2013 (9) TMI 1256 - AT - Income Tax

Summary

Issues Involved:

1. Deduction u/s 80IA(4)(iii) for various types of income.
2. Classification of lease rent income from industrial park.
3. Eligibility of ancillary services income for deduction u/s 80IA(4)(iii).

Summary:

Issue 1: Deduction u/s 80IA(4)(iii) for Various Types of Income

The assessee's appeal contended that the Commissioner of Income Tax (Appeals) erred in not granting deduction u/s 80IA(4)(iii) for several types of income, including rent from others, rent from the auditorium, interest income, operation & maintenance income, revenue sharing income, and other income. The Revenue's appeal challenged the Commissioner of Income Tax (Appeals) for allowing deduction u/s 80IA(4)(iii) on lease rent income from the industrial park.

Issue 2: Classification of Lease Rent Income from Industrial Park

The Commissioner of Income Tax (Appeals) held that the lease rent income of Rs. 51,86,67,230/- from the industrial park is assessable under "profits and gains of business or profession" and eligible for deduction u/s 80IA(4)(iii). This decision was upheld by the Tribunal, which cited the Hon'ble Madras High Court's decision in CIT Vs. Elnet Technologies Ltd., affirming that income from leasing out property with amenities is business income, not "income from house property" or "income from other sources."

Issue 3: Eligibility of Ancillary Services Income for Deduction u/s 80IA(4)(iii)

The Commissioner of Income Tax (Appeals) held that operation and maintenance income, revenue sharing income, and other income are not business income but income from ancillary services, thus not eligible for deduction u/s 80IA(4)(iii). However, the Tribunal, following the decision in ACIT Vs. Ticel Bio Park Ltd., held that except for interest income of Rs. 7,74,19,358/- and other income of Rs. 21,29,999/-, the rest of the incomes, including rent from premises, operation and maintenance income, revenue sharing income, rent from the auditorium, and rent from others, are assessable under "income from business" for the purpose of deduction u/s 80IA(4)(iii).

Conclusion:

The Tribunal directed the Assessing Officer to treat interest income and other income under "income from other sources" and allow deduction u/s 80IA on the rest of the incomes. The assessee's appeal was partly allowed, the Revenue's appeal was dismissed, and the cross-objection by the assessee was disposed of accordingly.

Order pronounced in the open court on Friday, the 27th day of September, 2013 at Chennai.