Lease rent from Software Tech Park qualifies as business income under Section 80IA

The Court upheld the classification of lease rent income from a Software Technology park as 'income from business' eligible for deduction under Section 80IA of the Income Tax Act. Relying on past judgments and a CBDT circular, the Court dismissed the Revenue's appeal, affirming that income from letting out property with amenities should be treated as business income. The Tribunal's decision was upheld, and the substantial questions of law were resolved in favor of the assessee, with no costs awarded.

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Issues Involved:
Challenge to orders passed by Income Tax Appellate Tribunal on the classification of lease rent income under Section 80IA of the Income Tax Act.

Analysis:
1. The main issue in the appeals was whether the lease rent income from letting out modules of a Software Technology park constitutes income from business and is eligible for deduction under Section 80IA of the Income Tax Act. The Revenue challenged the Tribunal's decision on this classification.

2. The substantial questions of law admitted for consideration included whether the income from letting out a building can be considered as 'income from business' under Section 28 of the Income Tax Act. Additionally, the Tribunal's decision on whether the services rendered by the landlord should be classified as 'business' income was questioned.

3. The Revenue's counsel acknowledged that similar issues had been previously decided against the Revenue in other judgments. Specifically, a judgment dated 14.06.2021 in T.C.A.No.16 of 2014 held that income derived from letting out property for running a software technology park is considered 'income from business'. This decision was based on a circular issued by the CBDT and previous court rulings.

4. The judgment referred to a previous Division Bench decision which clarified that income from letting out property in an industrial park/SEZ, along with amenities, should be treated as business income in the hands of the property owner. The circular issued by the CBDT also supported this interpretation.

5. The Division Bench emphasized that when considering the nature of the business, income from letting out property with amenities should be classified as business income and not under other categories like income from house property or other sources. The appeal against this decision was dismissed by the Supreme Court.

6. Following the precedent set by previous judgments and the circular issued by the CBDT, the Court ruled against the Revenue in the present case. The Tax Case Appeals were dismissed, and the substantial questions of law were answered in favor of the assessee. No costs were awarded in this matter.

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