CIT v. Elnet Technologies Ltd.

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers2013 TaxPub(DT) 0684 (Mad-HC) : (2013) 054 (I) ITCL 0120 : (2013) 213 TAXMAN 0129 : (2013) 089 DTR 0442 INCOME TAX ACT, 1961 --Head of income--business income v. Income from house property Lease rentals from leasing of property--Assessee constructed Technology Park which comprised of separate modules with uplinking facility with BSNL. The company provided infrastructure facilities for the purpose of running IT company. In respect of income received on such licence, the assessee claimed that the said income was assessable as business income. The assessee's claim was however, rejected by the assessing officer holding that the said income was assessable as income from the property. The revenue contended that in the memorandum, there is no clause or reference about assessee leasing out the property as business proposition and that the income could be treated as income from business. *Held:* When the company had taken lands on 90 days years lease with the objects of constructing Income Tax company with all its infrastructural facilities, the same was for the purpose of establishing and providing the amenities required to run, maintain, manage or administer computer centres for manufacturing or processing software packages and/or hardware materials and components required for computer industry, to exploit it as a business proposition. Therefore, the lease rentals are assessable as business income only. [Para 6] Income Tax Act, 1961 Section ? In the MADRAS High Court Chitra Venkataraman & K.Ravichandra baabu CIT v. Elnet Technologies Ltd. Tax Case (Appeal) Nos.2336 and 2623 of 2006 and 2169 9 October, 2012 T.C.(A).Nos. 2336 and 2623 of 2006 :- Tax Case (Appeals) against the order of the Income Tax Appellate Tribunal, Madras A Bench, dated 6.2.2006 and 12.6.2006 passed in I.T.A.Nos.3203/Mds/04 and 1451/Mds/2002 for the assessment year 2001-02 and 1995-96. T.C.(A).No. 2169 of 2008 :- Tax Case (Appeal) against the order of the Income Tax Appellate Tribunal, Madras B Bench, dated 31.10.2002 passed in I.T.A.No.1606/Mds/1999 for the assessment year 1996-97. Appellantby : T. Ravi Kumar Respondent by : C.V. Rajan JUDGMENT *Chitra Venkataraman, J.* The above Tax Case (Appeals) are at the instance of the Revenue against the order of the Tribunal relating to assessment years 2001-02, 1995-96 and 1996-97 respectively by raising the following substantial questions of law : '1.Whether in the facts and in the circumstances of the case 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 as income from business in the hands of the owner of the property? SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 0684 (Mad-HC) : (2013) 054 (I) ITCL 0120 : (2013) 213 TAXMAN 0129 : (2013) 089 DTR 0442

INCOME TAX ACT, 1961

--Head of income--business income v. Income from house property Lease rentals from leasing of property--Assessee constructed Technology Park which comprised of separate modules with uplinking facility with BSNL. The company provided infrastructure facilities for the purpose of running IT company. In respect of income received on such licence, the assessee claimed that the said income was assessable as business income. The assessee's claim was however, rejected by the assessing officer holding that the said income was assessable as income from the property. The revenue contended that in the memorandum, there is no clause or reference about assessee leasing out the property as business proposition and that the income could be treated as income from business. Held: When the company had taken lands on 90 days years lease with the objects of constructing Income Tax company with all its infrastructural facilities, the same was for the purpose of establishing and providing the amenities required to run, maintain, manage or administer computer centres for manufacturing or processing software packages and/or hardware materials and components required for computer industry, to exploit it as a business proposition. Therefore, the lease rentals are assessable as business income only. [Para 6]

Income Tax Act, 1961 Section ?

In the MADRAS High Court

Chitra Venkataraman & K.Ravichandra baabu

CIT v. Elnet Technologies Ltd.

Tax Case (Appeal) Nos.2336 and 2623 of 2006 and 2169

9 October, 2012

T.C.(A).Nos. 2336 and 2623 of 2006 :- Tax Case (Appeals) against the order of the Income Tax Appellate Tribunal, Madras A Bench, dated 6.2.2006 and 12.6.2006 passed in I.T.A.Nos.3203/Mds/04 and 1451/Mds/2002 for the assessment year 2001-02 and 1995-96.

T.C.(A).No. 2169 of 2008 :- Tax Case (Appeal) against the order of the Income Tax Appellate Tribunal, Madras B Bench, dated 31.10.2002 passed in I.T.A.No.1606/Mds/1999 for the assessment year 1996-97.

Appellantby : T. Ravi Kumar

Respondent by : C.V. Rajan

JUDGMENT

Chitra Venkataraman, J.

The above Tax Case (Appeals) are at the instance of the Revenue against the order of the Tribunal relating to assessment years 2001-02, 1995-96 and 1996-97 respectively by raising the following substantial questions of law :

'1.Whether in the facts and in the circumstances of the case 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 as income from business in the hands of the owner of the property?