DCIT, New Delhi V. M/s. DLF Assets Pvt. Ltd., New Delhi

ITA 4965/DEL/2016

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7328 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 19-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.4965/DEL/2016 ASSESSMENT YEAR: 2012-13 DCIT CIRCLE 7 (1) NEW DELHI VS DLF ASSETS PVT LTD. 1-E, NAAZ CINEMA COMPLEX JHANDEWALAN EXTN. NEW DELHI PAN NO. AACCD4923A (APPELLANT) (RESPONDENT) APPELLANT BY MS. NIDHI SRIVASTAVA, CIT(DR) RESPONDENT BY SH R. S. SINGHVI, CA SH. SATYAJEET GOEL, CA DATE OF HEARING: 21/01/2021 DATE OF PRONOUNCEMENT: 25/01/2021 ORDER PER N. K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE CIT(A)-3, DELHI DATED 21.06.2016 PERTAINING TO A.Y. 2012-13. 2. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT TH E CIT(A) ERRED IN ALLOWING DEDUCTION U/S. 80IAB OF THE ACT TO THE ASSESSEE. 2 3. REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH AND CASE RECORD CAREFULLY PERUSED. 4. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARIN G INCOME OF RS.66.37 LACS AFTER CLAIMING DEDUCTION U/S. 80IAB O F THE ACT AMOUNTING TO RS.316.04 CRORES. THE RETURN WAS SELE CTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY STATUTORY NOTIC ES WERE ISSUED AND SERVED UPON THE ASSESSEE. 5. WHILE SCRUTINIZING THE RETURN OF INCOME THE AO N OTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IAB OF THE ACT AMOUNTING TO RS. 316.04 CRORES. THE AO FOUND THAT THE ASSESSEE HAS CLAIMED THE SAID DEDUCTION ON THE RENTAL INCOME SHOWN UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 6. THE ASSESSEE WAS ASKED TO SHOW-CAUSE WHY THE CLA IM OF DEDUCTION U/S. 80 IAB OF THE ACT SHOULD NOT BE DENI ED AS THE CLAIM IS MADE ON THE RENTAL INCOME AND NOT FROM ANY PROFITS AND GAINS OF BUSINESS. 7. ASSESSEE FILED A DETAILED REPLY SUBSTANTIATING I TS CLAIM OF DEDUCTION AND RELIED UPON VARIOUS JUDICIAL DECISION S IN SUPPORT OF ITS CLAIM. 8. THE MAIN CONTENTION OF THE ASSESSEE WAS THAT IT IS ENGAGED IN THE ELIGIBLE BUSINESS OF DEVELOPING SEZ AND THE INCOME ARISING TO THE ASSESSEE IS FROM SUCH ELIGIBLE BUSINESS. TH E ASSESSEE STRONGLY CONTENDED THAT THE RELEVANT FACTOR IS PROF IT AND GAIN SHOULD BE DERIVED FROM THE ELIGIBLE BUSINESS IRRESP ECTIVE OF THE HEAD OF THE INCOME. 3 9. THE CLAIM OF THE ASSESSEE WAS CONSIDERED BY THE AO BUT DID NOT FIND ANY FAVOUR BECAUSE THE AO WAS OF THE FIRM BELIEF THAT DEDUCTION U/S. 80IAB OF THE ACT IS AVAILABLE ONLY F ROM THE PROFITS AND GAINS DERIVED BY AN UNDERTAKING FROM ANY BUSINE SS AND SINCE INCOME FROM HOUSE PROPERTY DOES NOT QUALIFY FOR DED UCTION U/S.80 IAB OF THE ACT, THE CLAIM WAS DENIED. 10. ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) A ND SUCCESSFULLY GOT THE CLAIM OF DEDUCTION. 11. THERE IS NO DISPUTE IN SO FAR AS THE ELIGIBILIT Y OF THE ASSESSEE IS CONCERNED. THE ASSESSEE DURING THE YEAR UNDER C ONSIDERATION HAS BEEN ENGAGED IN DEVELOPING, LEASING AS WELL AS MAINTENANCE AND OPERATIONS OF COMMERCIAL PROPERTIES UNDER SEZ. THE ASSESSEE COMPANY IS AN APPROVED CO-DEVELOPER OF THE FOLLOWING NOTIFIED SEZ PROJECTS :- S. NO. NAME OF THE DEVELOPER PROJECT 1 DLF INFO CITY DEVELOPERS (CHENNAI) MANAPAKKAM AND MUGLIVAKKAM VILLAGES, KANCHEEPURAM, TAMIL NADU 2 DLF CYBER CITY DEVELOPERS LTD DLF CYBER CITY DISTRI CT, GURGAON 3 DLF LIMITED SILOKHERA, GURGAON 4 DLF COMMERCIAL DEVELOPERS LTD RANGA REDDY DISTRICT, ANDHRA PRADESH 4 12. AS PER THE SCHEME OF THE INCOME TAX ACT THE ASS ESSEE HAS SHOWN THE RENTAL INCOME DERIVED FROM ITS SEZ PROJEC TS UNDER THE HEAD INCOME FROM OTHER SOURCES. 