Madras High Court
The Commissioner Of Income Tax vs Elnet Technologies Limited on 14 June, 2021
Tax Case Appeal No.16 of 2014
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 14.06.2021
CORAM
THE HON'BLE MR.JUSTICE M. DURAISWAMY
AND
THE HON'BLE MRS.JUSTICE R. HEMALATHA
Tax Case Appeal No.16 of 2014
The Commissioner of Income Tax,
Chennai. ... Appellant
v.
M/s. Tidal Park Ltd.,
4, Rajiv Gandhi Salai,
Taramani,
Chennai – 600 113. ... Respondent
Tax Case Appeal filed under Section 260A of the Income Tax Act,
1961 against the order of the Income Tax Appellate Tribunal, Madras
"D" Bench, dated 03.06.2013 passed in I.T.A.No.1198/Mds/2010.
For Appellant : Mr.M.Swaminathan,
Senior Standing Counsel
For Respondent : Mr. Vijayaraghavan Vikram
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Tax Case Appeal No.16 of 2014
JUDGMENT
(Delivered by M.DURAISWAMY, J.)
Challenging the order dated 03.06.2013 passed by the Income Tax
Appellate Tribunal, Madras "D" Bench in I.T.A.No.1198/Mds/2010, in
respect of the assessment year 2007-2008, the Revenue has filed the
above appeal.
2. The above appeal was admitted on the following substantial
questions of law:
" Whether the Tribunal was right in holding that
the 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
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Tax Case Appeal No.16 of 2014
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 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
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Tax Case Appeal No.16 of 2014
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."
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
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Tax Case Appeal No.16 of 2014
Revenue in this appeal may be decided against the Revenue and in
favour of the 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.
[M.D., J.] [R.H., J.]
14.06.2021
Index : Yes/No
Internet : Yes
Rj
To
The Income Tax Appellate Tribunal,
Madras "D" Bench
M. DURAISWAMY, J.
and
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Tax Case Appeal No.16 of 2014
R.HEMALATHA, J.
Rj
Tax Case Appeal No.16 of 2014
14.06.2021
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