The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that the income from operating and maintaining an IT park is to be assessed under the head "Income from Business".
The two-member bench of Vikas Awasthy (Judicial Member) and M. Balaganesh (Accountant Member) has observed that the income from letting out the premises/developing space along with other facilities in an industrial park, SEZ is to be charged to tax under the head "profits and gains of business."
The respondent/assessee is engaged in developing, operating, and maintaining an information technology park (IT Park). The assessee received income of Rs.11,83,86,181 from letting out, operating, and maintaining an IT park named G-Corp Tech Park and offered the same for tax under the head "Business Income".
In the scrutiny assessment proceedings, the Assessing Officer did not concur with the assessee's claim with respect to income from IT Park as "Business Income". The Assessing Officer held that rental income from IT Park is assessable under the head "Income from House Property". The assessee was aggrieved by the assessment order and appealed before the CIT(A), assailing the findings of the Assessing Officer in treating the income from operating and maintaining G-Corp Tech Park as income from "house property".
The CIT (A), after considering the facts and various decisions, reversed the findings of the Assessing Officer and held that the receipts from the operation and maintenance of G-Corp Tech Park are to be assessed under the head "Income from Business".
The issue raised was whether rental income received by the assessee from the Information Technology Park was to be assessed as "Income from House Property" or "Income from Business".
The department vehemently defended the assessment order and prayed for the reversal of the findings of CIT(A) and upheld the findings of the Assessing Officer.
The assessee contended that the main objectives of the assessee company are to develop and operate technological parks, software parks, electronic and hardware technology parks, etc. The assessee referred to CBDT Circular No.16/2017 dated April 25, 2017 to contend that lease rent from letting out the building and developing space along with amenities in an industrial park or SEZ is to be considered as "business income".
The tribunal noted that no material has been placed on record to show that any appeal was filed by the Revenue against the order of CIT(A) for Assessment Year 2011-12 or Assessment Year 2013-14.
The tribunal, while following the principle of consistency, dismissed the appeal of the department.
Case Title: DCIT Versus M/s. N.V.Developers Pvt. Ltd.
Citation: ITA NO. 6325/MUM/2019(A.Y.2012-13)
Counsel For Appellant: Pankaj Kumar and B.K.Bagchi
Counsel For Respondent: Mehiln Golvala and Darshit Naik