Rental Income from IT Park is Income from Business: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT) Mumbai Bench, ruled that Rental income from Information Technology Park is Income from Business.

The assessee, M/s. N. V. Developers Pvt Ltd is engaged in developing, operating and maintaining Information Technology Park(IT Park). The assessee received income of Rs.11,83,86,181/- from letting out, operating and maintaining of IT Park named G-Corp Tech Park and offered the same to tax under the head ‘Business Income’. In 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’.

Aggrieved against the assessment the assessee carried the issue in appeal before the CIT(A), assailing the findings of 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 Assessing Officer and held that the receipts from operation and maintenance of G-Corp Tech Park is to be assed under the head ‘Income from Business’. Hence, the present appeal by the Revenue.

Mehil Golvala appearing on behalf of the assessee supported the findings of CIT(A). The Authorized Representative for the assessee referred to CBDT Circular No.16/2017 dated 25/04/2017 to contend that lease rent from letting out the building, developing space along with amenities in an industrial park/SEZ is to be considered as ‘business income’ and that in the immediate preceding Assessment Year and in the succeeding Assessment Year the CIT(A) has accepted the plea of assessee and held the income from operating and maintaining G-Corp Tech Park assessable under the head ‘Business Income’.

Pankaj Kumar representing the Department vehemently defending the assessment order prayed for reversing the findings of CIT(A) and upholding the findings of Assessing Officer.

The Bench consisting of Vikas Aswathy, Judicial Member and M Balaganesh, Accountant Member observed that “An undertaking which develops and operates, or maintain and operate an industrial park/SEZ notified in accordance with scheme framed and notified by the Government, the income from letting out of 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 Hon’ble Jurisdictional High Court in the case of CIT vs. Magarpatta Township & Development Construction Co. Ltd., after considering the aforesaid circular has reiterated this position.”

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