M/s Salarpuria Soft Zone, Kolkata V. J.C.I.T Rg - 56,kolkata, Kolkata

ITA 666/KOL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5076 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 26-03-2013
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: SIDHARTH JHAJAHRIA
• Keywords: Business income; Depreciation; Business expenditure; Benefit of exemption; Commercial expediency
• Section: 143(3); 80IB; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI WASIM AHMED, AM] I.T.A NO.665 & 666/KOL/2013 ASSESSMENT YEAR: 2008-09 & 2009-10 M/S SALARPURIA SOFTZONE VS. JOINT COMMISSIONE R OF INCOME-TAX, (PAN: ABEFS2661J) RANGE-56, KOLKATA. ( APPELLANT ) ( RESPONDENT ) & I.T.A. NO.581 & 813/KOL/2013 ASSESSMENT YEAR: 2008-09 & 2009-10 JOINT COMMISSIONER OF INCOME-TAX, VS. M/S SALARPUR IA SOFTZONE RANGE-56, KOLKATA. (PAN: ABEFS2661J) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 10.12.2015 DATE OF PRONOUNCEMENT: 29.02.2016 FOR THE ASSESSEE: SHRI SIDHARTH JHAJAHRIA, CA FOR THE DEPARTMENT: SHRI: NIRAJ KUMAR, CIT-DR ORDER PER SHRI MAHAVIR SINGH, JM: THESE FOUR CROSS APPEALS BY ASSESSEE AND BY REVENUE ARE ARISING OUT OF DIFFERENT ORDERS OF CIT(A)-XXXVI, KOLKATA VIDE APPEAL NOS. 368 & 628/CI T(A)-XXXVI/KOL/10-11, BOTH OF EVEN DATE 21.01.2011. ASSESSMENTS WERE FRAMED BY JCIT, R ANGE-56, KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) FOR ASSESSMENT YEAR 2008-09 & 2009-10 VIDE HIS ORDERS OF DIFFERENT DATE 31.12.201 0 & 30.12.2011. 2. THE FIRST COMMON ISSUE, IN THESE TWO APPEALS OF ASSESSEE IN ITA NO. 665 & 666/KOL/2013 FOR THE AYS 2008-09 & 2009-10, IS AS REGARDS TO THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF DEDUCTION U/S 80IA(4)(III) OF THE A CT WITH RESPECT TO NEW INDUSTRIAL UNDERTAKING WITH DEVELOPMENT OF INDUSTRIAL PARK. FOR THIS ASSES SEE HAS RAISED IDENTICALLY WORDED GROUNDS IN BOTH THE YEARS AND HENCE, WE WILL TAKE UP THE FACTS AND ISSUE FROM LEAD ASSESSMENT YEAR 2008-09, WHEREIN THE GROUNDS RAISED ARE AS UNDER:- 1. FOR THAT IN VIEW OF THE FACT AND CIRCUMSTANCES THE AO IS WHOLLY UNJUSTIFIED IN NOT ALLOWING BENEFIT OF EXEMPTION U/S 80IA (4)(III) TO YOUR APPELLANT AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE CIT(A) IS WHOLLY UNJUSTIFIED IN CONFIRMING THE ACTION OF THE AO. 2 ITA NOS.665, 666,581 &813 /KOL/20 13 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 2. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES AND THE NEW INDUSTRIAL UNDERTAKING OF YOUR PETITIONER IN CONNECTION WITH DEVELOPMENT OF A N INDUSTRIAL PARK HAVING BEEN DULY APPROVED BY MINISTRY OF COMMERCE AND INDUSTRY BEING THE AUTH ORISED PERSON UNDER THE INCOME TAX ACT TO APPROVE THE SAME FOR THE PURPOSE OF EXEMPTION U/S 8 0IA(4)(III) UNDER THE THEN EXISTING SCHEME, AND SUCH MINISTRY OF COMMERCE AND INDUSTRY HAVING D ULY NOTIFIED THE APPROVAL OF SUCH INDUSTRIAL UNDERTAKING OF YOUR APPELLANT, THE SAME WAS FULLY E LIGIBLE FOR EXEMPTION U/S 80IA (4)(III) AND IN VIEW OF THE FACTS AND CIRCUMSTANCES THE AO IS WHOLL Y UNJUSTIFIED IN NOT ALLOWING THE EXEMPTION AND CIT(A) IS WHOLLY UNJUSTIFIED IN CONFIRMING THE SAID ACTION OF THE AO IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES AND YOUR PETITIONER BEING ELIG IBLE FOR EXEMPTION U/S 80IA(4)(III) IT MAY KINDLY BE HELD ACCORDINGLY. 3. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES AND THE PETITION FOR APPROVAL OF SUCH INDUSTRIAL UNDERTAKING HAVING MADE TO MINISTRY OF C OMMERCE AND INDUSTRY WHO WERE AUTHORISED TO APPROVE THE SAME DURING THE RELEVANT PERIOD AND THE SAME HAVING BEEN ALSO APPROVED AND NOTIFIED BY MINISTRY OF COMMERCE AND INDUSTRY, THE CBDT WAS BOUND TO NOTIFY THE SAME FOR ELIGIBILITY FOR SUCH EXEMPTION U/S 80IA(4)(III) AS HELD BY DIFFERENT JUDICIAL AUTHORITIES AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES IT MAY K INDLY BE HELD ACCORDINGLY. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM CONSISTS OF FOUR PARTNERS I.E. ALL FOUR COMPANIES. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF SPECIAL ECONOMIC ZONE I.E. SOFTWARE PARK. THE AO DURING TH E COURSE OF ASSESSMENT PROCEEDINGS ISSUED SHOWN CAUSE NOTICE REQUIRING THE FOLLOWING INFORMAT ION RESPECT TO THIS ISSUE: 2. IF THE ASSESSEE HAS CLAIMED BUSINESS INCOME, T HEN, WHETHER THE ASSESSEE WILL BE ENTITLED/ELIGIBLE TO CLAIM DEDUCTION U/S. 80IA AND WHETHER IT FULFILS THE CONDITIONS LAID DOWN BY GOVERNMENT OF INDIA FOR CREATION OF SEZ INTER ALIA INCLUDES: (A) WHETHER THE ASSESSEE HAS CONSTRUCTED THE SOFTWARE P ARK WITHIN TIME. (B) WHETHER THE ASSESSEE HAS COMMENCED THE BUSINESS OF THE SOFTWARE PARK WITHIN ONE YEAR. (C) WHETHER OTHER CONDITIONS LIKE THE NUMBER OF UNITS S PECIFIED WERE CONSTRUCTED BY THE ASSESSEE. (3) WHETHER THE ASSESSEE HAS CORRECTLY SHOWN THE BU SINESS INCOME DURING THE YEAR AND THE CLAIM OF DEDUCTION U/S. 80IA HAS CORRECTLY BEEN CLAIMED. ACCORDING TO AO, THE ASSESSEE IS NOT ELIGIBLE FOR D EDUCTION U/S. 80IA(4)(III) OF THE ACT ON THE INCOME EARNED FROM SOFTWARE PARK MAINLY ON THE FOLL OWING GROUNDS: I) COMPLETION CERTIFICATE OF THE BUILDING OF BANGA LORE DEVELOPMENT AUTHORITY WAS NOT FURNISHED. II) THE APPELLANT HAS CONSTRUCTED 15 UNITS INSTEAD OF 3 UNITS APPROVED BY THE MINISTRY OF COMMERCE WHEN THE APPELLANT HIMSELF HAS ADMITTED IN IPSII BEFORE THE APPROPRIATE AUTHORITY AS ON 1 ST JULY, 2007. 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT( A), WHO ALSO CONFIRMED THE ACTION OF AO BY OBSERVING AS UNDER: HOWEVER, THE FACT REMAINS THAT THE APPELLANT HAS NOT BEEN ABLE TO PRODUCE THE NOTIFICATION ISSUED BY CBDT WHICH IS BEING ISSUED BY THE BOARD A ND WHICH ENTITLES THE APPELLANT FOR DEDUCTION U/S 80IA(4)(III). IT REMAINS TO FACT THAT THE SAID UNIT HAS BEEN DEVELOPED AS INDUSTRIAL PARK AS APPROVED BY MINISTRY OF COMMERCE VIDE ITS L ETTER NO. 15/23/ 2006/ IP & ID DT 25.7.2006. HOWEVER, THE APPELLANT HAS NOT BEEN ABLE TO FURNISH THE EVIDENCE OF COMPLETION OF SAID UNIT BEFORE THE PRESCRIBED DATE I.E. 31.3.2007 . INDEED, THE COPY OF CERTIFICATE AS HAVING BEEN OBTAINED FROM THE BANGALORE DEVELOPMENT AUTHORITY S HOWS THE DATE OF COMPLETION IS 23.6.2007 ONLY. HENCE, THE APPELLANT CANNOT UNDER ANY CIRCUMS TANCES BE ALLOWED DEDUCTION U/S. 80IA(4)(III). 3 ITA NOS.665, 666,581 &813 /KOL/20 13 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 AS REGARDS THE CONTENTION OF THE APPELLANT REGARDIN G THE POWER AND ARCHITECTURE'S CERTIFICATE THE SAME CANNOT BE TREATED AS CONCLUSIVE SINCE THE CERT IFICATE ISSUED BY BANGALORE DEVELOPMENT AUTHORITY I.E. LOCAL AUTHORITY IN THIS RESPECT CAN ONLY BE CONSIDERED AS SACROSANCT. THE APPELLANT CLAIMED THAT THE APPLICATION IN THIS REGARD WAS MAD E EARLIER CANNOT BE ALSO CONSIDERED SINCE THE APPELLANT FAILED TO FURNISH ANY COPY OF SUCH APPLIC ATION AND EVEN OTHERWISE ONLY FROM THE DATE OF CERTIFICATE BEING GRANTED BY BANGALORE DEVELOPME NT AUTHORITY, THE BUILDING IS CONSIDERED AS HABITABLE SINCE THE CERTIFICATE AS ISSUED BY BANGAL ORE DEVELOPMENT AUTHORITY IS 23.6.2007 EVEN THOUGH INCOME FROM ACTIVITY OF DEVELOPING INDUSTRIA L PARK STARTED FROM FEBRUARY, 2007. IN MY OPINION THE BUILDING CANNOT HELD TO BE COMPLETED BE FORE THE PRESCRIBED DATE I.E. 31.3.2007. HENCE, THE APPELLANT HAVING NOT COMPLETED THE UNITS WITHIN THE PRESCRIBED PERIOD THE APPELLANT IS NOT ENTITLED TO SUCH DEDUCTION U/S 80IA(4)(III) AND HENCE THIS GROUND OF THE APPELLANT IS DISCUSSED. AGGRIEVED, NOW ASSESSEE IS IN SECOND APPEAL BEFORE TRIBUNAL. