THE COMMISSONIER OF INCOME TAX V. M/S TOYOTO TECHNO PARK INDIA P LTD

ITA/207/2008

AI Insights

This case involves an appeal by the Revenue against the decision of the Income Tax Appellate Tribunal, Bangalore, which had dismissed the Revenue's appeal and confirmed the order of the Commissioner of Income Tax (Appeals), Mysore. The dispute centered on the classification of rental income received by M/s. Toyota Techno Park India (P) Ltd. from tenants of the Toyota Technical Park. The Assessing Officer had classified this income under 'Income from House Property', whereas the First Appellate Authority reclassified it as 'Income from Business'. The Revenue challenged this reclassification, leading to the present appeal.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 733434 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 18-03-2014
• Assessment Year: misc
• Other Referred Cases: COMMISSIONER OF INCOME TAX-III v/s VELANKANI INFORMATION SYSTEMS (P) LTD.
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: VANI
• Assessee Lawyers: K V ARAVIND
• Keywords: Business income; Income from house property; Income Tax; Rental income
• Section: 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 18TH DAY OF MARCH 2014 PRESENT THE HON'BLE MR.JUSTICE DILIP B.BHOSALE AND THE HON'BLE MR.JUSTICE B.MANOHAR I T A No.207/2008 BETWEEN: 1. The Commissioner of Income Tax, No.55/1, Shilpashree, Vidyaranya Complex, Vishveshwaranagar, Mysore – 570 008. 2. The Assistant Commissioner of Income-Tax, Circle -2(1), Vidyaranya Complex, Vishveshwaranagar, Mysore – 570 008. … Appellants (By Sri.K.V.Aravind, Advocate) AND: M/s.Toyota Techno Park India (P) Ltd., Plot No.20, Bidadi Industrial Area, Ramanagaram Taluk, Bangalore Rural District. …. Respondent (By Smt.Vani.H, Advocate) 2 This ITA is filed under Sec.260-A of Income Tax Act 1961, arising out of Order dated 16-10-2007 passed in ITA.No.3/Bang/2006, for the Assessment Year 2002- 2003, praying that this Hon’ble Court may be pleased to: i formulate the substantial questions of law stated therein. ii allow the appeal and set aside the orders passed by the ITAT, Bangalore in ITA.No.3/Bang/2006, dated 16-10-2007 confirming the order of the Appellate Commissioner and confirm the order passed by the Assistant Commissioner of Income Tax, Circle-2(1), Mysore in the interest of justice and equity. This appeal coming for hearing this day, B.MANOHAR.J., delivered the following: J U D G M E N T This Income Tax appeal is filed by the Revenue under Section 260A of the Income Tax Act, 1961 (for short ‘the Act’), being aggrieved by the order dated 16-10-2007 made in ITA No.3/Bang/2006, passed by the Income Tax Appellate Tribunal, Bangalore Bench ‘A’ (for short ‘the Tribunal’) whereby the Tribunal dismissed the appeal filed by the Revenue and confirmed the order 3 dated 14-11-2005 passed by the Commissioner of Income Tax (Appeals), Mysore, (hereinafter referred to as ‘the First Appellate Authority’), The First Appellate Authority while setting aside the order passed by the Assessing Authority for the assessment year 2002-03 held that rental income received by letting out the building to the tenants of Toyoto Technical Park falls under the head of ‘business income’ and not under the ‘Income from house property’. 2. The appeal was admitted to consider the following substantial question of law: Whether the Appellate Authorities were correct in holding that the rental income earned by the assessee should be brought to tax under the head ‘Income from Business’ and not under the head ‘Income from House Property’ as held by the Assessing Officer? 3. Learned counsel appearing for the parties submitted that the substantial question of law raised in this appeal is fully covered by the judgment reported in 4 (2013) 218 Taxman 88 (Karnataka) in the case of COMMISSIONER OF INCOME TAX-III v/s VELANKANI INFORMATION SYSTEMS (P) LTD. 4. The Division Bench of this Court in the above said judgment at paragraph 26 has clearly held as under: 26…………… If the intention is to exploit commercial property by putting up construction and letting it out for the purpose of getting rental income, then notwithstanding the fact that the furniture and fittings are provided to the lessee, the income from the building fall under the head ‘income from house property’. But if the assessee is in the business of taking land, putting up commercial buildings thereon and letting out such buildings with all furniture as his profession or business, then notwithstanding the fact that he has constructed a building and he has also provided other facilities and even if there are two separate rental deeds, it does not fall within the heading of income from house property. Therefore, firstly what is the intention behind the lease and secondly what are the facilities given along with the buildings and documents executed in respect of each of them is to be seen. Thirdly it is to be found out whether it is inseparable or not. If they are inseparable and the intention is to carry on the business of letting out the commercial property and carrying at complex commercial activity and getting rental income 5 therefrom, then such a rental income falls under the heading of profits and gains of business or profession.” 5. We are in respectful agreement with the judgment of the Division Bench of this Court. In the instant case the assessee-company has been engaged in the business of developing, operating and maintaining an industrial park and providing infrastructure facilities to different companies as its business. In view of that, the substantial question of law is held against the Revenue. Accordingly, the appeal is dismissed. Sd/- JUDGE Sd/- JUDGE mpk/-* "