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TMI Blog2017 (1) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 2,98,73,840/-. The AO made an assessment on a total income of Rs. 2,28,73,150/- by determining the receipts towards lease rentals as 'income from house property' and disallowed depreciation and other business expenditure. 3.1 During scrutiny proceeding it was seen that the assessee-firm had shown a receipt of Rs. 16,30,06,552/- towards lease rentals from Software Technology Park, Rs. 1,16,81,004/- towards operations and maintenance of the same, besides other income of Rs. 49,24,626/-. It claimed interest expenses of Rs. 10,61,00,409/- on term loan, Rs. 7,63,60,6.48/- towards depreciation, Rs. 47,45,790/- towards security expenses, Rs. 54,23,712/- towards finance processing charges and Rs. 46,01,863/- towards annual maintenance charges besides other expenses. The Assessing Officer did not accept the contention of the assessee and held that, as per the scheduler system of taxation, the annual value of a house property was liable to be taxed under the head 'income from house property'. Consequently, he computed the income accordingly and, did not allow deduction for depreciation of Rs. 7,63,60,648/ - and other expenses claimed in the profit and loss account. He charged ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) and Ministry of Commerce and Industry, Department of Industrial Policy and Promotion's approval letter no.15/12/2006- ID dated 10'" April, 2007" (Ref. CBDT notification No. 37/2015, dt.10.04.2015). Hence, according to him, any argument to the effect that the income should be treated as profits from business because the undertaking had been approved by the competent authority for purposes of deduction u/s 80IA(4) [which may have found favour in the past] does not hold good anymore. For the same reason, he held that the decision of the Hon'ble ITAT in assessee's favour in the past is not applicable. 6.1 As regards the other decisions relied on by the assessee, the CIT(A) observed that the common ratio of those decisions is that, if the main object of the company holding a property is to lease it out and earn rental income, such income may be treated as profit of business, The assessee has cited these decisions but has not shown that its main object is that unless the facts of the case are shown to be identical to the facts on consideration of which those decisions were rendered, the ratio of those decisions cannot be applied and benefit of the same cannot be giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... separately against the receipt by way of operation and maintenance. It is only the expenditure incurred wholly and exclusively for purposes of rendering specific services to the lessees in course of their occupation of the premises that should be allowed as deduction against such receipt. He, therefore, directed the AO to compute profit and gains of business following his observations. 7. Aggrieved by the order of the CIT(A) both assessee as well as revenue are in appeal before us raising the following grounds of appeal, which are common in both the years under consideration: Assessee's Grounds of appeal: 1. The learned CIT (A)-VI erred in facts and law while passing assessment order. 2. The learned CIT (A)-VI erred in making the assessment under head income from house property when the income is from business and depreciation & other expenditure are allowable. 3. The learned CIT (A)-VI erred in not appreciating that operation and maintenance of infrastructure project is eligible for depreciation and other expenses. 4. The learned CIT (A)-VI erred in ignoring the order passed by Honorable ITAT on similar issues in assesses own case for A Y 08-09, 09-10 & 10-11 on the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction u/s 80IA, the Ministry of Finance has rescinded the approval Accordingly, the assessee also not claimed any benefit. He submitted that these facts were brought to the notice of CIT(A), who failed to appreciate the facts in this case and adjudicated that the activities of the assessee are not eligible business, hence, it could be assessed under the head "income from house property". 8.1 Ld. AR brought to our notice the partnership deed in which the objective clause of the partnership is to carry on the business ventures in software technology parks, industrial parks, all types of infrastructure development, operating and maintenance (refer pages 65-70 of paper book). He submitted that the assessee is doing business of letting the said property and doing eligible business. He further submitted before us the decisions of Hon'ble Supreme Court in the case of Rayala Corporation Pvt. Ltd. Vs. ACIT (Civil Appeal No. 6437 of 2016, dt. 11/08/16) and M/s Chennai Properties & Investments Ltd., (Civil Appeal No. 4494 of 2004, dt. 09/04/2015) to submit that when the assessee carries on the eligible business, the income should be assessed only as business income not under the head 'incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business is to venture in software technology parks, all nature of real estate business. It is evident from the financial statement of the assessee that the main income is from leasing out of the property and related income from maintenance of the property. In case, the main object of the assessee is to lease out the property, then, it can be regarded as the business income. This is inferred from the judgment of the Hon'ble Supreme Court in the case of Chennai Properties & Investments Ltd. (supra) and Rayala Corporation Pvt. Ltd. (supra). The above two cases are relating to company, whereas the case in question, relates to partnership firm. The objects of creating the company and partnership firm are similar. Hence, the conclusion can be drawn that both are created to carry on the business of leasing out the properties to make profit. In our considered view, the object of running business to make profit by leasing out the property will be charged to tax only under the head 'income from business and not income from house property. The assessee has established the business only to earn income from leasing out the property, hence, assessee is eligible to treat the rental income a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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