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2020 (9) TMI 538 - HC - Income TaxCorrect head of income - rental income of the appellant from software technology park developed - income from house property or under the head 'income from business' - HELD THAT - CIT Vs. Tidel Park Ltd. 2020 (7) TMI 339 - MADRAS HIGH COURT wherein the Court took note of various decisions and answered the substantial questions of law against the Revenue and in favour of the assessee. Decision in the case of Chennai Properties Investments Ltd. Vs. CIT 2015 (5) TMI 46 - SUPREME COURT will come to the aid and assistance of the assessee wherein it was held that where, in the terms of memorandum of association, the main object of the assessee given was to acquire properties and earn income by letting out the same, such income was brought to books as business income and not as income from house properties.- Decided in favour of the assessee.
Issues:
1. Classification of income from software technology park. 2. Eligibility for deduction under Section 80IAB. 3. Treatment of expenditure in owning, developing, and maintaining a software technology park. 4. Classification of income from letting out property in an industrial park/SEZ. Issue 1: Classification of income from software technology park The High Court considered whether the income from a software technology park should be assessed as income from house property or income from business. The Tribunal had previously held the income to be assessed as income from house property. The Court referred to a previous decision in the case of CIT Vs. Tidel Park Ltd., where the substantial questions of law were answered against the Revenue and in favor of the assessee. The Court noted that the legal position followed by the Tribunal was correct, leading to the dismissal of the appeal filed by the Revenue. Issue 2: Eligibility for deduction under Section 80IAB The Court analyzed whether the appellant qualified for a deduction under Section 80IAB even if the income was assessable under the head 'income from house property.' The Tribunal had remitted the matter back to the Assessing Officer for examination. The Court found that the Tribunal's decision was in line with the legal position and dismissed the appeal filed by the Revenue. Issue 3: Treatment of expenditure in owning, developing, and maintaining a software technology park The Court examined whether the appellant was eligible for a deduction of expenditure incurred in owning, developing, and maintaining a software technology park, even if the lease rental income was to be assessed under the head 'income from house property.' The Court referred to relevant legal principles and upheld the Tribunal's decision, dismissing the appeal filed by the Revenue. Issue 4: Classification of income from letting out property in an industrial park/SEZ The Court considered whether income derived from letting out property in an industrial park/SEZ, along with amenities, should be classified as business income. Referring to Circular No.16 of 2017 issued by the CBDT, the Court found that such income is to be charged under the head 'Profits and Gains of Business.' The Court also cited previous decisions and the circular to support the classification of such income as business income. Consequently, the Court dismissed the appeal filed by the Revenue and answered the substantial questions of law in favor of the assessee. In conclusion, the High Court upheld the Tribunal's decisions on all issues, dismissing the appeal filed by the Revenue and ruling in favor of the assessee.
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