Asstt. CIT v. Lulu Tech Park (P) Ltd.

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The Tax Publishers2017 TaxPub(DT) 1259 (Chen-Trib) Asstt. CIT v. Lulu Tech Park (P) Ltd. INCOME TAX ACT, 1961 --Deduction under section 80-IAB--AllowabilityAssessee SEZ, developer--Earned lease rentals from apartments in SEZ.--Where assessee was a approved co-developer of an info park, a Special Economic Zone (SEZ) and rented the three apartments and earned lease rentals on it and claimed the same as deduction under section 80-IAB, AO was not justified in denying deduction treating the lease rental as part of house property income, since developing real estate and leasing it was broadly, and in common parlance, only a business activity.--Assessee company was a approved co-developer of an info park, a Special Economic Zone (SEZ). It has constructed a building known as 'Tejomaya' on the said land for information technology related businesses, providing other related support services and amenities, viz., water facility, generator back-up, centralized air conditioning, security, garden, etc. For the year under reference, it earned Rs. 137.74 lacs by way of lease rent. It claimed deduction under section 80-IAB on the entire income from the Tejomaya building leased to three entities during the relevant year. The same was, however denied by AO in respect of the lease income, and assessed the same under the head 'Income from house property'. *Held:* The assessee was without doubt a Developer of a SEZ, having been in fact allowed deduction under section 80-IAB on it's other income/s, as from service agreements, chargeable under section 28. That the said income was assessable as business income, and only rightly so, inasmuch as the source thereof is the commercial activity of providing a range of services, is besides the point. The said activity, i.e., developing real estate and leasing it, which was, broadly, and in common parlance, only a business, was not regarded as so for the purpose of assessment of income there from, being derived from a house property. Therefore, AO was not justified in assessing it as house property income and assessee was to be allowed deduction under section 80-IAB. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2017 TaxPub(DT) 1259 (Chen-Trib)

Asstt. CIT v. Lulu Tech Park (P) Ltd.

INCOME TAX ACT, 1961

--Deduction under section 80-IAB--AllowabilityAssessee SEZ, developer--Earned lease rentals from apartments in SEZ.--Where assessee was a approved co-developer of an info park, a Special Economic Zone (SEZ) and rented the three apartments and earned lease rentals on it and claimed the same as deduction under section 80-IAB, AO was not justified in denying deduction treating the lease rental as part of house property income, since developing real estate and leasing it was broadly, and in common parlance, only a business activity.--Assessee company was a approved co-developer of an info park, a Special Economic Zone (SEZ). It has constructed a building known as 'Tejomaya' on the said land for information technology related businesses, providing other related support services and amenities, viz., water facility, generator back-up, centralized air conditioning, security, garden, etc. For the year under reference, it earned Rs. 137.74 lacs by way of lease rent. It claimed deduction under section 80-IAB on the entire income from the Tejomaya building leased to three entities during the relevant year. The same was, however denied by AO in respect of the lease income, and assessed the same under the head 'Income from house property'. Held: The assessee was without doubt a Developer of a SEZ, having been in fact allowed deduction under section 80-IAB on it's other income/s, as from service agreements, chargeable under section 28. That the said income was assessable as business income, and only rightly so, inasmuch as the source thereof is the commercial activity of providing a range of services, is besides the point. The said activity, i.e., developing real estate and leasing it, which was, broadly, and in common parlance, only a business, was not regarded as so for the purpose of assessment of income there from, being derived from a house property. Therefore, AO was not justified in assessing it as house property income and assessee was to be allowed deduction under section 80-IAB.