The Commissioner of Income-tax, Chennai v. Tidel Park Ltd
[Citation -2020-LL-0803-4]

Citation 2020-LL-0803-4
Appellant Name The Commissioner of Income-tax, Chennai
Respondent Name Tidel Park Ltd.
Court HIGH COURT OF MADRAS
Relevant Act Income-tax
Date of Order 03/08/2020
Assessment Year 2008-09
Judgment View Judgment
Keyword Tags income from house property • letting out of property • income from business • lease rental income • computing deduction • material on record • maintenance income • business activity • notional expenses • business income • industrial park • interest income • other sources
Bot Summary: 2122/Mds/2011 for the assessment years, 2008-09, dismissing the appeal of the Revenue and upholding the order of the learned Commissioner of Income Tax VI, Chennai, dated 30.09.2011 for the assessment year 2008-09 and holding that except the interest income of Rs. 7,74,19,358/- and other income of Rs. 21,29,999/-, rest of the incomes are assessable under the head income from business for the purpose of computing deduction under section 801A(4) of the Act and to treat interest income and other income only under the head income from other sources and allow deduction under section 80IA on rest of the incomes i.e., rent from premises, operation and maintenance income etc. 03.08.2020 in TCA No.901 of 2015 the case the Tribunal was right in holding that the income derived from letting out of property to tenant for the purpose of running technological park is income from business and not income from house property 2. Whether on the facts and circumstances of the case the assessee is entitled to deduction u/s.80IA(iii) on rental income and lease rent income of the industrial park which is mean for I.T.industries 4. Further, the co-ordinate Bench of this Tribunal in the case of ACIT Vs. Ticel Bio Park Ltd. affirming the order of the Commissioner of Income Tax held that rental income, operation and maintenance income, a/c. We do not find any material on record to establish that such income of the Assessee during the relevant year was from any of its idle properties and the Assessee company used to enjoy such properties as a landlord from only earning the rental income. On the contrary, it seems that the Assessee diversified and added its business line for the development of real estate of particular type, namely software companies and even though the name of the company continue to remain as M/s. Khivraj Motors Pvt. Ltd. The burden of the argument of the learned counsel for the Revenue, perhaps emanated from only the name of the company, forgetting that the main business activity of the company from its motor business had been diversified into developing a special kinds of property and earning lease rental income as its main business income. The Tribunal not only relied upon an earlier decision of Madras High Court in the case of CIT v. Elnet Technologies Ltd. 213 Taxman 129, but also having considered all these aspects in great detail, the Division Bench of this Court to which one of us was a member, in M/s. PSTS Heavy Lift and Shift Ltd., had clearly held that where the main business of the company is to earn rental income as its business income, the income would be taxable under the head Income entitling the petitioner Assessee to have the deductions of notional expenses like depreciation and special deductions like Section 80IA etc.


Order dt. 03.08.2020 in TCA No.901 of 2015 IN HIGH COURT OF JUDICATURE AT MADRAS DATED: 03.08.2020 CORAM HONOURABLE DR.JUSTICE VINEET KOTHARI & HONOURABLE MR.JUSTICE KRISHNAN RAMASAMY T.C.A.No.901 of 2015 Commissioner of Income Tax, Chennai. ... Appellant Vs. M/s. Tidel Park Ltd., C/o.M/s.R. Janakiraman & Co., C.A., 6, Old No.43, Maharaja Suriya Road, Alwarpet, Chennai 600 018. .. Respondent Prayer: Tax Case Appeal filed under Section 260-A of Income Tax Act, 1961 against order of Income Tax Appellate Tribunal Madras B Bench, dated 27.09.2013 in ITA.No.2122/Mds/2011. For Appellant : Mr.M. Swaminathan, Sr. Standing Counsel For Respondent : Mr.R. Venkatnarayanan for Mr. Subbaraya Aiyar ORDER (Delivered by Dr.Vineet Kothari, J.) Court was held by Video Conference, as per Resolution of Full Court dated 3 July 2020, by Judges at their respective 1/8 http://www.judis.nic.in Order dt. 03.08.2020 in TCA No.901 of 2015 residences and counsel, staff of Court appearing from their respective residences. 2. Revenue has filed present appeal aggrieved by order of learned Income Tax Appellate Tribunal, Madras B Bench, dated 27.09.20213 in ITA.No.2122/Mds/2011 for assessment years, 2008-09, dismissing appeal of Revenue and upholding order of learned Commissioner of Income Tax (Appeals) VI, Chennai, dated 30.09.2011 for assessment year 2008-09 and holding that except interest income of Rs. 7,74,19,358/- and other income of Rs. 21,29,999/-, rest of incomes are assessable under head "income from business for purpose of computing deduction under section 801A(4) of Act and to treat interest income and other income only under head income from other sources and allow deduction under section 80IA on rest of incomes i.e., rent from premises, operation and maintenance income etc. 3. following purported substantial questions of law are sought to be raised in present appeals filed by Revenue :- 1. Whether on facts and circumstance of 2/8 http://www.judis.nic.in Order dt. 03.08.2020 in TCA No.901 of 2015 case Tribunal was right in holding that income derived from letting out of property to tenant for purpose of running technological park is income from business and not income from house property? 2. Whether on facts and circumstances of case assessee is entitled to deduction u/s.80IA (4)(iii) on rental income and lease rent income of industrial park which is mean for I.T.industries? 