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE GONE THROUGH CASE RECORDS INCLUDING ASSESSE ES PAPER BOOKS. THE ASSESSEE HAS DEVELOPED AND IS OPERATING AN INDUSTRIAL PARK AT BA NGALORE, WHICH WAS APPROVED BY D.I.P.P. (MINISTRY OF COMMERCE & INDUSTRY) VIDE APPROVAL DAT ED 25.7.06. THIS APPROVAL IS FILED IN ASSESSEES PAPER BOOK PAGE 46 VOLUME II. AS PER A PPROVAL, COMMENCEMENT OF INDUSTRIAL PARK WAS TO HAPPEN BEFORE 31.3.06 BUT THE SAME WAS DELAY ED BY MORE THAN ONE YEAR OR LESS FROM 31.3.2006, HENCE, FRESH APPROVAL WAS REQUIRED. ACCO RDINGLY, SINCE THE ASSESSEE WAS COVERED UNDER NON AUTOMATIC ROUTE OF INDUSTRIAL PARK SCHEME 2002, IT FILED IPS-II DT. 01.01.08 AS ON 01.07.07 GIVEN IN ASSESSEES PAPER BOOK PAGE147 VOL UME II, WHEREIN THE AREA OF INDUSTRIAL PARK WAS ENHANCED AND NUMBERS OF UNIT WERE ALSO INCREASE D FROM 3 TO 15 FOR WHICH APPROVAL WAS ALSO ISSUED ON 16.03.09 ENCLOSED AT ASSESSEES PAPER BOO K PAGE17 VOL-II. THE ASSESSEE COMPLETED THE PROJECT IN DECEMBER 2006 I.E. WITHIN ONE YEAR FROM 31.3.2006 AND FOR WHICH A PROVISIONAL COMPLETION CERTIFICATE DATED 29.12.06 AND FINAL COM PLETION CERTIFICATE DATED 16.01.07 WHICH IS GIVEN AT ASSESSEES PAPER BOOK PAGE 417,VOL-II. THE ASSESSEE ALSO SUBMITTED APPLICATION TO BANGALORE DEVELOPMENT AUTHORITY ON 29.12.06. FURTHE R SINCE 3 LESSEES WERE GIVEN SPACE IN THE SAID INDUSTRIAL PARK MUCH BEFORE 31.03.07, HENCE, I T CANNOT BE SAID THAT THE INDUSTRIAL PARK HAD NOT COMMENCED BEFORE 31.03.07. MORE SO, SINCE APPLI CATION FOR COMPLETION CERTIFICATE WAS MADE ON 29.12.06, HENCE, COMPLETION OF SUCH INDUSTRIAL P ARK HAS TO BE RECKONED FROM THE DATE OF APPLICATION I.E. 29.12.06 AND HENCE THE INDUSTRIAL PARK HAS TO BE HELD AS COMPLETED MUCH BEFORE 31.3.2007. AS REGARDS AO'S CONTENTION OF CBDT HAVIN G NOT NOTIFIED IT AS ELIGIBLE FOR DEDUCTION U/S. 80IA(4)(III), A NUMBER OF COURTS HAVE ALREADY HELD THAT ONCE APPROVAL IS GRANTED BY MINISTRY 4 ITA NOS.665, 666,581 &813 /KOL/20 13 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 OF COMMERCE, NOTIFICATION BY CBDT IS MERE FORMALITY AND CANNOT BE DETERMINANT FOR ELIGIBILITY FOR DEDUCTION U/S. 80IA(4)(III), WHICH WE WILL DISC USS IN THE LATER PART OF THIS ORDER. FURTHER, EVEN IF THERE IS A VARIATION IN THE PROJECT THE APPROVAL SO GRANTED BY MINISTRY OF COMMERCE AND INDUSTRY HAS NOT BEEN WITHDRAWN TILL DATE. 6. BUT CIT(A) CONFIRMED THE ACTION OF AO DENYING SU CH BENEFIT ONLY ON THE GROUND THAT ASSESSEE HAD NOT BEEN NOTIFIED BY CBDT AND FURTHER THAT THE ASSESSEE HAS NOT COMPLETED THE INDUSTRIAL PARK BEFORE 31.03.2007 BUT FOR THAT WE H AVE TO SEE THE DATES, WHICH ARE UNDER: (I) RELEVANT DATES: - A) APPLICATION FOR APPROVAL OF INDUSTRIAL PARK WAS FILED BEFORE ON 11.02.2006 DEPARTMENT OF INDUSTRIAL POLICY & PROMOTION, MINIST RY OF COMMERCE & INDUSTRY, NEW DELHI, (WHICH WAS EMPOWERE D COMMITTEE) DURING RELEVANT TIME FOR APPROVAL OF SUC H PARK \ UNDER NON-AUTOMATIC ROUTE. B) THE AFORESAID APPLICATION WAS DULY REGISTERED WI THIN ON 20.02.2006 EMPOWERED COMMITTEE ON 20TH FEBRUARY, 2006 UNDER REGISTRATION NO. 23/SIALIP/2006 DT. 20.02.2006. SUBSEQUENTLY, APPROVAL FOR DEVELOPING INDUSTRIAL PA RK IN TERMS OF INDUSTRIAL PARK SCHEME WAS GIVEN BY THE EMPOWERED COMMITTEE ON 25.07.2006. FURTHER PARTICULAR DATE OF APPLICATION DATE OF RECEIPT D) E) F) G) H) I) J) COMMENCEMENT CERTIFICATE FROM BANGALORE DEVELOPMEN T AUTHORITY NO OBJECTION CERTIFICATE FROM BANGALORE ELECTRICITY SUPPLY CO. LTD. PLAN SANCTION FROM BANGALORE DEVELOPMENT AUTHORITY COMPLETION CERTIFICATE FROM THE ARCHITECT NO OBJECTION CERTIFICATE FROM KARNATAKA STATE EMERG ENCY SERVICES OCCUPANCY CERTIFICATE FROM BANGALORE DEVELOPMENT AUTHORITY FIRE NOC FROM KARNATAKA STATE EMERGENCY SERVICES - - 26.11.2005 - 28.12.2006 29.12.2006 28.12.2006 21.10.2004 10.01.2005 21.12.2005 16.01.2007 24.04.2007 23.06.2007 24.4.2007 THE COMPANY HAD ALREADY ENTERED INTO DEEDS FOR LEAS ES WITH SOME OF ITS CLIENTS FOR LEASING PREMISES WITHIN THE INDUSTRIAL PARK. THE DATE OF S UCH LEASE DEEDS AND THE DATE BY WHICH THE PREMISES WERE TO BE HANDED OVER (AS MENTIONED IN TH E DEED) ARE TABULATED BELOW: NAME OF THE CLIENT DATE OF LEASE DEED DATE BY WHICH OCCUPATION/ 5 ITA NOS.665, 666,581 &813 /KOL/20 13 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 HANDING OVER WAS SCHEDULED N.I. SYSTEM (INDIA) PVT. LTD. 25.09.2006 1.12.2006 CARRIER NET TECHNOLOGIES (P) LTD. 25.10.2006 15.11. 2006 TIMKEN ENGINEERING & RESEARCH INDIA (P) LTD. 01.12 .2006 10.02.2007 7. IN VIEW OF THE ABOVE FACTUAL POSITION, WE ARE O F THE VIEW THAT THE ENTIRE INDUSTRIAL PARK WAS COMPLETED AND ALL THE UNITS WERE LOCATED IN THE INDUSTRIAL PARK MUCH BEFORE EXPIRY OF ONE YEAR FROM THE DATE OF COMMENCEMENT AS MENTIONED IN THE APPLICATION AND WHICH WAS DULY APPROVED BY THE EMPOWERED COMMITTEE. THE ASSESSEE HAD ALREADY ENCLOSED A COPY OF THE APPROVAL DATED 25.07.2006 AT ASSESSEES PAPER BOOK PAGE 52, VOL-I. WE ARE REPRODUCING THE RELEVANT PARA 5(2I) OF THE SCHEME WHICH READS AS UN DER: IN CASE THE COMMENCEMENT OF THE INDUSTRIAL PARK IS DELAYED BY MORE THAN ONE YEAR FROM THE DATE AS INDICATE IN PARA 4(XI) OF THE APPROVAL LETTER, F RESH APPROVAL SHALL BE REQUIRED UNDER THE INDUSTRIAL PARK SCHEME, 2002, FOR AVAILING BENEFITS UNDER SUB-SECTION 4(III) OF SECTION 80IA OF THE INCOME TAX ACT, 1961. FURTHER, THE AO IN HIS REMAND REPORT, GIVEN AT PAGE 86 OF ASSESSEES PAPER BOOK VOLUME - ILL HAD MERELY CONTENDED THAT - (A) THE DATE OF LEASE AGREEMENTS PRIOR TO 31.03.200 7 CANNOT BE CONSTRUED AS TO THE ACTUAL DATE OF COMMENCEMENT OF LEASE RENTAL AND FOR WHICH HE ALSO SUBMITTED THE MAGNITUDE OF ELECTRICITY BILL FROM MARCH 2007 TO TILL MARCH 2008. (B) FURTHER, HE CONTENDED THAT THE ARCHITECT'S COMP LETION CERTIFICATE WAS DT. 16.01.2007 WHEREAS THE ASSESSEE HAD APPLIED FOR COMPLETION CERTIFICATE BEFORE THE BANGALORE DEVELOPMENT AUTHORITY VIDE LETTER DATED 29.12.2006. (C) THE ASSESSEE HAD INCREASED THE NUMBER OF INDUST RIAL UNITS IN THE PROJECT FROM 3 UNITS IN THE ORIGINAL PROPOSAL TO 15 UNITS. (D) IN VIEW OF THE DEVIATION FROM THE ORIGINAL PROP OSAL AND THE DEVIATION NOT HAVING BEEN ACCEPTED IN CBDT'S OFFICE MEMORANDUM, DISALLOWANCE U/S 80IA(4)(III) WAS MADE. WE FIND FROM THE FACTS THAT DATE OF LEASE AGREEMENT WITH THE CLIENTS TO LEASE OUT SPACE IN 'SALARPURIA SOFTZONE' SHOWS AND PROVES THAT THE AGR EEMENT HAVE BEEN ENTERED WITH THE PARTIES FOR A DEFINITE AREA LOCATED IN THE INDUSTRIAL PARK. THE ASSESSEE HAS ENTERED AGREEMENT WITH THE CLIENTS BEFORE 31.03.2007 AND THE DATE OF LEASE DEE D ONLY INDICATES THE DATE OF REGISTRATION OF AN AGREEMENT AND IS DONE ONLY AT THE BEHEST OF CLIENT' S REQUIREMENT. THE CONTENTION TAKEN BY THE AO IS THAT THE DATE OF LEASE DEEDS ARE DIFFERENT FR OM THE AGREEMENT IS NOT CORRECT. AS PER THE APPROVAL LETTER DATED 25TH JULY 2006 MINIMUM 3 NUMB ERS OF UNITS ARE REQUIRED TO BE LOCATED IN 6 ITA NOS.665, 666,581 &813 /KOL/20 13 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 THE INDUSTRIAL PARK. THE EXPECTED DATE OF COMMENCEM ENT AS MENTIONED IN THE IPS-I IS 28.03.2006. AS PER THE APPROVAL LETTER TERMS & COND ITIONS MENTIONED IN THE CLAUSE NO. 5(II) READS AS UNDER: 'IF THE REQUIRED NO OF UNITS NEEDS TO BE LOCATED AR E WITHIN ONE YEAR FROM THE DATE OF EXPECTED DATE OF COMMENCEMENT, NO FRESH APPROVALS ARE REQUIRED TO BE TAKEN UNDER THE NON-AUTOMATIC ROUTE'. FURTHER, UNDERSTANDING WITH CAREER NET TECHNOLOGIES (P) LTD IS BASED ON CERTAIN TERMS & CONDITIONS AS MENTIONED IN THE LEASE AGREEMENT AND ON FULFILLING THOSE TERMS & CONDITIONS LEASE RENTAL STARTED. SO THE CONTENTION OF THE AUTHORITY THAT THE INDUSTRIAL PARK WAS NOT READY AND IS UNDER CONSTRUCTION IS NOT TRUE. THE COMPLETION CERT IFICATE OF ALL THE ELECTRICAL DRAWING AND THE INFRASTRUCTURE WERE COMPLETED ON 20.03.2007 INCLUDI NG THE TRANSFORMERS AND OTHER ELECTRICAL EQUIPMENTS AND THE OFFICIAL MEMORANDUM WAS ISSUED B Y THE CHIEF ELECTRICAL INSPECTOR TO GOVT. OF KARNATAKA, BANGALORE DATED 20.03.2007, WHICH PRO VES THAT ALL THE EQUIPMENTS AND ELECTRICAL WORKS WERE COMPLETED BEFORE 31.03.2007. THE AMOUNT OF THE ELECTRICAL BILLS IS ALWAYS BASED ON THE CONSUMPTION MADE BY THE CLIENTS. ASSESSEE HAS N O CONTROL OVER THE CONSUMPTION. THE INFRASTRUCTURE FOR THE ELECTRICAL CONNECTION IN THE INDUSTRIAL PARK WAS READY ON 20.03.2007. THE DATE OF OCCUPATION CERTIFICATE ISSUED BY THE BANGAL ORE DEVELOPMENT AUTHORITY ON 23.06.2007 FOR WHICH THE ASSESSE HAD BANGALORE DEVELOPMENT AUTHORI TY ON 29.12.2006 WITH A PROVISIONAL COMPLETION CERTIFICATE ISSUED BY THE ARCHITECT. IT IS NOT WITHIN THE CONTROL OF THE ASSESSEE COMPANY TO OBTAIN COMPLETION CERTIFICATE FROM BANGA LORE DEVELOPMENT AUTHORITY AND THE CONTENTION OF THE ASSESSING AUTHORITY IS NOT CORREC T. THE PROVISIONAL COMPLETION CERTIFICATE ISSUED BY M/S VENKATARAMANAN ASSOCIATES DATED 26.12.2006 W AS SUBMITTED ALONG WITH THE APPLICATION MADE TO BANGALORE DEVELOPMENT AUTHORITY FOR COMPLET ION CERTIFICATE ON 29.12.2006. SUBSEQUENTLY ANOTHER INSPECTION WAS DONE BY 10.01.2 007 AND ACCORDINGLY COMPLETION CERTIFICATE WAS ISSUED ON 16.01.2007 AND THE SAME WAS SUBMITTED TO BANGALORE DEVELOPMENT AUTHORITY. THE COPY OF THE PROVISIONAL COMPLETION CERTIFICATE DATED 26.12.2006 HAS BEEN FILED BEFORE AO AND HIS CONTENTION OF MAKE - BELIEVE IS ONLY TO CRE ATE UNNECESSARY DOUBT. THE OBSERVATION MADE BY THE AO ABOUT THE DETAILS OF THE IPS-II AS ON 01. 