The Commissioner Of Income Tax,Corporate Circle 3(1), Chennai – 600 034 v. M/S.tidel Park Limited

IN THE HIGH COURT OF JUDICATURE AT MADRASDATE: 15.07.2021 CORAM: THE HON'BLE MR.JUSTICE M.DURAISWAMYAND THE HON'BLE MRS.JUSTICE R.HEMALATHA T.C.A.No.210 of 2016 The Commissioner of Income Tax,Corporate Circle 3(1), Chennai – 600 034....Appellant Vs. M/s.Tidel Park Limited,No.4, Rajiv Gandhi Salai,Taramani, Chennai – 600 113....Respondent Appeal preferred under Section 260A of the Income Tax Act,1961, against the order of the Income Tax Appellate Tribunal,Madras, "C" Bench, dated 26.08.2015 in I.T.A.No.465/Mds/2015 forthe Assessment Year 2010-11 against the order of theCommissioner of Income Tax (A)-III, Chennai –34 dated 20.10.2014in ITA No.1867/2013-2014/CIT(A)-III for the Assessment year2010-2011 against the Amenment order dated 18.03.2013 of theAssistant Commissioner of Income Tax Corporate Circle-3(2),Chennai-34. For Respondent : Mr.Vikram Vijayaraghavan for M/s.Subbaraya Aiyar & Padmanaban JUDGMENT (Judgment was delivered by M.DURAISWAMY, J.) Challenging the order passed in I.TA.No.465/Mds/2015 inrespect of the Assessment Year 2010-11 on the file of the IncomeTax Appellate Tribunal, Chennai, "C" Bench, the Revenue hasfiled the above appeal. https://hcservices.ecourts.gov.in/hcservices/ 2.The only issue in the appeal of the Revenue is that theIncome Tax Appellate Tribunal erred in holding that the leaserent income received from letting out modules of SoftwareTechnology park to various lessees would constitute income frombusiness and eligible for deduction under Section 80IA of theAct. 3.The above appeal was admitted on the following substantialquestions of law: “a)Whether on the facts and in the circumstancesof the case, the Income Tax Appellate Tribunal wasright in holding that the income derived from lettingout of property to the tenants as 'income from businessin the hands of the owner of the property? b)Whether on the facts and in the circumstances ofthe case, the Income Tax Appellate Tribunal was rightin holding that the income from letting out of businesscomprising of communication and various otherfacilities as income from 'business' assessable underSection 28?” 4.When the appeal was taken up for hearing,Mr.M.Swaminathan, learned Senior Standing Counsel appearing forthe appellant/Revenue fairly submitted that the questions of lawthat arose for consideration in the above appeal was alreadydecided against the Revenue and in favour of the assessee in thejudgment dated 14.06.2021 made in T.C.A.No.16 of 2014 [TheCommissioner of Income Tax, Chennai. Vs. M/s. Tidal Park Ltd.,4, Rajiv Gandhi Salai, Taramani, Chennai – 600 113] wherein thisBench held as follows: “... 2.The above appeal was admitted on the followingsubstantial questions of law:"Whether the Tribunal was right in holding thatthe income derived from letting out of property to thetenants for the purpose of running a softwaretechnology park is 'income from business'?”3.When the appeal is taken up for hearing,Mr.M.Swaminathan, learned Senior Standing Counsel forthe appellant/Revenue fairly submitted that the issueinvolved in the above appeal has already been decidedby the Hon'ble Division Bench of this Court, by itsJudgment dated 07.07.2020 in T.C.A. No.732 & 733 of2018, wherein the Hon'ble Division Bench held asfollows:- 8.So far as Substantial Question of Law No.1 isconcerned, it has to be seen as to whether theincome derived from letting out of the property inan industrial park/SEZ including the amenities andthe income received by the owners for such property and the amenities therein would be business income in the hands of the owner of theproperty. 8.So far as Substantial Question of Law No.1 isconcerned, it has to be seen as to whether theincome derived from letting out of the property inan industrial park/SEZ including the amenities andthe income received by the owners for such property and the amenities therein would be business income in the hands of the owner of theproperty. 9.We need not labour much on this issue, onaccount of the circular No.16 of 2017 issued by theCBDT dated 25.04.2017. The CBDT after taking note ofthe two decisions of the Karnataka High Court heldthat it is now a settled position that in the caseof an undertaking which develops, develops andoperates or maintains and operates an industrialpark/SEZ notified in accordance with the schemeframed and notified by the Government, the incomefrom letting out the premises / developed spacealong with other facilities in an industrialpark/SEZ is to be charged to tax under the head'Profits and Gains of Business. 