4. findings of Tribunal, in this regard, are quoted as under: 10. We also find that identical issue came up before Hon'ble jurisidictional High Court in case of CIT Vs. Elnet Technologies Ltd. in Tax Case Appeal Nos.391 & 392 of 2007, wherein High Court following its earlier order in TCA Nos.2336 and 2623 of 2006 and 2169 of 2008 dated 9.10.2012 held that income received from leasing out of property with all amenities and facilities would be only income from business and not to be assessed either as income from house property or as income from other sources'. Respectfully following said decision, we uphold order of Commissioner of Income Tax (Appeals) in holding that lease rent income from modules/ built-up space of industrial park is assessable under head 'income 3/8 http://www.judis.nic.in Order dt. 03.08.2020 in TCA No.901 of 2015 from business' and such income is eligible for deduction under section 80lA of Act. 11. Further, co-ordinate Bench of this Tribunal in case of ACIT Vs. Ticel Bio Park Ltd. (supra) affirming order of Commissioner of Income Tax (Appeals) held that rental income, operation and maintenance income, a/c. charges, electricity charges are eligible for deduction under section 80IA(4) of Act. 12. Following decision of Hon'ble Madras High Court in case of Elnet Technolgies Pvt.Ltd (supra) and decision of co-ordinate Bench of this Tribunal in case of Ticel Bio Park Ltd. (supra), we hold that except interest income of Rs.7,74,19,358/- and other income of Rs.21,29,999/- rest of incomes are assessable under head "income from business for purpose of computing deduction under section 801A(4) of Act Therefore, we direct Assessing Officer to treat interest income and other income only under head "income from other sources" and allow deduction under section 80lA on rest of incomes, i.e. rent from premises, operation and maintenance income, revenue sharing income, common facilities such as rent from auditorium and rent from others. 5. issues raised in this appeal are already covered by earlier 4/8 http://www.judis.nic.in Order dt. 03.08.2020 in TCA No.901 of 2015 decision of this Court rendered in Principal Commissioner of Income Tax 4 v. M/s. Khivraj Motors Pvt. Ltd. [TCA.Nos.314 and 315 of 2017 dated 27.7.2020], wherein, this Court following ratio laid down in M/s. PSTS Heavy Lift and Shift Ltd., Wavoo Mansion, 2nd Floor 48, (Old No.39), Rajaji Salai vs. M/s. CeeDeeYes IT Parks Pvt. Ltd., decided on 30 January 2020, in Tax Case Appeal Nos.2193 to 2195 of 2008 & 979 of 2009 , held as follows: "6. Though learned counsel for Revenue Mr.Karthik Ranganathan, sought to urge before us that development of I.T. Park was not main business activity of Assessee company, he failed to establish his contention with help of any relevant evidence, including memorandum of association of company or any other relevant documents. 7. On contrary, we found from discussion in order of Commissioner of Income Tax (Appeals) as well as learned Tribunal that Assessee has not only shown part of its income as income from other property, but has only allowed claim of Assessee to tax income from software companies in form of lease rentals from Olympia Tech Park as income from business and 5/8 http://www.judis.nic.in Order dt. 03.08.2020 in TCA No.901 of 2015 thereupon allowing this deduction under Section 80IA of Act, which is allowed only if income from business is taxed under head Income from business at hands of Assessee. We do not find any material on record to establish that such income of Assessee during relevant year was from any of its idle properties and Assessee company used to enjoy such properties as landlord from only earning rental income. 8. On contrary, it seems that Assessee diversified and added its business line for development of real estate of particular type, namely software companies and even though name of company continue to remain as M/s. Khivraj Motors Pvt. Ltd. burden of argument of learned counsel for Revenue, perhaps emanated from only name of company, forgetting that main business activity of company from its motor business had been diversified into developing special kinds of property and earning lease rental income as its main business income. By no stretch of imagination, could software park developed with special facilities and amenities for software companies, be described or believed to be property created for 6/8 http://www.judis.nic.in Order dt. 03.08.2020 in TCA No.901 of 2015 earning rental income as income from house property. Tribunal not only relied upon earlier decision of Madras High Court in case of CIT v. Elnet Technologies Ltd. [(2012) 213 Taxman 129], but also having considered all these aspects in great detail, Division Bench of this Court to which one of us (VKJ) was member, in M/s. PSTS Heavy Lift and Shift Ltd., had clearly held that where main business of company is to earn rental income as its business income, income would be taxable under head Income entitling petitioner Assessee to have deductions of notional expenses like depreciation and special deductions like Section 80IA etc." 5. Following above decision, this appeal of revenue is also dismissed on above lines. No costs. (V.K.,J.) (K.R.,J.) 03.08.2020 msr/kpl Index:Yes/No Internet:Yes/No DR. VINEET KOTHARI, J. & KRISHNA RAMASAMY, J. 7/8 http://www.judis.nic.in Order dt. 03.08.2020 in TCA No.901 of 2015 msr To Income Tax Appellate Tribunal, Madras B Bench T.C.A.No.901 of 2015 3.8.2020 8/8 http://www.judis.nic.in Commissioner of Income-tax, Chennai v. Tidel Park Ltd
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