07.2007 FILED ON 19.07.2008 AND IPS-II AS ON 01.07.2008 SHOULD BE READ AS 01.01.2008 FILED ON 19 .07.2008. SINCE ALL OTHER FACTS REMAINS THE SAME EXCEPT THAT THE NUMBER OF UNITS LEASE OUT ARE DIFFERENT & HAVE BEEN MENTIONED CORRECTLY. THE CONTENTION OF THE AO THAT THE FRESH APPROVAL WA S REQUIRED UNDER THE NON-AUTOMATIC ROUTE FOR MORE THAN THE MINIMUM NUMBER OF UNITS REQUIRED TO B E ESTABLISHED IN THE INDUSTRIAL PARK IS NOT CORRECT BECAUSE THE APPROVAL WAS FOR MINIMUM NUMBER OF UNITS AND THERE WAS NO RESTRICTION 7 ITA NOS.665, 666,581 &813 /KOL/20 13 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 IMPOSED FOR INCREASING THE NUMBER OF UNITS AND HENC E NO FRESH APPROVAL IS REQUIRED UNDER THE CURRENT SCENARIO. FURTHER, ASSESSEE SENT ALL THE DE TAILS TO CBDT FOR NOTIFICATION ON THE BASIS OF THE FIRST APPROVAL AS WELL AS AFTER RECEIPT OF THE RENEWED APPROVAL. THE NEW NOTIFICATION AND THE INDUSTRIAL POLICY 2008 HAS COME SUBSEQUENTLY. ASSES SEE HAS GIVEN A REPRESENTATION TO THE CHAIRMAN OF EMPOWERED COMMITTEE & THE DIRECTOR OF C BDT FOR GIVING AN OPPORTUNITY TO ASSESSEE. THE EMPOWERED COMMITTEE HAS STILL NOT WIT HDRAWN THE APPROVAL GRANTED AND HENCE ITS VALIDITY CANNOT BE DISPUTED. AS REGARDS THE APPROVA L ISSUED BY THE DIPP, MINISTRY OF COMMERCE AND INDUSTRY, WE ARE OF THE VIEW THAT THE SAID APPR OVAL WAS FOR NON-AUTOMATIC ROUTE AND THE SAID APPROVAL SO GRANTED BY THE MINISTRY OF COMMERCE AND INDUSTRY HAS NOT BEEN CANCELLED TILL DATE. FURTHER, SUCH CHANGE HAS BEEN DULY INTIMATED VIDE IPS- II DT. 01.01.2008 AND ON CONSIDERATION OF THE SAME THE APPROVAL DATED16.03.2009 HAS BEEN G RANTED AND FURTHER THE SAID APPROVAL REMAINS IN FORCE TILL DATE AND HAS NOT BEEN WITHDRA WN. 8. WE FIND THAT IN SIMILAR FACTS AND CIRCUMSTANCES HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. ITTINA PROPERTIES (P) LTD. ITA NO.556 OF 2013 AND 105 OF 2014 DATED 15.07.2014 HELD IN RESPECT TO CONTROVERSY REGARDING THE DATE O N WHICH THE PROJECT WAS COMPLETED TO BE ELIGIBLE FOR THE BENEFIT OF SECTION 80IB OF THE ACT . HONBLE HIGH COURT HELD AS UNDER: 6. ONE OF THE PROJECT HAS BEEN SANCTIONED SUBSEQUEN T TO THE ACT. THE POINT OF CONTROVERSY IS REGARDING THE DATE ON WHICH THE PROJ ECT WAS COMPLETED TO BE ELIGIBLE FOR THE BENEFIT OF THE SAID PROVISION. THE REVENUE CONT ENDS, THE COMPLETION CERTIFICATE ISSUED BY THE VILLAGE PANCHAYAT IS NOT VALID AND TH EREFORE THE ASSESSEE IS NOT ENTITLED TO THE SAID BENEFIT. ADMITTEDLY THE PLAN IS SANCTIONED BY THE BDA. THE BDA HAS NOT ISSUED ANY COMPLETION CERTIFICATE. THE REASON BEING, IN TH E BDA ACT OR THE KARNATAKA MUNICIPAL CORPORATION ACT, THERE IS NO PROVISION FO R ISSUE OF COMPLETION CERTIFICATE. THE PROVISION IN THE KARNATAKA MUNICIPAL CORPORATION AC T IS FOR ISSUANCE OF OCCUPANCY CERTIFICATE. WHEN THE STATUTE DOES NOT PROVIDE FOR ISSUE OF A COMPLETION CERTIFICATE, IF THE AUTHORITIES WERE INSISTING ON SUCH CERTIFICATE, THE ASSESSEE HAS GONE TO THE VILLAGE PANCHAYAT WITHIN WHOSE LIMITS THE PROPERTY IS SITUA TED AND HAS OBTAINED THE COMPLETION CERTIFICATE AND HAS PRODUCED THE SAME FO R AVAILING THE BENEFIT. WHETHER THAT CERTIFICATE WOULD SATISFY THE REQUIREMENT OF LAW NE ED NOT BE GONE INTO IN THESE PROCEEDINGS BECAUSE, WHEN THE STATUTE DOES NOT PROV IDE FOR ISSUE OF SUCH A CERTIFICATE, IF THE REVENUE INSISTS ON SUCH CERTIFICATE, THE ASSESS EE WOULD BE LEFT WITH NO OPTION EXCEPT TO GET SUCH CERTIFICATE WITH SOME AUTHORITY WHICH W OULD BE CALLED AS A LOCAL AUTHORITY. IN THE FACTS OF THIS CASE, WE ARE OF THE VIEW THAT THE TRIBUNAL HAS RECORDED A FINDING THAT THE BUILDING WAS COMPLETED WITHIN THE STIPULATED PE RIOD AND THEREFORE DE HORS THIS CERTIFICATE ISSUED BY THE PANCHAYAT AFTER THE BUILD ING IS COMPLETED, THE ASSESSEE IS ENTITLED TO THE SAID BENEFIT. IN THAT VIEW OF THE M ATTER, WE DO NOT SEE ANY MERIT IN THESE APPEALS. ACCORDINGLY THE APPEALS ARE DISMISSED. 9. FURTHER, EXACTLY ON THE SAME ISSUE HONBLE BOMBA Y HIGH COURT IN THE CASE OF CIT VS. ACKRUTI CITY LTD. (2013) 214 TAXMAN 398 (BOM) HAS H ELD THAT ONCE INDUSTRIAL PARK WAS APPROVED BY MINISTRY OF COMMERCE & INDUSTRY, CBDT H AS TO SUO MOTTO ISSUE NOTIFICATION. ANY 8 ITA NOS.665, 666,581 &813 /KOL/20 13 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 DELAY ON THE PART OF THE CBDT IN ISSUING NOTIFICATI ON WOULD NOT WARRANT ASSESSEE BEING DENIED BENEFIT OF DEDUCTION U/S. 80IA(4)(III) OF THE ACT. HONBLE HIGH COURT HAS DECIDED THIS ISSUE AS UNDER: 3.THE CIT(A) AS WELL AS THE TRIBUNAL HAVE HELD THAT THE MINISTRY OF COMMERCE AND INDUSTRY HAD FINALLY BY LETTER DATED 31ST DECEMBER, 2004 APPROVED THE INDUSTRIAL PARK AND A COPY OF THE SAME WAS FORWARDED TO THE CBDT. IN TERMS OF RULE 18C(4) OF THE RULES, ONCE THE INDUSRRIAL PARK IS APPROVED BY THE MINISTRY OF COMMERICE AND I NDUSTRY, THE CBDT HAS TO SUOMOTTO ISSUE THE NOTIFICATION. THE TRIBUNAL, ON EXAMINATION OF ALL F ACTS CONCLUDED THAT ALL THE REQUISITE CONDITIONS FOR CLAIMING BENEFIT UNDER SECTION 80IA(4)(III) OF THE ACT HAS BEEN COMPLIED WITH BY THE RESPONDENT ASSESSEE DURING THE ASSESSMENT YEAR IN QUESTION. FU RTHER, THERE IS NO REASON TO HOLD THE BENEFIT UNDER SECTION 80IA(4)(III) OF THE ACT IS AVAILABLE ONLY PROSPECTIVELY FROM THE DATE OF THE ISSUE OF NOTIFICATION BY THE CBDT. IN THESE CIRCUMSTANCES, A S THE DECISION OF THE TRIBUNAL IS BASED ON FINDING OF FACT AND MERE DELAY ON THE PART OF THE C ENTRAL BOARD OF DIRECT TAXES IN ISSUING THE NOTIFICATION WOULD NOT WARRANT THE RESPONDENT - ASS ESSEE BEING DENIED THE BENEFIT OF SECTION 80IA(4)(III). ' 10. SIMILARLY, HONBLE GUJARAT HIGH COURT IN THE CASE O F CREATIVE INFOCITY LTD. VS. UNDER SECRETARY [2012] 19 TAXMANN.COM 270 (GUJ.) ALSO HEL D THAT , ONCE INDUSTRIAL PARK WAS APPROVED BY MINISTRY OF COMMERCE & INDUSTRY, CBDT HAS TO SUO MOTTO ISSUE NOTIFICATION AND IF THERE IS DELAY ON THE PART OF THE CBDT IN ISSUING NOTIFICATI ON, IT WOULD NOT WARRANT ASSESSEE BEING DENIED BENEFIT OF DEDUCTION U/S. 80IA(4)(III) OF TH E ACT. HONBLE HIGH COURT FINALLY HELD AS UNDER: ONCE APPROVAL IS GIVEN BY THE COMMERCE MINISTRY TO THE PETITIONER IN TERMS OF SUB-RULE [2] OF RULE L8C, THE BOARD IS DUTY BOUND TO NOTIFY THE IND USTRIAL PARKS FOR BENEFITS UNDER SECTION 80-IA WITHOUT ANY FURTHER INVESTIGATION AS TO WHETHER THE PETITIONER HAS COMPLIED WITH THE TERMS AND CONDITIONS ENVISAGED IN THE SCHEME. SINCE THE POWER OF GRANT OF APPROVAL HAS BEEN CONFERRED UPON THE COMMERCE MINISTRY, IN THE ABSENCE OF ANY EXPRES S PROVISION IN THE RULES, IT SHOULD BE PRESUMED THAT THE AUTHORITY, WHICH HAS GIVEN APPROV AL, HAS THE POWER OF REVOCATION AND EXAMINATION OF COMPLIANCE OF THE CONDITIONS UPON WH ICH THE APPROVAL HAS BEEN ACCORDED. THEREFORE, IT IS THE DUTY OF THE COMMERCE MINISTRY TO DECIDE WHETHER AN INDUSTRIAL