ALL AMENITIES AND FACILITIES W OULD BE ASSESSABLE AS BUSINESS INCOME, BY RELYING ON THE DECISION OF TH E HONBLE MADRAS HIGH COURT IN THE ASSESSEES OWN CASE FOR THE AYS 9 5-96, 96-97 & 2001- 02, WHICH WAS NOT ACCEPTED THE DEPARTMENT AND FURTH ER APPEAL IS PENDING BEFORE THE HONBLE SUPREME COURT. 2.2 THE CIT(A) ERRED IN HOLDING THAT THE INCOME DER IVED FROM LETTING OF PROPERTY TO THE TENANTS FOR THE PURPOSE OF RUNNING A SOFTWARE TECHNOLOGY PARKS AS INCOME FROM BUSINESS IN THE HANDS OF THE OWNER OF THE PROPERTY. 3.1 THE CIT(A) ERRED IN HOLDING THAT SINCE LETTING OUT OF THE MODULES TO THE SOFTWARE COMPANIES IS BUSINESS INCOME, THE INCOME E ARNED THROUGH ELECTRICITY IS ALSO BUSINESS INCOME. 3.2 THE CIT(A) FAILED TO CONSIDER THE FACT THAT THE ELECTRICITY INCOME IS RECEIVED FROM THE TENANTS WHO OCCUPY THE MODULES, F OR USE OF THE POWER, SUPPLIED BY TNEB AND BY OPERATING GENERATOR SETS WH ICH ARE OPERATED AND MAINTAINED BY THE ASSESSEE, WOULD BE TREATED AS INC IDENTAL CHARGES AND THE SAME SHOULD BE TAXED UNDER THE HEAD INCOME FROM OTH ER SOURCES, 4.1 THE CIT(A) ERRED IN HOLDING THAT THE INCOME EAR NED BY THE ASSESSEE COMPANY FOR LETTING OUT OF THE MODULES IS BUSINESS INCOME THEN THE INCOME EARNED FROM THE COMPENSATION AMOUNT COLLECTE D FROM SOFTWARE COMPANIES IS ALSO BUSINESS INCOME. 4.2 THE CIT(A) FAILED TO THE APPRECIATE THE FACT TH AT WHEN LETTING OF PROPERTY TO THE TENANTS FOR THE PURPOSE OF RUNNING A SOFTWARE TECHNOLOGY PARKS UNDER THE HEAD INCOME FROM HOUSE PROPERTY, TH EN THE COMPENSATION AMOUNT COLLECTED FROM SOFTWARE COMPANIES SHOULD BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. 5 FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED A T THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) BE SET ASIDE AND THAT OF THE ASSESSING OF FICER BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF LETTING OUT PROPERTY, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-0 8 ELECTRONICALLY ON 15.10.2007 DECLARING INCOME OF RS.4,37,71,500/-. I NITIALLY THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT AND SUBSEQUENTL Y THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S.143(2) OF THE ACT WAS ISSUED ON 3 ITA NO. 2772/CHNY/2017 13.08.2008. FINALLY ASSESSMENT ORDER WAS PASSED U/S .143(3) OF THE ACT ON 28.12.2009 WHEREIN THE LD.AO TREATED THE LE ASE RENT RECEIVED BY THE ASSESSEE AS INCOME FROM HOUSE PROPERTY AS AGAINST BUSINESS INCOME CLAIMED BY THE ASSESSEE AND FURTH ER THE LD.AO TREATED THE INCOME ARISING OUT OF ELECTRICITY CHARG ES AS INCOME FROM OTHER SOURCE AS AGAINST BUSINESS INCOME CLAIMED BY THE ASSESSEE. 4. AT THE OUTSET THE LD.AR SUBMITTED THAT THE HON BLE HIGH COURT IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2001-02, 1995-96 & 1996-97 DATED 09.10.2012 IN TAX CASE (APP EAL) NOS.2336 AND 2623 OF 2006 AND 2169 OF 2008 HAD HELD THE ISSU E IN FAVOUR OF THE ASSESSEE BY HOLDING THAT IN THE CASE OF THE ASS ESSEE THE LEASE RENTALS AND THE INCOME ARISING OUT OF ELECTRICITY C HARGES SHOULD BE TREATED AS BUSINESS INCOME. IT WAS FURTHER SUBMIT TED THAT THE LD.CIT(A) HAD ONLY FOLLOWED THE ORDER OF THE HONBL E JURISDICTIONAL MADRAS HIGH COURT CITED SUPRA AND THEREFORE THE SAM E MAY BE UPHELD. THE LD.DR ON THE OTHER HAND COULD NOT CONTR OVERT TO THE SUBMISSION OF THE LD.AR. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIALS ON RECORD. SINCE WITH RESPECT TO THE ISSUE OF LEASE RENT RECEIVED BY THE ASSESSEE AND THE ELECTRICITY CHARGE S THE HONBLE 4 ITA NO. 2772/CHNY/2017 JURISDICTIONAL HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WHICH WAS FOLLOWED BY THE LD.CIT(A), WE DO NOT FIND IT NECESSARY TO INTERFERE IN THE ORDER OF THE LD.CIT(A ). ACCORDINGLY THE ORDER OF THE LD.CIT(A) WITH RESPECT TO BOTH THE ABO VE MENTIONED ISSUES ARE UPHELD. FURTHER THE LD.CIT(A) HAS HELD T HAT COMPENSATION AMOUNT COLLECTED FROM SOFTWARE COMPANIES AS BUSINE SS INCOME BECAUSE THE LEASE RENT WHICH IS RELATED TO THE SAME IS TREATED AS BUSINESS INCOME BY THE HONBLE JURISDICTIONAL HIGH COURT. WE DO NOT FIND ANY FAULT IN THE REASONED ORDER OF THE LD.CIT( A) ON THIS ISSUE. HENCE THE ORDER OF THE LD.CIT(A) ON THIS ISSUE IS A LSO UPHELD. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED ON THE 18 TH APRIL, 2018 AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER #$ /CHENNAI, %& /DATED 18 TH APRIL, 2018 RSR & () *) /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. - ( )/CIT(A) 4. - /CIT 5. )./ 0 /DR 6. /1 /GF
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