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TMI Blog2017 (5) TMI 1097X X X X Extracts X X X X X X X X Extracts X X X X ..... or AY 2009-10 on 17.09.2009, admitting an income of Rs..7,43,34,181/-, claiming deduction u/s. 80IA(4)(iii) of the Act at Rs.. 439.74 lacs. The said deduction, it was found during the course of the assessment proceedings, to be in respect of rent from four concerns (refer para 4.3) to whom built-up space had been let out. The assessee claimed the same to be a business receipt in-as-much as the letting of building was along with the provision of certain facilities, so that it was in the nature of business income. In view of the Assessing Officer (AO), however, the same was only rent, as evidenced by the deduction of tax at source thereon by the payers u/s. 194I of the Act and, in any case, did not change the character of the income as income from house property. No separate document had in fact been executed in respect of the facilities. He, accordingly, assessed the rental income u/s. 22, as income from house property, relying on the decision in the case of Shambhu Investments (P.) Ltd. v. CIT [2003] 263 ITR 143 (SC). Further, the assessee is not eligible for deduction u/s. 80-IA(4)(iii) as the same could be only after the notification of the industrial park by Central Board of Dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lex, hospitals, schools, training centre, testing laboratory, worker housing, convention centres, canteens, hotels, restaurants, recreation facilities, places of worship, highways, roads, weigh bridges, transport terminals, petrol bunks, paths, streets, sideways, air conditioning systems, power generation plants including those operating with renewable energy sources like wind, pavements, open area development with horticulture and to do other similar construction, levelling or paving work in the industrial township, industrial park or industrial estate, developed by the Company for the use of the company or for the use of Indian and / or foreign investors / tenants.' The ld. DR would strongly object, stating that such a plea was not assumed before the Revenue authorities, so that it is not maintainable. In any case, it is of no consequence in-as-much as the objects stand inserted only in April, 2013, which shall, therefore, have effect only for the period on or after the said amendment. Acts done without the authority of its' charter are ultra vires the company, and the same cannot be ratified even by the whole body of the shareholders. All acts and matters consequent and pursua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.' The tribunal's decision supra, as shall be apparent, is based on the specific finding of a complex (composite) letting, i.e., the inseparable letting of the specialized furniture in the form of business modules, along with the building, further relying on the decision in the case of CIT v. Elnet Technologies Ltd. [2013] 213 Taxman 129 (Mad). While the electrical fittings, also stated therein, would form an integral part of the building and, further, the air conditioning equipment, though separate and distinct from the building, is only toward enabling the proper user of the building itself, without doubt, the business modules, in the form of cubicles and workstations, are part of the furniture, let inseparably along with the building, so that, even as found by the first appellate authority (in the assessee's appeal for AY 2009-10), it is a case of inseparable letting. Income shall, on that basis, stand to be assessed as business income. The ld. first appellate authority, we may clarify, misdirects himself (for AY 2009- 10) in law when he holds that the rental income in su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in its' hands as income from other sources. As afore-stated, the same would not impact its eligibility for deduction u/s. 80-IA(4)(iii), which reads as under (in its relevant part), inasmuch as the same does not alter the nature of the receipt: 'Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. 80-IA. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years. (4) This section applies to- (i) to (ii) ....... (iii) any undertaking which develops, develops and operates or maintains and operates an industrial park or special economic zone notified by the Central Government in accordance with the scheme framed and notified by that Government fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t allowed deduction u/s.80-IAB on it's other income/s, as from service agreements, chargeable u/s.28. That the said income is assessable as business income, and only rightly so, inasmuch as the source thereof is the commercial activity of providing a range of services, is besides the point. We have in fact found the said services as only enabling services, i.e., enabling the enjoyment and the user of the house property, developed by the assessee as a developer thereof - a term defined under SEZ Act, 2005. By letting the built-up space, the assessee is only turning into account it's investment in the house property, being a building and land appurtenant thereto. It is, in fact, this - the construction of a building suitable for the firms operating in the IT sector, that qualifies it as a developer of an Infopark, approved as a SEZ. That the said activity, i.e., developing real estate and leasing it, which is, broadly speaking, and in common parlance, only a business, is not regarded as so for the purpose of assessment of income there-from, being derived from a house property, a defined source of income for which a specific head of income is provided under the Act, is another matter. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant on account of the nature of the receipt, are as follows: a) Only a part of the building is let to the concerns in the software business: b) The assessee's building, christened as Olympia Technology Park is not notified by the Central Government, i.e., Central Board of Direct Taxes (CBDT). We shall take up both objections in seriatim. With regard to the first, the same in not maintainable as the approval letter dated 03/3/2009 (PB pgs. 14-16) records the proposed number of units in the park as '3', while admittedly four units, as under (along with the corresponding rent), are housed in the building during the previous year relevant to AY 2009-10: (refer pg.1 of the assessment order) 'The break-up of the income is shown below: Visteon Power Train Controls Rs. 1,57,216/- Merril Technologies Ltd Rs. 1,80,72,120/- ABN Amro Central Enterprises Rs. 1,27,63,079/- Mindtree Solutions Rs. 89,65,069/-' With regard to the second objection, it was informed that, in terms of rule 18C of the Income Tax Rules, 1962, CBDT only is authorized to notify the scheme u/s. 80-IA(4)(iii), application to which, i.e., for notification, made u/r. 18C (4), vide letter dated 18.04.2009 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otors Pvt. Ltd. own 4th, 5th and 6th Floors and M/s. Khivraj Tech Park Pvt. Ltd. are owners of 1st, 2nd, 3rd, 7th and 8th floor of the building, and all the installation and handing over certificates are also in the name of M/s. Khivraj Tech Park Pvt. Ltd. In view of this there is no supporting material on record to state that M/s. Khivraj Motors Pvt. Ltd. is developing a separate Industrial park to be entitled for availing deductions under the IT Act.' In summation 5. The Tribunal for the earlier years has found leasing of house property by the assessee as being a case of composite letting along with other assets, which finding has not been disputed before us by the Revenue. The (composite) lease rental income would, in view of section 56(2)(iii) of the Act, stand to be assessed as business income u/s. 28; the assessee undertaking the same in an organized, systematic manner, on commercial basis, in a regular manner. This, as explained in Sultan Bros. (P.) Ltd. v. CIT [1964] 51 ITR 353 (SC), is for the reason that it then becomes a new source of income. In the present case, the Revenue has, however, with reference to the extant object clauses of it's charter (MOA), pleaded the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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