10.As rightly pointed out by Mr.R.VijayaRaghavan, the emphasis is on not only letting out ofthe premises / developed space but along with otherfacilities in an industrial park/SEZ. The tribunalin this regard followed a decision of the DivisionBench of this Court in the case of CIT Vs. ElnetTechnologies Limited, reported in (2013) 30Taxmann.com 63 (Mad). In the said decision, atparagraph No.11, the Division Bench, has held asfollows: "11. In considering whether the incomearising on the leasing of the property wasbusiness of the assessee, one has to get intothe nature of the business of the assessee, tofind out the receipts are assessable under thehead of income from house property or asbusiness income and if receipts does not fall inany of those classified heads, would fallconsideration under the residuary head of incomeas income from other sources." 11.After referring to the decision in the caseof CIT Vs. Chennai Properties and InvestmentsLimited, reported in (2005) 274 ITR 117, it waspointed out that income derived from letting out ofthe property with all amenities and facilities wouldbe income from business and cannot be assessedeither as income from house property or as incomefrom other sources. The said decision of the Hon'bleDivision Bench was appealed against by the revenuebefore the Hon'ble Supreme Court in SLP No.11638 of2013 and we are informed that the appeal wasdismissed on 27.01.2020 on the ground of Low TaxEffect. 12.Considering all those facts as wells as the circular issued by CBDT, substantial question of lawNo.1, has to be answered against the revenue and infavour of the assessee. The Tax Case Appeals are dismissed and theSubstantial Questions of Law are answered againstthe revenue. No Costs.Further, the learned Senior Standing Counsel submittedthat in view of the ratio laid down by the Hon'bleDavison Bench of this Court in the Judgement citedsupra, the question of law that has been raised by theRevenue in this appeal may be decided against theRevenue and in favour of the respondent/assessee. 4.Mr.Vijayaraghavan Vikram, learned counselappearing for the respondent submitted that in view ofthe Judgement of the Division Bench of this court citedsupra, the appeal may be dismissed. 5.Having regard to the submissions made by thelearned counsel on either side, following the ratiolaid down by the Hon'ble Division Bench of this Courtreported in T.C.A.No.732 and 733 of 2018, the questionsof law is decided against the appellant/Revenue and infavour of the respondent/assessee. Accordingly, the TaxCase Appeal is dismissed. No costs.” 5.Mr.Vikram Vijayaraghavan, learned counsel appearing forthe respondent/assessee submitted that in view of the judgmentof the Division Bench of this Court made in T.C.A.No.16 of 2014,the appeal may be dismissed. 4.Mr.Vijayaraghavan Vikram, learned counselappearing for the respondent submitted that in view ofthe Judgement of the Division Bench of this court citedsupra, the appeal may be dismissed. 5.Having regard to the submissions made by thelearned counsel on either side, following the ratiolaid down by the Hon'ble Division Bench of this Courtreported in T.C.A.No.732 and 733 of 2018, the questionsof law is decided against the appellant/Revenue and infavour of the respondent/assessee. Accordingly, the TaxCase Appeal is dismissed. No costs.” 5.Mr.Vikram Vijayaraghavan, learned counsel appearing forthe respondent/assessee submitted that in view of the judgmentof the Division Bench of this Court made in T.C.A.No.16 of 2014,the appeal may be dismissed. 6.Having regard to the submissions made by the learnedcounsel on either side, following the ratio laid down in thejudgment dated 14.06.2021 made in T.C.A.No.16 of 2014 (citedsupra), the questions of law are decided against the Revenue andin favour of the assessee. Accordingly, the Tax Case Appeal isdismissed. No costs. Sd/- Assistant Registrar //True Copy// va Sub Assistant Registrar To 1. The Registrar, The Income Tax Appellate Tribunal, Chennai, "C" Bench 2. The Commissioner of Income Tax(A)-III, Chennai – 343. The Assistant Commissioner of Income Tax, Corporate Circle 3(2), Chennai-34 +1cc to Mr.M.Swaminathan, Advocate, S.R.No.33806+1cc to Mr.A.Subbaraya Aiyar, Advocate, S.R.No.33793T.C.A.No.210 of 2016(1/3) PPA(CO)RGA(24/08/2021)