TaxTMI 
TaxTMI 
2017 (5) TMI 1033
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....a, from Info Parks, Kerala (IPK), a Government of Kerala Undertaking, for a period of 90 years. 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, which is the first year of it's operations, it earned Rs.. 137.74 lacs by way of lease rent on 1,63,153 sq. ft. of built-up area, being, in the main, at Rs..30 per sq.ft. per month. Besides, it collects another Rs..5 (per sq.ft. per month) for operating and maintenance of the common area utilities, air conditioning, etc., and also provides car parking space (both open and covered) for a monthly charge. It claimed deduction u/s. 80-IAB of the Act on the entire income from the Tejomaya building leased to three entities during the relevant year. The same was however denied in respect of the lease income, assessing the same at Rs..31,20,761/- under the head 'Income from house property'. The assessee's income was, accordingly, assessed at Rs.. 32,08,558/-, the balance Rs..87,797/- being 'income from othe....
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....os. 01 Air cooled Chillers York - 250TR 4 02 Air Handling Units 40 03 Chilled water pumps 9 04 Chilled Water Pipelines 1 Set 05 Vertical AHUs 9 06 Fresh-air Handling Unit 1 07 Heat Recovery Wheel 4 08 Transformers - 2000k V A 2 09 DG Set -1500 KVA 2 10 Electrical Distribution System 1 11 Fire Fighting System - Sprinklers All floors 12 Fire Hidrants 1 Set 13 Portable Fire Extinguishers 300 14 Staircase pressurisation Unit 4 15 Sewage Treatment Plant 1 16 Lifts - Mitsubishi 8 17 Building Management System 1 18 Building Surveillance System 1 19 A V System - Auditorium 1 20 Intercom Facilities 1 Set Without prejudice, it was submitted by him that even if regarded as letting of house property, so that the income is assessable u/s. 22, the same would yet qualify for deduction u/s. 80-IAB in-as-much as the same is only income derived from developing a SEZ. 3. We have heard the parties, and perused the material on record. 3.1 Any income arising or accruing or received by the assessee duri....
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....vidend income; income from letting of house property by a person who is not the owner thereof; where the same is let along with other assets, i.e., furniture, plant or machinery, under the condition of the two lettings being inseperable, etc. In this context, it may be clarified that, for the purpose of s. 22, the owner is the person who can exercise the rights of the owner, i.e., not on behalf of another, but in his own right. In other words, is a person who is entitled to receive income from house property in his own right (R.B. Jodhamal Kuthiala v. CIT [1971] 82 ITR 570, 575, 578-9 (SC); CIT v. Podar Cement Pvt. Ltd. [1997] 226 ITR 625, 647, 653 (SC)). Again, it is the owner of the structure and not of the land who is eligible to tax (CIT v. Madras Cricket Club [1934] 2 ITR 209 (Mad); Tinsukia Development Corporation Ltd. v. CIT [1979] 120 ITR 476 (Cal)). In the present case, the assessee is the owner of the house property by virtue of s. 27(iiib) r/w. s. 269 UA(f). The assessee has leased a part of the Tejomaya building to each of the three concerns, charging lease rent at defined rates. Annual Value (AV) of a house property u/s. 23(1)(a) is a sum at which the property may reas....
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....ts properly so called, the income falls under the head 'income from property' chargeable under section 9. It is the nature of the operations and not the capacity of the owner that must determine whether the income is from property or from trade. Where the operations involved in the activity of earning income from house property are not different from those of an ordinary house-owner turning to profitable account the property of which he is the owner, the income derived is income from property chargeable under section 9 irrespective of whether the operations are carried on by a company one of whose objects or even the sole object is to indulge in the activity of earning income from house property. Thus, where house property is given on lease or licence basis for earning income therefrom, the true character of the income derived is income from property falling under section 9. The said character is not changed and the income does not become income from trade or business if the hiring is inclusive of certain additional services such as heating, cleaning, lighting or sanitation, which are relatively insignificant and only incidental to the use of occupation of the tenements. ....
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....the sole object to acquire land, build houses and let premises to tenants, was again found of no moment, as the income continued to be from property, and the mere fact that the owner is a company would not be relevant (Commercial Properties Ltd., In re, AIR [1928] Cal 456 (also, Indian City Properties Ltd. v. CIT [1965] 55 ITR 262 (Cal)). We cannot help but refer again to the decision in Sultan Brothers (P.) Ltd. (supra), wherein, among others, the concept of complex letting, i.e., the inseparable letting of a house property belonging to the assessee, along with furniture, plant or machinery, is explained, and in which case the income would be assessable as either income from other sources (u/s. 56(2)(iii)) or as business income u/s. 28. This is as, as explained, this becomes a new source of income. The Apex Court devised tests for determining the inseparability of the two lettings, followed in Shambhu Investments (P.) Ltd. (supra). That is, the entire (rent) income would, in case of such inseparability, stand to be assessed under either head, depending on whether it constitutes or forms a part of the assessee's business or not. The Hon'ble Court also discountenanced the plea wi....
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.... as that of the Revenue is, in this regard, supported by well-settled law on the subject and toward which we have cited a number of decisions, including by the larger benches of the Apex Court, which continue to hold the field, being judicially binding, with that in the case of Keyaram Hotels Pvt. Ltd. (supra) being the latest; the Apex Court dismissing the SLP against the decision by the Hon'ble jurisdictional High Court (reported at [2015] 373 ITR 494 (Mad)) (reference here may also be made to Keyaram Hotels Pvt. Ltd. v. Asst. CIT [2008] 300 ITR 118 (Mad). 3.4 We may next consider the assessee's alternate claim (refer para 2), and for which, the assessee being not in appeal, reference is made to the decisions in Hukumchand Mills Ltd v. CIT [1967] 63 ITR 232 (SC); CIT v. Assam Travels Shipping Service [1993] 199 ITR 1 (SC); CIT v. C.C.C. Holdings [2003] 260 ITR 433 (Mad); CIT vs. Ramnath Goenka (Decd.) & Othrs.[2001] 252 ITR 653, 654 (Mad); Thanthi Trust v. Asst. CIT [1999] 238 ITR 117 (Mad); CIT vs. Rayala Corporation (P.) Ltd. [1995] 215 ITR 883 (Mad); CIT v. Indian Express (Madurai) Pvt. Ltd. [1983] 140 ITR 705 (Mad); Ahmedabad Electricity Co. Ltd. v. CIT [1993] 199 ITR 351 ....
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....r the purpose of assessment of income there-from, being derived from a house property, a defined source of income for which a specific head of income is provided under the Act, is another matter. This is so even where it is carried in an organized manner, i.e., as a business, as in the present case. It shall, however, not cease, for that reason, to be profits and gains derived from the activity of developing a SEZ. The word 'business' - even otherwise a word of wide and indefinite import, as occurring in section 80-IAB(1), is to be, accordingly, construed in a broad rather than a strict sense, as conveying the gamut of activities, including activities subservient and incidental to developing a SEZ and turning it into account. Now, surely, leasing of house property, inasmuch as the lessees (who are to be, or presumably so, in info-tech business) would be able to undertake their businesses only on the developed property being made available to them, could not therefore but be regarded as the principal activity yielding income from the development of a SEZ. In fact, even the income (to the assessee) from providing ancillary and maintenance services to these businesses arises or stands....