Madras High Court
The Commissioner Of Income Tax vs M/S.Tidel Park Limited on 16 July, 2021
T.C.A.Nos.887 to 889 of 2016
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATE: 16.07.2021
CORAM:
THE HON'BLE MR. JUSTICE M.DURAISWAMY
AND
THE HON'BLE MRS.JUSTICE R.HEMALATHA
T.C.A.Nos.887 to 889 of 2016
The Commissioner of Income Tax,
Company Circle III (2)
Chennai – 600 034. ... Appellant in all TCAs
Vs.
M/s.Tidel Park Limited,
No.4, Rajiv Gandhi Salai,
Taramani, Chennai – 600 113. ... Respondent in all TCAs
Appeals preferred under Section 260A of the Income Tax Act,
1961, against the order of the Income Tax Appellate Tribunal, Madras,
"D" Bench, dated 19.02.2016 in I.T.A.Nos.1554, 1555 & 1556/Mds/2014
for the Assessment Year 2006-07 & 2009-10.
For Appellant : Mr.M.Swaminathan
(in all TCAs) Senior Standing Counsel
and Mrs.V.Pushpa
Junior Standing Counsel
For Respondent : Mr.R.Vijayaraghavan
(in all TCAs) for M/s.Subbaraya Aiyar
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T.C.A.Nos.887 to 889 of 2016
COMMON JUDGMENT
(Judgment was delivered by M.DURAISWAMY, J.)
Challenging the orders passed in I.T.A.Nos.1554, 1555 &
1556/Mds/2014 in respect of the Assessment Year 2006-07 & 2009-10
on the file of the Income Tax Appellate Tribunal, Chennai, "D" Bench,
the Revenue has filed the above appeals.
2.The only issue in the appeals of the Revenue is that the Income
Tax Appellate Tribunal erred in holding that the lease rent income
received from letting out modules of Software Technology park to
various lessees would constitute income from business and eligible for
deduction under Section 80IA of the Act.
3.The above appeals were admitted on the following substantial
questions of law:
“a)Whether on the facts and in the circumstances of
the case, the Income Tax Appellate Tribunal was right in
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holding that the income derived from letting out of property
to the tenants as 'income from business' in the hands of the
owner of the property?
b)Whether on the facts and in the circumstances of the
case, the Income Tax Appellate Tribunal was right in
holding that the income from letting out of building
comprising of communication and various other facilities as
income from 'business' assessable under Section 28?”
4.When the appeals were taken up for hearing, Mrs.V.Pushpa,
learned Standing Counsel appearing for the appellant/Revenue fairly
submitted that the questions of law that arose for consideration in the
above appeals were already decided against the Revenue and in favour of
the assessee in the judgment dated 14.06.2021 made in T.C.A.No.16 of
2014 [The Commissioner of Income Tax, Chennai. Vs. M/s. Tidal Park
Ltd., 4, Rajiv Gandhi Salai, Taramani, Chennai – 600 113] wherein this
Bench held as follows:
“...
2.The above appeal was admitted on the following
substantial questions of law:
"Whether the Tribunal was right in holding that the
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T.C.A.Nos.887 to 889 of 2016
income derived from letting out of property to the tenants for
the purpose of running a software technology park is 'income
from business'?”
3.When the appeal is taken up for hearing,
Mr.M.Swaminathan, learned Senior Standing Counsel for
the appellant/Revenue fairly submitted that the issue
involved in the above appeal has already been decided by the
Hon'ble Division Bench of this Court, by its Judgment dated
07.07.2020 in T.C.A. No.732 & 733 of 2018, wherein the
Hon'ble Division Bench held as follows:-
8.So far as Substantial Question of Law No.1 is
concerned, it has to be seen as to whether the income
derived from letting out of the property in an industrial
park/SEZ including the amenities and the income
received by the owners for such property and the
amenities therein would be
business income in the hands of the owner of the
property.
9.We need not labour much on this issue, on
account of the circular No.16 of 2017 issued by the
CBDT dated 25.04.2017. The CBDT after taking note of
the two decisions of the Karnataka High Court held that
it is now a settled position that in the case of an
undertaking which develops, develops and operates or
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maintains and operates an industrial park/SEZ notified in
accordance with the scheme framed and notified by the
Government, the income from letting out the premises /
developed space along with other facilities in an
industrial park/SEZ is to be charged to tax under the head
'Profits and Gains of Business.
10.As rightly pointed out by Mr.R.Vijaya
Raghavan, the emphasis is on not only letting out of the
premises / developed space but along with other facilities
in an industrial park/SEZ. The tribunal in this regard
followed a decision of the Division Bench of this Court
in the case of CIT Vs. Elnet Technologies Limited,
reported in (2013) 30 Taxmann.com 63 (Mad). In the
said decision, at paragraph No.11, the Division Bench,
has held as follows:
"11. In considering whether the income
arising on the leasing of the property was business
of the assessee, one has to get into the nature of the
business of the assessee, to find out the receipts are
assessable under the head of income from house
property or as business income and if receipts does
not fall in any of those classified heads, would fall
consideration under the residuary head of income as
income from other sources."
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11.After referring to the decision in the case of
CIT Vs. Chennai Properties and Investments Limited,
reported in (2005) 274 ITR 117, it was pointed out that
income derived from letting out of the property with all
amenities and facilities would be income from business
and cannot be assessed either as income from house
property or as income from other sources. The said
decision of the Hon'ble Division Bench was appealed
against by the revenue before the Hon'ble Supreme Court
in SLP No.11638 of 2013 and we are informed that the
appeal was dismissed on 27.01.2020 on the ground of
Low Tax Effect.
12.Considering all those facts as wells as the
circular issued by CBDT, substantial question of law
No.1, has to be answered against the revenue and in
favour of the assessee.
The Tax Case Appeals are dismissed and the
Substantial Questions of Law are answered against the
revenue. No Costs.
Further, the learned Senior Standing Counsel submitted that
in view of the ratio laid down by the Hon'ble Davison Bench
of this Court in the Judgement cited supra, the question of
law that has been raised by the Revenue in this appeal may
be decided against the Revenue and in favour of the
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respondent/assessee.
4.Mr.Vijayaraghavan Vikram, learned counsel
appearing for the respondent submitted that in view of the
Judgement of the Division Bench of this court cited supra,
the appeal may be dismissed.
5.Having regard to the submissions made by the
learned counsel on either side, following the ratio laid down
by the Hon'ble Division Bench of this Court reported in
T.C.A.No.732 and 733 of 2018, the questions of law is
decided against the appellant/Revenue and in favour of the
respondent/assessee. Accordingly, the Tax Case Appeal is
dismissed. No costs.”
5.Mr.R.Vijayaraghavan, learned counsel appearing for the
respondent/assessee submitted that in view of the judgment of the
Division Bench of this Court made in T.C.A.No.16 of 2014, the appeals
may be dismissed.
6.Having regard to the submissions made by the learned counsel
on either side, following the ratio laid down in the judgment dated
14.06.2021 made in T.C.A.No.16 of 2014 (cited supra), the questions of
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law are decided against the Revenue and in favour of the assessee.
Accordingly, the Tax Case Appeals are dismissed. No costs.
Index : Yes/No [M.D., J.] [R.H., J.]
Internet : Yes 16.07.2021
va
To
1.The Income Tax Appellate Tribunal, Chennai, "D" Bench
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T.C.A.Nos.887 to 889 of 2016
M.DURAISWAMY, J.
and
R.HEMALATHA , J.
va
T.C.A.Nos.887 to 889 of 2016
16.07.2021
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