UNDERTAKING IS COMPLYING WITH THE CONDITIONS ENVISAGED IN THE SCHE ME AND IF THE UNDERTAKING FAILS TO COMPLY WITH THOSE CONDITIONS, IT IS THE COMMERCE MINISTRY ALONE , WHICH HAS THE RIGHT TO WITHDRAW THE BENEFIT GRANTED UNDER SUB-RULE [2J OF RULE 18C OF THE RULES . AS SOON AS THE APPROVAL UNDER SUB- RULE [2] OF RULE 18C IS GIVEN, IT IS OBLIGATORY ON THE PART OF THE CENTRAL BOARD OF DIRECT TAXES TO NOTIFY INDUSTRIAL PARKS IN TERMS OF SUB-RULE [4] OF RULE 1 8C.' 11. IN SIMILAR CIRCUMSTANCES HONBLE BOMBAY HIGH COURT IN THE CASE OF SILVER LAND DEVELOPERS (P) LTD. & ORS. VS. EMPOWERED COMMITTEE (2012) 343 ITR 0439 (BOM) HAS HELD THAT THE EMPOWERED COMMITTEE WAS NOT JUSTIFIED IN R EJECTING THE APPLICATION FOR NOTIFICATION OF APPROVED UNITS U/S. 80IA(4)(III) OF THE ACT UNDER T HE INDUSTRIAL PARK SCHEME OF 2002 ONLY ON THE GROUND THAT DEVELOPMENT OF INDUSTRIAL PART WAS COMP LETED BEYOND 31.03.2006. HONBLE BOMBAY HIGH COURT HELD AS UNDER: 9 ITA NOS.665, 666,581 &813 /KOL/20 13 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 21. WE FIND MERIT IN THE CONTENTION OF THE PETITION ERS THAT IF THE POSITION WHICH HAS BEEN ADOPTED BY THE EMPOWERED COMMITTEE WERE TO BE ACCEP TED, THAT WOULD RESULT IN VIRTUALLY DMT 34 WP744-11 DEFEATING THE SALUTARY PU BLIC PURPOSE WHICH UNDERLIES SECTION 80-IA (4) (III). NOTICE WOULD HAVE TO BE TAKEN OF THE FA CT THAT INFRASTRUCTURAL PROJECTS REQUIRE A CONSIDERABLE AMOUNT OF INVESTMENT AND A T IME LAG IS INVOLVED IN THE COMPLETION OF THE PROJECT. THE VIEW OF THE EMPOWERED COMMITTEE IS THAT PARA 9 OF THE SCHEME WOULD APPLY TO A DELAY IN A PROJECT BEYOND ONE YEAR BUT T HAT THE DELAYED DATE OF COMPLETION SHOULD NOT IN ANY EVENT FALL BEYOND 31 MARCH 2006. IF THIS WERE TO BE ACCEPTED AS THE CORRECT INTERPRETATION, THAT WILL DENUDE THE BENEFI T OF SECTION 80-IA TO PROJECT WHERE APPROVALS WERE GRANTED A FEW MONTHS BEFORE 31 MARCH 2006 AND THE COMPLETION DATE SPILLS OVER BEYOND THAT DATE. THERE IS NO INDICATIO N EITHER IN THE STATUTE OR IN THE SCHEME THAT PARLIAMENT OR ITS DELEGATE INTENDED TO DEPRIVE THE ASSESSEE OF THE BENEFIT OF SECTION 80IA(4)(III) . PARA 9 OF THE SCHEME WOULD WOULD IN FACT INDICATE AN INTENT NOT TO DEPRIVE THE BENEFIT OF SECTION 80IA (4) (III) SAVE AND EXCEPT THAT IF THE COMMENCEMENT OF THE PROJECT IS DELAYED BEYOND ONE YEAR A FRESH APPROVAL WOULD HAVE TO BE OBTAINED TO GET THE BENEFITS UNDER THE ACT. DMT 35 WP744-11 THE COURT CANNOT ALSO IGNORE THE FA CT THAT THE INTENT OF THE LEGISLATURE AND ITS EXECUTIVE IS NOT TO DISCONTINUE THE BENEFIT S AVAILABLE IN LAW. THE UNION GOVERNMENT HAS FURTHER LIBERALISED THE SCHEME IN 20 08 BY REQUIRING THAT THE UNDERTAKING SHALL BEGIN TO DEVELOP THE INDUSTRIAL P ARK BY A STIPULATED DATE. IN THIS CASE, APPROVALS HAD BEEN GRANTED ON 24 JULY 2006 WHICH WA S SEVERAL MONTHS AFTER 31 MARCH 2006 WHEN THE SCHEME OF 2002 WAS TO EXPIRE. 22. DURING THE COURSE OF THE HEARING, LEARNED COUNS EL APPEARING ON BEHALF OF THE REVENUE RELIED ON THE FACT THAT THOUGH THE PETITION ERS HAD INITIALLY STATED IN THEIR APPLICATION THAT THEY WOULD HAVE EIGHT UNITS IN THE INDUSTRIAL PARK, THIS FIGURE WAS SOUGHT TO BE REDUCED TO THREE. LEARNED COUNSEL SUBM ITTED THAT PARA 9(2) OF THE SCHEME SPEAKS THAT THE TAX BENEFITS UNDER THE ACT CAN BE A VAILED OF ONLY AFTER THE NUMBER OF UNITS INDICATED IN THE APPLICATION ARE LOCATED IN THE IND USTRIAL PARK. IN RESPONSE TO THIS, THE ATTENTION OF THE COURT WAS DRAWN BY THE LEARNED COU NSEL FOR THE PETITIONERS TO THE DMT 36 WP744-11 FACT THAT THE PETITIONERS HAD IN THEIR ORIGINAL APPLICATION STATED THAT THERE WOULD BE EIGHT UNITS; THAT THE PROPOSED AREA OF THE INDUSTRIAL PARK WOULD BE 8261-56 SQ. MT.; AND THAT THE PROPOSED ALLOCABLE AREA OF WOULD BE 6529.42 SQ. MT. BY THEIR FURTHER APPLICATION DATED 26 OCTOBER 2006 THE PETITIONERS S OUGHT TO ALTER THE NUMBER OF UNITS FROM EIGHT TO THREE. HOWEVER, THERE WAS NO CHANGE PROPOSED EITHER IN THE AREA AS DECLARED EARLIER OR IN THE ALLOCABLE AREA. LEARNED COUNSEL SUBMITTED THAT THE PETITIONERS FULFILLED IN SUBSTANCE THE OBJECT AND SUBSTANCE UNDERLYING THE SCHEME AND THE DEPARTMENT WAS NOTIFIED ON 25 JULY 2007 THAT THREE UNITS LOCATED IN THE PARK AS ON 14 MARCH 2007 WERE OCCUPIED BY TATA CONSULTANCY SERVICES LTD., POLARIS SOFTWARE LAB. LT D., AND BHARTI AIRTEL LTD. SUBSEQUENTLY, THE PETITIONERS NOTIFIED THE DEPARTME NT THAT AN ADDITIONAL UNIT HAD BEEN OCCUPIED BY CITIGROUP GLOBAL SERVICES LTD. 23. THE APPLICATION FILED BY THE PETITIONERS FOR A MODIFICATION OF THE NUMBER OF APPROVED UNITS WAS NOT ALLOWED DMT 37 WP744-11 PURELY ON THE GROUND THAT THE DEVELOPMENT OF THE INDUSTRIAL PARK WAS COMPLETED BEYOND 31 MARCH 2006. FOR THE REASONS ALREADY INDICATED BY US IN THE EARLIER PART OF THIS JUDGMENT, WE HAVE COME TO THE CONCLUSION THAT THE RESPONDENTS WERE NOT JUSTIFIED IN REJECTING THE APP LICATION PURELY ON THE GROUND THAT THE DEVELOPMENT OF THE PARK WAS NOT COMPLETE BY 31 MARC H 2006. IN HOLDING THUS, THE EMPOWERED COMMITTEE DISABLED ITSELF FROM EXERCISING THE POWER AND JURISDICTION WHICH IT HAD UNDER PARA 9(1) OF THE SCHEME. 10 ITA NOS.665, 666,581 &813 /KOL/2 013 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 12. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, T HE ISSUE IS COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT AND HONBLE KARNATAKA HIG H COURT, CITED SUPRA. HENCE, THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. 13. THE SECOND COMMON ISSUE IN THESE TWO APPEALS OF ASSESSEE IN ITA NOS. 665 AND 666/KOL/2013 FOR AYS 2008-09 AND 2009-10 IS AS REGA RDS TO DISALLOWANCE OF INTEREST ON INTEREST FREE ADVANCES AND FURTHER IN AY 2008-09 THERE IS EN HANCEMENT OF DISALLOWANCE OF INTEREST. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NOS. 4 A ND 5 IN AY 2008-09: AY 2008-09 4. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE ENHANCEMENT PROCEEDINGS INITIATED BY CIT(A) AND THE ENHANCEMENT OF THE ASSESSMENT ORDER BY THE CIT(A) ON ACCOUNT OF INTEREST PAYMENT IS WHOLLY BAD, ILLEGAL, UNJUSTIFIED AND UNCALLED FOR A ND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES SUCH ENHANCEMENT MADE IS WHOLLY BAD, ILLEGAL AND VO ID BOTH ON POINTS OF LAW AS WELL AS FACTS AND HENCE LIABLE TO BE QUASHED/CANCELLED AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES IT MAY KINDLY BE HELD ACCORDINGLY. 5. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCE S THE CIT(A) IS WHOLLY UNJUSTIFIED IN DISALLOWING INTEREST PAYMENT OF RS.3,68,48,359/- AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE WHOLE OF THE INTEREST EXPENDITURE HAVING BEEN INCURRED BY YO UR PETITIONER FOR THE BUSINESS AND FOR THE PURPOSES OF BUSINESS AND AS COMMERCIAL EXPEDIENCY A ND BEING WHOLLY OF REVENUE IN NATURE, THE SAME MAY KINDLY BE HELD AS ALLOWABLE. AND FOLLOWING GROUND NO. 4 IN AY 2009-10: 4. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE AO IS WHOLLY UNJUSTIFIED IN DISALLOWING RS.7,42,03,845/- BEING 50% OF THE INTEREST PAID ON ESTIMATE AND ON SUSPICIONS AND SURMISES AND THE CIT(A) IS WHOLLY UNJUSTIFIED TO CONFIRM THE DIS ALLOWANCE TO THE EXTENT OF RS.2,18,70,815/- AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE WHOL E OF INTEREST EXPENDITURE HAVING BEEN INCURRED FOR THE BUSINESS AND FOR THE PURPOSES OF BUSINESS A ND TOWARDS COMMERCIAL EXPEDIENCY AND BEING WHOLE OF REVENUE NATURE, THE WHOLE OF SUCH INTEREST PAID IS ALLOWABLE DURING THE YEAR AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE DISALLOWANCE OF RS.2,18,70,815/- BY THE CIT(A) MAY KINDLY BE DELETED. SIMILARLY REVENUE HAS ALSO RAISED A GROUND AGAINST DELETION OF DISALLOWANCE RESTRICTED AT 50% IN AY 2009-10, WHICH READS AS UNDER: VI) DESPITE AFFORDING SEVERAL OPPORTUNITIES BY TH E JCIT, RANGE-56, KOLKATA AS THE ASSESSEE DID NOT COMPLY, THE CLAIM OF INTEREST WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. BUT LD. CIT(A)- XXXVI, KOLKATA, HAD ERRED IN CONSIDERING DISALLOWAN CE OF INTEREST @ 12.03% OF THE TOTAL CLAIM WITHOUT ASKING FOR ANY REMAND REPORT IN THIS REGARD . SINCE THE ISSUE IS COMMON IN BOTH THE YEARS, HENCE, WE WILL DECIDE THIS ISSUE BY THIS CONSOLIDATED ORDER. 