13. IN OUR UNDERSTANDING, THE SCHEME OF SEZ IS GOVE RNED BY THE PROVISION OF LAW CONTAINED UNDER THE SEZ 2005. SEC TION 51 OF THE SEZ ACT 2005 PROVIDES THAT THE SEZ ACT SHALL HAVE O VERRIDING EFFECT NOTWITHSTANDING ANYTHING INCONSISTENT THEREWITH CON TAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE OR IN ANY INS TRUMENT HAVING EFFECT BY VIRTUE OF ANY LAW OTHER THAN THIS ACT. I N OUR CONSIDERED OPINION DEVELOPING SEZ BY ITSELF IS THE BUSINESS CO NTEMPLATED U/S. 80 IAB OF THE ACT AND THE SEZ ITSELF PROVIDES THAT THE LEASE RENTAL INCOME GENERATED IN THE HANDS OF A DEVELOPER ENGAGE D IN SETTING UP OF THE SEZ, IS THE PROFITS AND GAINS DERIVED FROM T HE BUSINESS OF DEVELOPING A SEZ. 14. THE COORDINATE BENCH OF ITAT CHENNAI IN THE CAS E OF COIMBATORE HITECH INFRASTRUCTURE (P) LTD. VS. ADDL. CIT, RANGE-4, COIMBATORE IN IT APPEAL NO.937 (MDS) OF 2012 HAS HE LD AS UNDER :- 'THE ASSESSEE COMPANY IS A COMPANY ENGAGED IN THE B USINESS OF DEVELOPING SECTOR SPECIFIC SEZ FOR INFORMATION TECH NOLOGY AND INFORMATION TECHNOLOGY ENABLED SERVICES AT COIMBATO RE. THERE IS NO DISPUTE REGARDING THE CHARACTER OF THE BUSINESS CAR RIED ON BY THE ASSESSEE COMPANY. (PARA 38).' 'HAVING CONFIRMED THE ABOVE FACT, IT IS NECESSARY T O EXAMINE WHAT WOULD BE THE NATURE OF INCOME EARNED BY THE ASSESSE E. SEC. 80-IAB PROVIDES THAT WHERE THE GROSS TOTAL INCOME OF AN AS SESSEE, BEING A DEVELOPER INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING 5 OR AN ENTERPRISE FROM ANY BUSINESS OF DEVELOPING A SEZ, THERE SHALL BE ALLOWED ONE HUNDRED PERCENT OF THE PROFITS AND G AINS DERIVED FROM SUCH BUSINESS AS DEDUCTION. IT IS CLEAR FROM T HE FACTS OF THE CASE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BU SINESS OF DEVELOPING A SEZ. THE ACTIVITY CARRIED ON BY THE AS SESSEE IS DEVELOPING A SEZ. IT AMOUNTS TO THE BUSINESS OF DEV ELOPING A SEZ EXPLAINED IN SEC. 80-IAB.(PARA 39).' 'WHAT IS CONTEMPLATED IN SECTION 80-IAB OF THE INCO ME TAX ACT, 1961 IS THE BUSINESS OF DEVELOPING A SEZ. IT IS NOT THE BUSINESS OF RUNNING ELIGIBLE UNITS APPROVED BY THE COMPETENT AUTHORITY. IN THE PRESENT CASE, ASSESSEE IS THE DEVELOPER. IT NEED NOT DO ANY OTHER BUSINESS TO CLAIM THE BENEFIT OF DEDUCTION UNDER SEC. 80-IAB. .. ASSESSEEIS NOT REQUIRED TO RUN OPERATING UNITS IN THE SECTOR OF INFORMATION TECHNOLOGY LIKE M/S ROBERT BOSCH, M/S C OGNIZANT TECHNOLOGY, KGISL IT PARKS ETC. TO WHOM THE ASSESSE E HAS LEASED OUT DEVELOPED AREA WITHIN THE SEZ.(PARA 40). 15. SIMILAR VIEW WAS TAKEN BY THE COORDINATE BENCH ITAT CHENNAI IN THE CASE OF LULU TECH PARK PVT. LTD. IN ITA NO.593/MDS/2016. THE RELEVANT FINDINGS OF THE COOR DINATE BENCH READ AS UNDER :- 6 7 16. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE DECISIONS OF THE COORDINATE BENCH (SUPRA) WE DO NOT FIND ANY REA SON TO INTERFERE 8 WITH THE FINDINGS OF THE CIT(A) APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSED. 17. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.01.2021. SD/- SD/- (SUCHITRA KAMBLE) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOU NTANT MEMBER *NEHA* DATE:-25.01.2021 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGI STRAR ITAT NEW DELHI DATE OF DICTATION 21.012021 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 25.01.2021 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 25.01.2021 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS 25.01.2021 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 25.01.2021 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 25.01.2021 DA TE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 25.01.2021 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 25.01.2021 DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER