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TMI Blog2012 (11) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. T.C.(A).No. 2336 of 2006 was admitted on the above stated two questions of law, whereas, T.C.(A).Nos. 2623 of 2006 and 2169 of 2008 were admitted only on the second substantial question of law. The Tribunal followed the order made for the assessment year 1996-97 in respect of other two assessment years under independent discussion. The assessee company was granted lease of certain extent of land by Government of Tamil Nadu for a period of 90 years under lease deed dated 18.2.2005. The assessee company is incorporated under the Companies Act. The grant of lease was for the purpose of constructing a Software Technology Park as per G.O.Ms. No. 755, Industries Department dated 26.7.90. The assessee is stated to have constructed the Technology Park which comprised of separate modules with uplinking facility with BSNL. The company provided infrastructure facilities for the purpose of running IT company. The main object of the company as evident from the memorandum of association, which is relevant for the purpose of this case reads as under:- 1. To establish and provide facilities and amenities required to run, maintain, manage or administer computer centres for manufacturing or proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bout the assessee using the module by itself, but it only allowed others to use the facilities on payment. The income was from investment made on modules. Hence, he reasoned out that the income from the assessment could be assessed as income from other sources. The assessee went on appeal before the Income Tax Appellate Tribunal. The Revenue did not file any appeal as against the order of the Commissioner of Income Tax (Appeals) in holding the receipt as income from other sources. Adverting to the Memorandum of Association, the Tribunal held that the main purpose of the assessee company was not letting out a mere building to the clients, but by providing the infrastructural facilities necessary for running the IT company. Referring to the series of case law relied on by the assessee as well as by the Revenue, the Tribunal held that the income could only be assessed as business income. In so holding, it also referred to the decision of the Tribunal in the case of CIT v. CHENNAI PROPERTIES AND INVESTMENTS LIMITED, MADRAS, in RA. No. 1262 (Mds) / 1992 in I.T.A.No. 2922 (Mds) / 1985, which was taken on reference before this Court. Thus, the appeal filed by the assessee was allowed. Agg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blishing and providing facilities so as to lease it out to others for running a computer software company. Going by the objects, the irresistible conclusion is that the income earned is only business income and no fault could be found on the decision of the Tribunal. He further pointed out the decision of the Apex Court reported in 51 ITR 353 SULTAN BROTHERS PVT. LTD v. CIT. and submitted that the question is as to whether the income could be taxed as business income or otherwise has to rest on the various clauses of the Articles of Association particular concern. Thus, on reading the memorandum of association, he submitted that rightly the Tribunal came to the conclusion that the income has to be assessed only as income from business. 8. Heard learned standing counsel for the Revenue as well as learned counsel for the assessee and perused the materials available on record. 9. In the decision reported in 51 ITR 353 SULTAN BROTHERS PVT. LTD v. CIT, the Apex Court pointed out that the question as to whether particular letting is business or not has to be decided in the circumstances of each case. The Apex Court pointed out that 'each case has to be looked at from a bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported in 266 ITR 685 CIT v. CHENNAI PROPERTIES & INVESTMENTS LTD., this Court elaborately considered the decisions on the subject and on facts, came to the conclusion that as the owner of the building, the rental income received by the assessee on exploiting the property by letting out the same was liable to be assessed under the head 'Income from house property'. A reading of the decision referred to above thus shows a common thread of reasoning that in deciding whether the income on leasing out the property could be treated as income from property or business, the question has to be considered in the circumstances of each case and in the case of assessee being a company, the question has to be considered in the background of the object of the company and whether it is for leasing out the property or as a business to earn income. 13. Applying the said rulings to the facts of the case, on going through the articles of association, we agree with the contention of the assessee that the income received from the leasing out of the property with all amenities and facilities would be income from business only and can not be assessed either as income from house property or as inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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