14. BRIEFLY STATED FACTS ARE THAT THE DEPARTMENT HA S NOT CHALLENGED INTEREST DISALLOWANCE ON THE SUM OF RS.117.0 CR. RS.51.0 CR. I.E. RS.66.0 CR. IN AY 2008-09 AND THE INTEREST DISALLOWANCE IF ANY, HAS TO BE RESTRICTED TO RS.51. 0 CR. OUT OF WHICH A SUM OF RS.16.0 CR. HAS 11 ITA NOS.665, 666,581 &813 /KOL/2 013 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 ALREADY BEEN REFUNDED BACK IN AY 2009-10 AND AS SUC H, EFFECTIVE ADVANCE UNDER CHALLENGE BY REVENUE IS ONLY TO THE EXTENT OF RS.35.0 CR. THE A O IN AY 2009-10 HAS ALLOWED RS.7.42 CR. OUT OF RS.14.84 CR. ON ESTIMATE BASIS AND TREATING THE SAME AS ALLOWABLE U/S. 24(B) OF THE ACT, SINCE RENTAL RECEIPT WAS TREATED AS ASSESSABLE AS INCOME FROM HOUSE PROPERTY. BUT CIT(A) RESTRICTED THE DISALLOWANCE TO RS.2.18 CR. (BEING INTEREST ON RS.35 CR. ). THE CIT(A) IN AY 2008-09 NOTED THAT THE ASSESSEE ADVANCED A SUM OF RS.51 CR. OUT O F LOAN AMOUNT RECEIVED TO ITS SISTER CONCERNS AND GROUP COMPANIES WITHOUT CHARGING ANY INTEREST. HOWEVER, THE ASSESSEE PAID INTEREST ON BANK LOAN BUT NO PROPERTY WAS PURCHASED AGAINST ADV ANCE SHOWN FOR PURCHASE OF PROPERTY AND TRANSACTION WAS REVERSED LATER ON. HE ALSO OBSERVE D THAT SIMILAR AMOUNT WAS TRANSFERRED IN THE FORM OF SHARE APPLICATION MONEY TO ESCAPE FROM DISA LLOWANCE OF INTEREST. HENCE, THE INTEREST WAS DISALLOWED BY CIT(A) U/S. 36(1)(III) OF THE ACT AT RS.3,68,48,359/-, BEING ENHANCEMENT U/S. 251(1) OF THE ACT BEING CAPITAL BORROWED WAS NOT US ED FOR THE PURPOSE OF BUSINESS. AGGRIEVED AGAINST THE ACTION OF CIT(A), ASSESSEE IS IN APPEAL BEFORE TRIBUNAL IN BOTH THE YEARS 15. BEFORE US LD. COUNSEL FOR THE ASSESSEE ARGUED T HAT THE ASSESSEE HAD MADE SUCH ADVANCES FOR ACQUISITION OF REAL ESTATE PROPERTIES OR LOAN T O ASSOCIATE CONCERNS OR INVESTED IN SHARE APPLICATION MONEY IN ASSOCIATE CONCERNS WHICH ARE I N THE SAME LINE OF BUSINESS AS THAT OF THE ASSESSEE. LD. COUNSEL FOR THE ASSESSEE ARGUED THAT ONCE THE ASSESSEE IS IN REAL ESTATE BUSINESS AND THE AMOUNT ADVANCED TO THE PARTIES WHO ARE SISTER C ONCERNS OF THE ASSESSEE ARE ALSO IN THE REAL ESTATE BUSINESS, SUM ADVANCED ARE ONLY IN THE COURS E OF THE BUSINESS OF THE ASSESSEE. ACCORDING TO HIM, SUCH ADVANCES HAVE BEEN MADE OUT OF COMMERC IAL EXPEDIENCY. THE SECOND LIMB OF THE ARGUMENT MADE BY LD. COUNSEL WAS THAT AO HAS NOT PR OVED NEXUS OF INTEREST BEARING FUNDS INVESTED IN INTEREST FREE ADVANCES/LOANS GIVEN BUT IT IS ONLY PRESUMPTION OF THE CIT FOR ENHANCEMENT U/S. 251 OF THE ACT AND ALSO AO MADE DI SALLOWANCE ON MERE ESTIMATE BASIS WITHOUT BRINGING ANY MATERIAL ON RECORD OF NEXUS. LD. COUN SEL FOR THE ASSESSEE FILED COMPLETE CASH FLOW STATEMENT WHICH READS AS UNDER: AS ON 29.9.2008 PARTICULARS AMOUNT (RS. IN CRORE) AMOUNT LOANS AND ADVANCES LESS: CURRENT LIABILITIES & PROVISIONS (NON INTEREST BEARING) PARTNERS CAPITAL PARTNERS CURRENT ACCOUNT (NET OF REVALUATION) 50.08 01.50 22.5 117.21 74.08 43.13 12 ITA NOS.665, 666,581 &813 /KOL/2 013 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 LESS: LOAN 7.43 35.66 IN VIEW OF THE ABOVE CASH FLOW STATEMENT, LD. COUNS EL FOR THE ASSESSEE ARGUED THAT THE DISALLOWANCE IF ANY, COULD HAVE BEEN MADE IN RESPEC T OF INTEREST CORRESPONDING TO THE SUM OF RS. 35.66 CR., FOR WHICH CIT(A) HAS RESTRICTED THIS DIS ALLOWANCE. FURTHER, THE CIT(A) IN PARA 5.2 PAGE 17 ALLOWED THE EXPENSES OF RS.64,29,817/- AND AUDIT FEE OF RS.5618/- TREATING THE INCOME FROM INDUSTRIAL PARK AS BUSINESS INCOME AS AGAINST THE ACTION OF THE AO IN NOT ALLOWING SUCH EXPENSES BY TREATING THE SAME AS INCOME FROM HOUSE PROPERTY. IN VIEW OF SUCH FACTS, LD. CIT, DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 16. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. THE ABOVE FACTS ARE UNDISPUTED IN RESPECT TO CASH F LOW STATEMENT FILED BY THE ASSESSEE AS WELL AS AVAILABILITY OF FUNDS. WE FIND THAT NEITHER THE AO NOR CIT(A) IS ABLE TO ESTABLISH THE NEXUS BETWEEN INTEREST BORROWED FUNDS AND INTEREST FREE F UNDS THAT INTEREST BEARING BORROWED FUNDS ARE UTILIZED FOR ADVANCING THE SAME AS INTEREST FREE FU NDS TO SISTER CONCERNS WHO ARE IN THE REAL ESTATE BUSINESS IN WHICH THE ASSESSEE IS. LD. COUNSEL FOR THE ASSESSEE HEAVILY RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF HERO CYCLES PV T. LTD. VS. CIT IN CIVIL APPEAL NO. 514 OF 2008 DATED 05.11.2015, WHEREIN HONBLE SUPREME COUR T HAS CONSIDERED THE ASPECT OF COMMERCIAL EXPEDIENCY AS WELL AS NEXUS OF THE FUNDS AND FINALLY HELD AS UNDER: WE ARE OF THE OPINION THAT SUCH AN APPROACH IS CLE ARLY FAULTY IN LAW AND CANNOT BE COUNTENANCED. INSOFAR AS LOANS TO THE SISTER CONCERN / SUBSIDIARY C.A. NO. 514/2008 5 HTTP://WWW.ITATONLINE.ORG COMPANY ARE CONCERNED, LAW IN THIS BEHALF IS RECAPI TULATED BY THIS COURT IN THE CASE OF 'S.A. BUILDERS LTD. V. COMMISSIONER OF INCOME TAX (APPEAL S) AND ANOTHER' [2007 (288) ITR 1 (SC)]. AFTER TAKING NOTE OF AND DISCUSSING ON THE SCOPE OF COMMERCIAL EXPEDIENCY, THE COURT SUMMED UP THE LEGAL POSITION IN THE FOLLOWING MANNER: - 26. THE EXPRESSION COMMERCIAL EXPEDIENCY IS AN E XPRESSION OF WIDE IMPORT AND INCLUDES SUCH EXPENDITURE AS A PRUDENT BUSINESSMAN INCURS FOR THE PURPOSE OF BUSINESS. THE EXPENDITURE MAY NOT HAVE BEEN INCURRED UNDER ANY LE GAL OBLIGATION, BUT YET IT IS ALLOWABLE AS A BUSINESS EXPENDITURE IF IT WAS INCURRED ON GROUNDS OF COMMERCIAL EXPEDIENCY. 27. NO DOUBT, AS HELD IN MADHAV PRASAD JATIA V. CI T [1979 (118) ITR 200 (SC)], IF THE BORROWED AMOUNT WAS DONATED FOR SOME SENTIMENTAL OR PERSONAL REASONS AND NOT ON THE GROUND OF COMMERCIAL EXPEDIENCY, THE INTEREST THEREON COULD N OT HAVE BEEN ALLOWED UNDER SECTION 36(1)(III) OF THE ACT. IN MADHAV PRASAD'S CASE [1979 (118) ITR 200 (SC)], THE BORROWED AMOUNT WAS DONATED TO A COLLEGE WITH A VIEW TO COMMEMORATE THE MEMORY OF THE ASSESSEE'S DECEASED HUSBAND AFTER WHOM THE COLLEGE WAS TO BE NAMED, IT WAS HELD BY TH IS COURT THAT THE INTEREST ON THE BORROWED FUND IN SUCH A CASE COULD NOT BE ALLOWED, AS IT COULD NO T BE SAID THAT IT WAS FOR COMMERCIAL EXPEDIENCY. 28. THUS, THE RATIO OF MADHAV PRASAD JATIA'S CASE [ 1979 (118) ITR 200 (SC)] IS THAT THE BORROWED FUND ADVANCED TO A THIRD PARTY SHOULD BE F OR COMMERCIAL EXPEDIENCY IF IT IS SOUGHT TO BE ALLOWED UNDER SECTION 36(1)(III) OF THE ACT. 13 ITA NOS.665, 666,581 &813 /KOL/2 013 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 29. IN THE PRESENT CASE, NEITHER THE HIGH COURT NO R THE TRIBUNAL NOR OTHER AUTHORITIES HAVE EXAMINED WHETHER THE AMOUNT ADVANCED TO THE SISTER CONCERN WAS BY WAY OF COMMERCIAL EXPEDIENCY. 30. IT HAS BEEN REPEATEDLY HELD BY THIS COURT THAT THE EXPRESSION FOR THE PURPOSE OF BUSINESS IS WIDER IN SCOPE THAN THE EXPRESSION FO R THE PURPOSE OF EARNING PROFITS VIDE CIT V. MALAYALAM PLANTATIONS LTD. [1964 53 ITR 140 (SC), C IT V. BIRLA COTTON SPINNING AND WEAVING MILLS LTD. [1971 82 ITR 166 (SC)], ETC. IN THE PROCESS, THE COURT ALSO AGREED THAT THE VIE W TAKEN BY THE DELHI HIGH COURT IN 'CIT V. DALMIA CEMENT (B.) LTD.' [2002 (254) ITR 377] WH EREIN THE HIGH COURT HAD HELD THAT ONCE IT IS ESTABLISHED THAT THERE IS NEXUS BETWEEN THE EXPENDI TURE AND THE PURPOSE OF BUSINESS (WHICH NEED NOT NECESSARILY BE THE BUSINESS OF THE ASSESSEE ITS ELF), THE REVENUE CANNOT JUSTIFIABLY CLAIM TO PUT ITSELF IN THE ARM-CHAIR OF THE BUSINESSMAN OR IN TH E POSITION OF THE BOARD OF DIRECTORS AND ASSUME THE ROLE TO DECIDE HOW MUCH IS REASONABLE EXPENDITU RE HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE. IT FURTHER HELD THAT NO BUSINESSMAN CAN BE CO MPELLED TO MAXIMIZE HIS PROFIT AND THAT THE INCOME TAX AUTHORITIES MUST PUT THEMSELVES IN THE S HOES OF THE ASSESSEE AND SEE HOW A PRUDENT BUSINESSMAN WOULD ACT. THE AUTHORITIES MUST NOT LOO K AT THE MATTER FROM THEIR OWN VIEW POINT BUT THAT OF A PRUDENT BUSINESSMAN. APPLYING THE AFORESA ID RATIO TO THE FACTS OF THIS CASE AS ALREADY NOTED ABOVE, IT IS MANIFEST THAT THE ADVANCE TO M/S . HERO FIBRES LIMITED BECAME IMPERATIVE AS A BUSINESS EXPEDIENCY IN VIEW OF THE UNDERTAKING GIVE N TO THE FINANCIAL INSTITUTIONS BY THE ASSESSEE TO THE EFFECT THAT IT WOULD PROVIDE ADDITIONAL MARGIN TO M/S. HERO FIBRES LIMITED TO MEET THE WORKING CAPITAL FOR MEETING ANY CASH LOSES. IT WOULD ALSO B E SIGNIFICANT TO MENTION AT THIS STAGE THAT, SUBSEQUENTLY, THE ASSESSEE COMPANY HAD OFF-LOADED I TS SHARE HOLDING IN THE SAID M/S. HERO FIBRES LIMITED TO VARIOUS COMPANIES OF OSWAL GROUP AND AT THAT TIME, THE ASSESSEE COMPANY NOT ONLY REFUNDED BACK THE ENTIRE LOAN GIVEN TO M/S. HERO FI BRES LIMITED BY THE ASSESSEE BUT THIS WAS REFUNDED WITH INTEREST. IN THE YEAR IN WHICH THE AF ORESAID INTEREST WAS RECEIVED, SAME WAS SHOWN AS INCOME AND OFFERED FOR TAX. INSOFAR AS THE LOANS TO DIRECTORS ARE CONCERNED, IT COULD NOT BE DISPUTED BY THE REVENUE THAT THE ASSESSEE HAD A CRE DIT BALANCE IN THE BANK ACCOUNT WHEN THE SAID ADVANCE OF RS. 34 LAKHS WAS GIVEN. REMARKABLY, AS O BSERVED BY THE CIT (APPEAL) IN HIS ORDER, THE COMPANY HAD RESERVE/SURPLUS TO THE TUNE OF ALMOST 1 5 CRORES AND, THEREFORE, THE ASSESSEE COMPANY COULD IN ANY CASE, UTILISE THOSE FUNDS FOR GIVING A DVANCE TO ITS DIRECTORS. 17. IN VIEW OF THE ABOVE FACTS OF THIS CASE AND THE CASE LAW OF HERO CYCLES PVT. LTD., SUPRA, WE ARE OF THE VIEW THAT THE ASSESSEE HAS ADVANCED F OR ACQUISITION OF REAL ESTATE PROPERTIES, LOANS TO SISTER CONCERNS AND SHARE APPLICATION MONEY IN A SSOCIATE CONCERNS, WHICH WERE IN SAME BUSINESS AS THAT OF THE ASSESSEE I.E. REAL ESTATE B USINESS AND HENCE, THE SAID SUM ADVANCED ARE ONLY IN THE NATURE OF BUSINESS OF THE ASSESSEE AND ARE OUT OF COMMERCIAL EXPEDIENCY. FURTHER, THERE IS NO NEXUS ESTABLISHED BETWEEN INTEREST BEAR ING FUNDS BORROWED AND INTEREST FREE FUNDS ADVANCED TO SISTER CONCERNS, NO DISALLOWANCE CAN BE ATTRIBUTED TO THE ASSESSEE ON ACCOUNT OF INTEREST BEARING BORROWED FUNDS. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF ASSESSEE AND AGAINST REVENUE IN BOTH THE YEARS. 18. THE NEXT COMMON ISSUE IN THESE APPEALS OF REVEN UE IN ITA NOS. 581 AND 813/KOL/2013 FOR AY 2008-09 AND 2009-10 IS AS REGARDS TO THE ORD ER OF CIT(A) DELETING THE DISALLOWANCE OF DEPRECIATION MADE BY AO. FOR THIS, REVENUE HAS RA ISED FOLLOWING GROUND IN AY 2008-09: 14 ITA NOS.665, 666,581 &813 /KOL/2 013 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 LD. CIT(A)-XXXVI, KOLKATA HAD ALLOWED ADDITIONAL GROUND OF APPEAL WHEREBY DEPRECIATION OF RS.12,31,96,184/-, WHICH WAS NOT CLAIMED IN THE COM PUTATION. IN THIS REGARD, LD. CIT(A)-XXXVI, KOLKATA HAD ASKED FOR REMAND REPORT, BUT BEFORE SEN DING THE REMAND REPORT HE HAD PASSED THE APPEAL ORDER. SIMILAR IS THE GROUND RAISED BY REVENUE IN AY 2008- 09. THE FACTS AND CIRCUMSTANCES ARE EXACTLY IDENTICAL IN BOTH THE YEARS HENCE WE TAKE U P THE FACTS FROM AY 2008-09 AND DECIDE THE ISSUE. 19. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE HAS NOT CLAIMED DEPRECIATION IN THE COMPUTATION OF INCOME BUT RAISED ADDITIONAL GROUND IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NTPC LTD. 229 ITR 387 (SC) AND IN VIEW OF T HIS DECISION CIT(A) ADMITTED THE ADDITIONAL GROUND AND ADJUDICATED THE CLAIM OF THE ASSESSEE. THE CIT(A) AFTER TAKING INTO CONSIDERATION THE ASPECT OF THE ASSESSEE REMANDED T HE MATTER TO THE AO FOR HIS REMAND REPORT VIDE LETTER DATED 31.12.2012. THE AO HAS NOT RESPO NDED TO CIT(A) AND ACCORDINGLY, CIT(A) DIRECTED THE AO TO ALLOW DEPRECIATION ON ASSETS USE D IN THE BUSINESS BUT AFTER VERIFICATION OF FACTS AND FIGURES CLAIMED NOW VIS--VIS THE RELEVAN T RATE OF DEPRECIATION AS APPLICABLE. WE FIND THAT THE ASSESSEES ISSUE IS COVERED AS PER EXPLANA TION 5 TO SEC. 32 OF THE ACT WHICH MAKES IT VERY CLEAR THAT THE ALLOWANCE OF DEPRECIATION IS MANDATO RY AND HAS TO BE CONSIDERED WHETHER OR NOT THE ASSESSEE MAKES A CLAIM IN THIS RESPECT OR NOT. EVE N OTHERWISE, THE CIT(A) AFTER ADMITTING ADDITIONAL ISSUE HAS REMITTED THE MATTER BACK TO TH E FILE OF THE AO FOR VERIFICATION OF FACTS AND FIGURE AND APPLICABLE RATES FOR CLAIM OF DEPRECIATI ON AND ALSO VERIFICATION ON ASSETS USED IN THE BUSINESS ONLY. WE FIND NO INFIRMITY IN THE ORDER O F CIT(A) AND HENCE, THE SAME IS CONFIRMED. THIS ISSUE IN BOTH THE YEARS, OF REVENUES APPEAL I S DISMISSED. 20. THE NEXT ISSUE IN REVENUES APPEAL IN ITA NO.5 81/KOL/2013 FOR AY 2008-09 IS AS REGARDS TO THE ORDER OF CIT(A) DELETING THE ADDITIO N MADE BY AO ON ACCOUNT OF DIFFERENCE IN THE STATEMENT OF ACCOUNTS DECLARED BY ASSESSEE. FOR TH IS, REVENUE HAS RAISED FOLLOWING GROUND: LD. CIT(A)-XXXVI, KOLKATA HAD AO HAD DELETED THE A DDITION OF RS.56,66,732/- MADE ON ACCOUNT OF DIFFERENCE IN THE INCOME DECLARED BY THE ASSESSE E AND IN THIS REGARD NO REMAND RECORD WAS CALLED FOR. 21. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO HAS MADE ADDITION ON ACCOUNT OF DIFFERENCE ON THE DISCLOSURE MADE BY 15 ITA NOS.665, 666,581 &813 /KOL/2 013 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 ASSESSEE AS PER THE ACTUAL RECEIPT AND AS PER THE R ENT RECEIVED AS PER TDS CERTIFICATE OF THE FOLLOWING PARTIES: A) SYMPHONY MARKETING SOLUTIONS PVT. LTD. RS. 14 ,20,000/- B) XALTED INFORMATION SYSTEM PVT. LTD. RS. 5 ,91,292/- C) CARRIER NET TECHNOLOGIES PVT. LTD. RS. 18,62 ,059/- D) ARIVANA NETWORKS INDIA PVT. LTD. RS. 17,93, 381/- RS. 56,66,732/- LD. COUNSEL FOR THE ASSESSEE BEFORE US EXPLAINED TH E PARTY WISE POSITION WHICH WAS EXPLAINED BEFORE CIT(A) FILING THE DETAILS OF GROSS LEASE RENTALS RECEIVED FROM VARIOUS PARTIES AMOUNTING TO RS.26,60,96,005/- AND ALSO ENCLOSED TH E DETAILS OF TDS AMOUNTING TO RS.3,15,44,547/- DEDUCTED BY THE PARTIES ON THESE L EASE RENTALS. LD. COUNSEL FOR THE ASSESSEE BEFORE US FILED COMPLETE DETAILS IN RESPECT OF SYMP HONY MARKETING SOLUTIONS PVT. LTD. AND STATED THAT THE CAFETERIA RENT WAS ONLY RECEIVABLE FROM MI DDLE OF MARCH, 2008 AND SINCE RENT WAS RECEIVED ONLY ON 09.07.2008, IT WAS DULY ACCOUNTED FOR IN THE NEXT FY AND OFFERED FOR TAXATION. ACCORDINGLY, THIS AMOUNT OF RS.14,20,000/- WAS ALRE ADY TAXED IN THE IMMEDIATE NEXT YEAR IN VIEW OF SUBSEQUENT FRESH LEASE DEED DATED 09.06.200 8. SIMILARLY, IN THE CASE OF XALTED INFORMATION SYSTEM, AS SUM OF RS.5,91,292/- WAS THE DIFFERENCE AND THIS WAS EXPLAINED THAT THE COPY OF LEDGER ACCOUNT OF THIS PARTY FOR THE ENTIRE YEAR, THE RENT HAS BEEN INCLUDED EARLIER YEAR. ACCORDINGLY, IT WAS CLEAR THAT THE PETITIONER HAS R ECEIVED A TOTAL OF RS.57,43,973/- AND THIS RENT OF RS.5,91,292/- WAS RECEIVED ONLY IN NEXT YEAR. S IMILAR IS THE EXPLANATION IN THE CASE OF M/S. CARRIER NET TECHNOLOGIES PVT. LTD. AMOUNTING TO RS. 18,62,059/-. IT WAS EXPLAINED TO THE AO THAT THE ASSESSEE WAS ENTITLED TO RECEIVE RENT W.E. F. 19.03.2007 @ RS.11,76,100/-, WHICH AMOUNTS TO RS.1,40,95,533/- FOR WHOLE OF THE YEAR BUT THE A O COMPUTED THE RENT IN VIEW OF THE TDS CERTIFICATE AT RS.1,58,57,591/-. HENCE, DIFFERENCE. SIMILAR IS THE POSITION IN RESPECT TO ARIVANA NETWORKS INDIA PVT. LTD. BEING THE DIFFERENCE OF RS . 17,93,381/-. IT WAS EXPLAINED THAT A SUM OF RS.1,63,02,907/- WAS SHOWN IN THE TDS CERTIFICATE I NCLUDED SERVICE TAX @ 12.36% ON ACTUAL RENT OF RS.1,45,09,600/- AND THIS DIFFERENCE WAS ON ACCO UNT OF SERVICE TAX AT RS.17,93,387/-. HENCE THE ENTIRE DIFFERENCE OF RS.56,66,732/- WAS EXPLAIN ED. THE CIT(A) ACCEPTED THE EXPLANATION OF THE ASSESSEE. NOW BEFORE US LD. CIT, DR FAIRLY CON CEDED THE POSITION. ACCORDINGLY, WE FEEL THAT FACTUALLY THE ASSESSEE HAS NOT RECEIVED EXCESS RENT OF RS.56,66,732/- ADDED BY THE AO. WE FIND THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITI ON IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE AND WE CONFIRM THE SAME. THIS ISSUE OF REVENUE S APPEAL IS DISMISSED. 16 ITA NOS.665, 666,581 &813 /KOL/2 013 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 22. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IN ITA NO. 813/KOL/2013 FOR AY 2009-10 IS AS REGARDS TO THE ORDER OF CIT(A) DELETING THE ADDITIO N MADE BY AO BY TREATING THE RECEIPT FROM THE OCCUPANTS OF INDUSTRIAL PARKS AND INCOME FROM HOUSE PROPERTY INSTEAD OF THE SAME AS ASSESSABLE AS INCOME FROM BUSINESS. FOR THIS, REVENUE HAS RAIS ED FOLLOWING GROUND: I) CONSIDERING THE NATURE OF INCOME DERIVED BY TH E ASSESSEE, WHICH IS DISCUSSED IN DETAIL IN THE ASSESSMENT ORDER AND ON THE BASIS OF DIFFERENT CASE LAWS, INCOME DERIVED BY THE ASSESSEE WAS TREATED AS H.P. INCOME. WHEREAS LD. CIT(A)-XXXVI, KOLKATA, HAD ALLOWED THE INCOME TO TREAT AS INCOME FROM BUSINESS. 23. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT IN AY 2008-09 THE AO TREATED THE SUCH RENTAL RECEIPT WHILE FRAMING ASSESSMENT U/S. 143(3) OF THE ACT AS INCOME FROM BU SINESS AND CIT(A) ISSUED NOTICE U/S. 251 OF THE ACT FOR ENHANCEMENT WITH A PROPOSAL TO TREAT SU CH RENTAL INCOME AS INCOME FROM HOUSE PROPERTY INSTEAD OF INCOME DECLARED BY ASSESSEE AS INCOME FROM BUSINESS BUT CIT(A) AFTER DUE CONSIDERATION OF ENTIRE FACTS DROPPED SUCH PROPOSAL AND REVENUE HAD NOT CHALLENGED THE SAME. BUT NOW IN AY 2009-10, THE AO TREATED RECEIPTS FROM THE OCCUPANTS OF INDUSTRIAL PARK AS INCOME FROM HOUSE PROPERTY ALTHOUGH THE SAME IS ASS ESSABLE AS INCOME FROM BUSINESS AS CLAIMED BY THE ASSESSEE. THE FACTS ARE THAT THE ASSESSEE I S IN THE BUSINESS OF DEVELOPING AND OPERATING INDUSTRIAL PARK AND WAS DERIVING INCOME FROM SUCH I NDUSTRIAL PARK WHICH WAS APPROVED BY MINISTRY OF COMMERCE & INDUSTRY U/S. 80IA(4)(III) O F THE ACT. THE ASSESSEE CLAIMED THE INCOME IN ITS RETURN OF INCOME AS BUSINESS INCOME FROM DEV ELOPING AND OPERATING OF INDUSTRIAL PARK. THE ASSESSEE ALSO CLAIMED THAT IT WAS NOT LETTING O UT BARE STRUCTURE BUT WAS PROVIDING WHOLE LOT OF SERVICES/AMENITIES FOR SOFTWARE AND ALLIED INDUS TRIES AS ELIGIBLE FOR USE OF SUCH INDUSTRIAL PARK. IN SUCH CIRCUMSTANCES, THE ASSESSEE CLAIMED THE REN TAL RECEIPTS FROM THE OCCUPANTS OF THE INDUSTRIAL PARK AS BUSINESS INCOME AND CIT(A) ALLOW ED THE CLAIM IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER: IN THIS REGARD IT MAY BE NOTED THAT THERE ARE A LO T OF SIMILARITIES IN BOTH THE PURPOSE AS WELL AS TH E ACTIVITIES CONCERNING THE RUNNING OF A HOTEL AND TH AT OF INDUSTRIAL ESTATE/BUSINESS CENTRE. INDEED BOTH INDUSTRIAL ESTATE AND HOTELS CONSTITUTE BUILDI NG OR GROUP OF BUILDINGS PROVIDING ACCOMMODATION FOR COMMERCIAL USE THEREOF. IN THE MANAGEMENT OF BOTH H OTELS AND INDUSTRIAL ESTATE/BUSINESS CENTRE THE PREDOMINANT ACTIVITY IS COMMERCIAL EXPLOITATION OF THE PROPERTY. SO APPLYING THE ABOVE PRINCIPLES LAID DOWN BY THE COURT THE IRRESISTIBLE CONCLUSION WOULD BE THAT THE 'INCOME DERIVED BY THE ASSESSEE FROM THE INDUSTRIAL ESTATE/BUSINESS CENTRE IS TO BE ASSESSED AS BUSINESS INCOME. IN THE INSTANT CASE, THE PRIMARY OBJECT OF THE ASSE SSEE IS TO EARN INCOME BY COMMERCIAL EXPLOITATION OF THE PROPERTY. FOR THAT PURPOSE, EVERY ACTIVITY O F THE ASSESSEE HAS BEEN DIRECTED TOWARDS DEVELOPING THE PROPERTIES AS INDUSTRIAL ESTATE/BUSI NESS CENTERS AND SO MANY WORKERS (AS IS EVIDENT 17 ITA NOS.665, 666,581 &813 /KOL/2 013 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 FROM THE LIST ENCLOSED) ARE EMPLOYED FOR PROVIDING VARIOUS SERVICES AND AMENITIES TO THE USERS. THUS, THE FACTS THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE INCOME EARNED BY SAMBHU INVESTMENT (P.) LTD. -VS- CIT [2003] 263 ITR 143 IS ASSESSABLE AS PROPERTY INCOME HAS NO RELEVANCE IN THE FACTS AND CIRCUMSTANCES OF THE PRE SENT CASE AS BECAUSE IN THAT CASE THE FACTS SHOWED THAT THE MAIN INTENTION WAS TO EARN RENTAL I NCOME AND THAT IS WHY THE ENTIRE COST OF THE PROPERTY WAS RECOVERED FROM THE TENANTS BY WAY OF I NTEREST-FREE ADVANCE. IN VIEW OF THE FOREGOING, AFTER CAREFULLY ANALYZING THE FACTS OF THE INSTANT CASE AND FOLLOWING THE CONSENSUS OF JUDICIAL OPINION ON THE ISSUE, IT IS S UBMITTED THAT, THE MERE FACT THAT THE INCOME IS ATTACHED TO IMMOVABLE PROPERTY, CANNOT BE THE SOLE CRITERION FOR ASSESSMENT OF SUCH INCOME AS INCOME FROM HOUSE PROPERTY. IT IS NECESSARY TO DIG FURTHER TO FIND OUT WHAT IS THE PRIMARY OBJECT OF THE ASSESSEE WHILE EXPLOITING THE PROPERTY. IF IT I S FOUND, THAT THE MAIN INTENTION IS FOR SIMPLY LETT ING OUT OF PROPERTY OR ANY PORTION THEREOF, THE RESULTA NT INCOME MUST BE ASSESSED AS INCOME FROM HOUSE PROPERTY. IF, ON THE OTHER HAND, THE MAIN INTENTION IS FOUND TO BE THE EXPLOITATION OF THE IMMOVABLE PROPERTY BY WAY OF COMMERCIAL ACTIVITIES, THEN THE RESULTANT INCOME MUST BE HELD AS BUSINESS INCOME. ATTENTION IS DRAWN TO THE FOLLOWING FACTS WHICH EME RGE IN THE PRESENT CASE OF ASSESSEE: THE ASSESSEE ORIGINALLY TREATED LAND AS INVESTMEN T AND LATER ON CONVERTED AS BUSINESS ASSET/ STOCK IN TRADE AND STARTED UTILIZING IT COMMERCIALLY AS B USINESS CENTRE/INDUSTRIAL PARK. FOR THIS PURPOSE, A HOST OF FACILITIES AND AMENIT IES ARE PROVIDED BY THE ASSESSEE IN AN ORGANIZED MANNER ON A CONTINUOUS BASIS. SEVERAL WORKERS ARE A LSO ENGAGED FOR PROVIDING SUCH SERVICES TO THE USERS. UNDOUBTEDLY, ALL THESE ACTIVITIES ARE DIRECTED FO R A SET PURPOSE WITH A VIEW TO EARN PROFIT. THE PROPERTY HAS BEEN DEVELOPED AS INDUSTRIAL PAR K UNDER THE APPROVAL OF MINISTRY OF COMMERCE AND INDUSTRY. DEPARTMENT OF INDUSTRIAL POLICY AND P ROMOTION WHICH SPECIALLY REFERS DEVELOPING, OPERATING AND MANUFACTURING OF INDUSTRIAL PARK AND THAT RECOGNIZES ACTIVITIES UNDERTAKING IN THE DEVELOPMENT OF INFRASTRUCTURE FACILITIES OR BUILT U P SPACE WITH COMMON AREA ALLOTTED TO SOFTWARE CONCERNS AS AN INDUSTRIAL PARK AND ALSO RECORD SUCH ACTIVITY AS BUSINESS ACTIVITY. APPELLANT CLAIMED DEDUCTION U/S 80IA(4)(III) WHIC H IS AVAILABLE FOR BUSINESS INCOME ONLY. THUS, IN VIEW OF ABOVE, IT IS SUBMITTED THAT SERVIC ES RENDERED BY THE ASSESSEE WERE THE RESULT OF ITS ACTIVITIES CARRIED ON CONTINUOUSLY IN AN ORGANIZED MANNER WITH A SET PURPOSE AND WITH A VIEW TO EARN PROFIT. HENCE, ALL THESE ACTIVITIES ARE IN THE NATURE OF COMMERCIAL ACTIVITIES. ACCORDINGLY, THE INCOME DERIVED BY THE ASSESSEE FROM INDUSTRIAL PARK /BUSINESS CENTERS IS TO BE ASSESSED AS BUSINESS INCOME AND' NOT AS INCOME FROM HOUSE PROPERTY, AS P ER FINDINGS OF A.O. IN ASSESSMENT ORDER. 24. WE FIND THAT THE FACTS ARE UNDISPUTED AS ABOVE THAT THE ASSESSEE WAS NOT LETTING OUT BARE STRUCTURE BUT WAS PROVIDING WHOLE LOT OF SERVICES/A MENITIES FOR SOFTWARE AND ALLIED INDUSTRIES AS ELIGIBLE FOR USE OF SUCH INDUSTRIAL PARK. IN SUCH CIRCUMSTANCES, THE ASSESSEE CLAIMED THE RENTAL RECEIPTS FROM THE OCCUPANTS OF THE INDUSTRIAL PARK AS BUSINESS INCOME. WE FIND THAT THIS ISSUE IS COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS LTD. VS. CIT (2015) 373 ITR 673 (SC) WH EREIN IT IS HELD AS UNDER: 18 ITA NOS.665, 666,581 &813 /KOL/2 013 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 4. WE HAVE HEARD THE LEARNED COUNSEL FOR THE PARTIE S ON THE AFORESAID ISSUE. BEFORE WE NARRATE THE LEGAL PRINCIPLE THAT NEEDS TO BE APPLIED TO GIVE TH E ANSWER TO THE AFORESAID QUESTION, WE WOULD LIKE T O RECAPITULATE SOME SEMINAL FEATURES OF THE PRESENT C ASE. 5. THE MEMORANDUM OF ASSOCIATION OF THE APPELLANT-C OMPANY WHICH IS PLACED ON RECORD MENTIONS MAIN OBJECTS AS WELL AS INCIDENTAL OR ANCILLARY OBJ ECTS IN CLAUSE III (A) AND (B) RESPECTIVELY. THE MAIN OBJECT OF THE APPELLANT COMPANY IS TO ACQUIRE AND HOLD THE PROPERTIES KNOWN AS 'CHENNAI HOUSE' AND 'FIRHAVIN ESTATE' BOTH IN CHENNAI AND TO LET OUT THOSE PROPERTIES AS WELL AS MAKE ADVANCES UPON THE SECURITY OF LANDS AND BUILDINGS O R OTHER PROPERTIES OR ANY INTEREST THEREIN. WHAT WE EMPHASISE IS THAT HOLDING THE AFORESAID PROPERTI ES AND EARNING INCOME BY LETTING OUT THOSE PROPERTIES IS THE MAIN OBJECTIVE OF THE COMPANY. IT MAY FURTHER BE RECORDED THAT IN THE RETURN THAT WAS FILED, THE ENTIRE INCOME WHICH ACCRUED AND WAS ASSESSED IN THE SAID RETURN WAS FROM LETTING OUT OF THESE PROPERTIES. IT IS SO RECORDED AND ACCEPTED BY THE ASSESSING OFFICER HIMSELF IN HIS ORDER. 6. IT TRANSPIRES THAT THE RETURN OF A TOTAL INCOME OF RS. 2,44,030 WAS FILED FOR THE ASSESSMENT YEAR I N QUESTION THAT IS THE ASSESSMENT YEAR 1983-84 AND TH E ENTIRE INCOME WAS THROUGH LETTING OUT OF THE AFORESAID TWO PROPERTIES, NAMELY, 'CHENNAI HOUSE' A ND 'FIRHAVIN ESTATE'. THUS, THERE IS NO OTHER INCOME OF THE ASSESSEE EXCEPT THE INCOME FROM LETTI NG OUT OF THESE TWO PROPERTIES. WE HAVE TO DECIDE THE ISSUE KEEPING IN MIND THE AFORESAID ASPECTS. 7. WITH THIS BACKGROUND, WE FIRST REFER TO THE JUDG MENT OF THIS COURT IN EAST INDIA HOUSING AND LAND DEVELOPMENT TRUST LTD.'S CASE WHICH HAS BEEN RELIED UPON BY THE HIGH COURT. THAT WAS A CASE WHERE THE COMPANY WAS INCORPORATED WITH THE OBJECT OF BUY ING AND DEVELOPING LANDED PROPERTIES AND PROMOTING AND DEVELOPING MARKETS. THUS, THE MAIN OB JECTIVE OF THE COMPANY WAS TO DEVELOP THE LANDED PROPERTIES INTO MARKETS. IT SO HAPPENED THAT SOME SHOPS AND STALLS, WHICH WERE DEVELOPED BY IT, HAD BEEN RENTED OUT AND INCOME WAS DERIVED FROM THE RENTING OF THE SAID SHOPS AND STALLS. IN THOSE FACTS, THE QUESTION AROSE FOR CONSIDERATION WAS : W HETHER THE RENTAL INCOME THAT IS RECEIVED WAS TO BE TREATED AS INCOME FROM THE HOUSE PROPERTY OR THE IN COME FROM THE BUSINESS. THIS COURT WHILE HOLDING THAT THE INCOME SHALL BE TREATED AS INCOME FROM THE HOUSE PROPERTY, RESTED ITS DECISION IN THE CONTEXT OF THE MAIN OBJECTIVE OF THE COMPANY AND TOOK NOTE OF THE FACT THAT LETTING OUT OF THE PROPERTY WAS NO T THE OBJECT OF THE COMPANY AT ALL. THE COURT WAS, TH EREFORE, OF THE OPINION THAT THE CHARACTER OF THAT INCOME WHICH WAS FROM THE HOUSE PROPERTY HAD NOT AL TERED BECAUSE IT WAS RECEIVED BY THE COMPANY FORMED WITH THE OBJECT OF DEVELOPING AND SETTING UP PROPERTIES. 8. BEFORE WE REFER TO THE CONSTITUTION BENCH JUDGME NT IN THE CASE OF SULTAN BROTHERS (P.) LTD., WE WOULD BE WELL ADVISED TO DISCUSS THE LAW LAID DOWN AUTHORITATIVELY AND SUCCINCTLY BY THIS COURT IN KARANPURA DEVELOPMENT CO. LTD. V. CIT [1962] 44 ITR 362 (SC). THAT WAS ALSO A CASE WHERE THE COMPANY, WHICH WAS THE ASSESSEE, WAS FORMED WITH TH E OBJECT, INTER ALIA, OF ACQUIRING AND DISPOSING OF THE UNDERGROUND COAL MINING RIGHTS IN CERTAIN CO AL FIELDS AND IT HAD RESTRICTED ITS ACTIVITIES TO ACQUIRING COAL MINING LEASES OVER LARGE AREAS, DEVE LOPING THEM AS COAL FIELDS AND THEN SUB-LEASING THEM TO COLLIERIES AND OTHER COMPANIES. THUS, IN TH E SAID CASE, THE LEASING OUT OF THE COAL FIELDS TO THE COLLIERIES AND OTHER COMPANIES WAS THE BUSINESS OF THE ASSESSEE. THE INCOME WHICH WAS RECEIVED FROM LETTING OUT OF THOSE MINING LEASES WAS SHOWN A S BUSINESS INCOME. DEPARTMENT TOOK THE POSITION THAT IT IS TO BE TREATED AS INCOME FROM THE HOUSE P ROPERTY. IT WOULD BE THUS, CLEAR THAT IN SIMILAR CIRCUMSTANCES, IDENTICAL ISSUE AROSE BEFORE THE COU RT. THIS COURT FIRST DISCUSSED THE SCHEME OF THE INCOME-TAX ACT AND PARTICULARLY SIX HEADS UNDER WHI CH INCOME CAN BE CATEGORISED/CLASSIFIED. IT WAS POINTED OUT THAT BEFORE INCOME, PROFITS OR GAINS CA N BE BROUGHT TO COMPUTATION, THEY HAVE TO BE ASSIGNED TO ONE OR THE OTHER HEAD. THESE HEADS ARE IN A SENSE EXCLUSIVE OF ONE ANOTHER AND INCOME WHICH FALLS WITHIN ONE HEAD CANNOT BE ASSIGNED TO, OR TAXED UNDER ANOTHER HEAD. THEREAFTER, THE COURT POINTED OUT THAT THE DECIDING FACTOR IS NOT T HE OWNERSHIP OF LAND OR LEASES BUT THE NATURE OF TH E ACTIVITY OF THE ASSESSEE AND THE NATURE OF THE OPER ATIONS IN RELATION TO THEM. IT WAS HIGHLIGHTED AND STRESSED THAT THE OBJECTS OF THE COMPANY MUST ALSO BE KEPT IN VIEW TO INTERPRET THE ACTIVITIES. IN SUPPORT OF THE AFORESAID PROPOSITION, A NUMBER OF J UDGMENTS OF OTHER JURISDICTIONS, I.E., PRIVY COUNCIL, HOUSE OF LORDS IN ENGLAND AND THE US COURT S WERE TAKEN NOTE OF. THE POSITION IN LAW, ULTIMATELY, IS SUMMED UP IN THE FOLLOWING WORDS (PA GE 377 OF 44 ITR) : 19 ITA NOS.665, 666,581 &813 /KOL/2 013 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 'AS HAS BEEN ALREADY POINTED OUT IN CONNECTION WITH THE OTHER TWO CASES WHERE THERE IS A LETTING OUT OF PREMISES AND COLLECTION OF RENTS THE ASSESSMENT ON PROPERTY BASIS MAY BE CORRECT BUT NOT SO, WHERE THE LETTING OR SUB-LETTING IS PART OF A TRADI NG OPERATION. THE DIVIDING LINE IS DIFFICULT TO FIN D ; BUT IN THE CASE OF A COMPANY WITH ITS PROFESSED OBJ ECTS AND THE MANNER OF ITS ACTIVITIES AND THE NATUR E OF ITS DEALINGS WITH ITS PROPERTY, IT IS POSSIBLE T O SAY ON WHICH SIDE THE OPERATIONS FALL AND TO WHAT HEAD THE INCOME IS TO BE ASSIGNED.' 9. AFTER APPLYING THE AFORESAID PRINCIPLE TO THE FA CTS, WHICH WERE THERE BEFORE THE COURT, IT CAME TO THE CONCLUSION THAT INCOME HAD TO BE TREATED AS INC OME FROM BUSINESS AND NOT AS INCOME FROM HOUSE PROPERTY. WE ARE OF THE OPINION THAT THE AFORESAID JUDGMENT IN KARANPURA DEVELOPMENT CO. LTD.'S CASE SQUARELY APPLIES TO THE FACTS OF THE PRESENT C ASE. 10. NO DOUBT IN SULTAN BROTHERS (P.) LTD.'S CASE, A CONSTITUTION BENCH JUDGMENT OF THIS COURT HAS CLARIFIED THAT MERELY AN ENTRY IN THE OBJECTS CLAUS E SHOWING A PARTICULAR OBJECT WOULD NOT BE THE DETERMINATIVE FACTOR TO ARRIVE AT AN CONCLUSION WHE THER THE INCOME IS TO BE TREATED AS INCOME FROM BUSINESS AND SUCH A QUESTION WOULD DEPEND UPON THE CIRCUMSTANCES OF EACH CASE, VIZ., WHETHER A PARTICULAR BUSINESS IS LETTING OR NOT. THIS IS SO S TATED IN THE FOLLOWING WORDS : 'WE THINK EACH CASE HAS TO BE LOOKED AT FROM A BUSI NESSMAN'S POINT OF VIEW TO FIND OUT WHETHER THE LETTING WAS THE DOING OF A BUSINESS OR THE EXPLOITA TION OF HIS PROPERTY BY AN OWNER. WE DO NOT FUR THE R THINK THAT A THING CAN BY ITS VERY NATURE BE A COMM ERCIAL ASSET. A COMMERCIAL ASSET IS ONLY AN ASSET USED IN A BUSINESS AND NOTHING ELSE, AND BUSINESS M AY BE CARRIED ON WITH PRACTICALLY ALL THINGS. THEREFORE, IT IS NOT POSSIBLE TO SAY THAT A PARTICU LAR ACTIVITY IS BUSINESS BECAUSE IT IS CONCERNED WI TH AN ASSET WITH WHICH TRADE IS COMMONLY CARRIED ON. W E FIND NOTHING IN THE CASES REFERRED TO SUPPORT THE PROPOSITION THAT CERTAIN ASSETS ARE COMMERCIAL ASSETS IN THEIR VERY NATURE.' 11. WE ARE CONSCIOUS OF THE AFORESAID DICTA LAID DO WN IN THE CONSTITUTION BENCH JUDGMENT. IT IS FOR THIS REASON, WE HAVE, AT THE BEGINNING OF THIS JUDG MENT, STATED THE CIRCUMSTANCES OF THE PRESENT CASE FROM WHICH WE ARRIVE AT IRRESISTIBLE CONCLUSION THA T IN THIS CASE, LETTING OF THE PROPERTIES IS IN FAC T IS THE BUSINESS OF THE ASSESSEE. THE ASSESSEE, THEREFO RE, RIGHTLY DISCLOSED THE INCOME UNDER THE HEAD 'INCOME FROM BUSINESS'. IT CANNOT BE TREATED AS 'IN COME FROM THE HOUSE PROPERTY'. WE, ACCORDINGLY, 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. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND TH E DECISION OF HONBLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS LTD., SUPR A, THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 25. IN THE RESULT, THE APPEALS OF ASSESSEE ARE ALLO WED AND THAT OF REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.02.2016. SD/- SD/- (WASIM AHMED) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29TH FEBRUARY, 2016 JD. SR. P.S COPY OF THE ORDER FORWARDED TO: 20 ITA NOS.665, 666,581 &813 /KOL/2 013 M/S SALARPURIA SOFTZONE, AY 2008-09 & 2009-1 0 1. APPELLANT M/S SALARPURIA SOFTZONE, C/O SALARPURIA JAJODIA & CO., 7, CHITTARANJAN AVENUE, KOLKATA-700072. 2. RESPONDENT JCIT, RANGE-56, KOLKATA. 3. CIT(A)-XXXVI, KOLKATA 4. CIT , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .