TaxTMI 
TaxTMI 
TaxTMI 
2012 (2) TMI 673
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....property. 4. At the time of hearing, both the parties have agreed that this issue is covered by the consolidated order of the Tribunal dated 18.11.2011 passed in I.T.A. Nos. 2194 to 2199/Mds/2010 in assessment years 2002-03 to 2007- 08, wherein the Tribunal had restored the matter back to the file of Assessing Officer and following the same, in this year also the issue may be decided accordingly. 5. We have heard the rival submissions, perused the materials available on record. We find that the Tribunal in the assessment years 2002-03 to 2007-08 has held as under: "12. Before us, the Revenue disputed the findings of the ld. CIT(A) to the extent the ld. CIT(A) held that the rental income derived by the assessee is to be assessed under the head "profit and gains of business". Thus, the only issue, which requires adjudication by us is that the rental income derived by the assessee from letting out is to be assessed under the head "income from House Property" or under the head "Profit and Gains of business or profession". 13. The ld. DR relied upon the order of the Assessing Officer and submitted that the facilities provided by the assessee were provided by any owner of the house....
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....(iii) of the Act. We find that the copy of the aforesaid letter dated 01.08.2001 is placed at page 1 to 2 of the paper book filed by the assessee. The said letter reads as under: No. 15(8)/2001-IP & ID Government of India Ministry of Commerce and Industry Department of Industry Policy & Promotion Secretariat for Industrial Assistance Investment Promotion & and Infrastructure Development Cell Udyog Bhavan, New Delhi - 110 011 Dated: August 01, 2001 To, M/s R.R.lndustries limited, 94-95, Block- VI, 4 I.T.A. No.1256/M/11 THIRU-VI-KA-INDUSTRIAL ESTATE, Guindy, Chennai - 600 032. Sub: Application for setting up of Industrial Park (SIA Regn No.08/SIA/IP/2001 dated 25.06.2001) under the scheme notified by this Ministry (S.O. No. 1201 (E) dated 01.12.99). Ref: Your application dated 21.06.2001 acknowledged vide SIA Ref. No. No.08/SIA/IP/2001 dated 25.06.2001 and subsequent clarifications vide letters dated 02.07.2001, 12.07.2001 and 16.07.2001. Sir, I am directed to refer to your application on the above mentioned subject and to convey the approval of the Government of India to your proposal for setting up of an Industrial park, in terms of the scheme notified ....
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....aithfully, Signed/- (Ashish Sharma) Desk officer Tel: No: 011- 3018356 Fax: No: 011- 301 1770 Copy to: I. Joint Secretary (TPL-II). C.B.D.T., Ministry of Finance, Department of Revenue, North Block, New Delhi (2 copies), along with a copy of the original application dated 21.06.2001 and subsequent letters as detailed on page I. 2. Chief Secretary. Govt. of Tamil Nadu. Fort St. George, Chennai - 600009. 3. Guard File. Signed/- (Ashish Sharma) Desk officer 16. Thus, a perusal of the above shows that the assessee was only granted approval for setting up of an industrial park. From the above letter it cannot be held that the establishment or infrastructure created by the assessee was actually held as an industrial park within the meaning of section 80IA(4)(iii) of the Act by the Government of India, Ministry of Commerce and Industry, Department of Industry Policy & Promotion, Secretariat for Industrial Assistance Investment Promotion and Infrastructure Development Cell. The above letter also does not provide that the assessee is eligible for deduction under section 80IA(4)(iii) of the Act and the said letter merely conveys its approval of the proposal of the assess....
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....on Picture Distributors' Association an amount of ₹ 800 per month for services rendered to the licensees. These vaults could only be used for the specific purpose of storing of films and other activities connected with the examination, repairs, cleaning, waxing and rewinding of the films." 9.2.1. Further, an identical issue to that of the present one had cropped up before the earlier Hon'ble Bangalore Bench in the case of Global Tech Park (P) Ltd. v. ACIT - reported in (2008) 119 IT) (Bang) 421 - wherein it was observed that - "The assessee having been incorporated with the sole intention of developing Technology Park for which it obtained leasehold land from KIDC and also obtained loan from bank for constructing superstructure thereon, it could not be considered as having made investment in a property for earning rental income only. The lease of the property was shown as part of the business activity, thus, the income received there from cannot be said as income received as a land owner but as a trader………… The activity was done by the assessee as a business venture and was in accordance with the main object of the company. The in....
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....us parties and earned income there-from. For the year 1985-86 and 86-87, the assessee filed its returns of income showing losses for which the AO completed the assessments making minor adjustments in computing the losses. The CIT initiated suo motto proceedings u/s 263 and after such proceedings directed the AO to make fresh assessments computing the income from rentals received from the commercial complex under the head "Income 'from house property." On an appeal by the assessee, the Tribunal held that the income derived by the assessee could have been assessed only as income from business and not under the head "Income from house property". According to the Tribunal, since the land over which the property had been built is a leasehold land, the assessee cannot be treated as the owner of the land which is a condition precedent for treating the income as income from house property under section 22 of the Act. The Hon'ble Court, taking cue from the ruling of the Hon'ble Supreme court in the case of CIT v. Podar Cement (P.) Ltd. [1997J 226 ITR 625 = (2002-TIOL-445-SC-IT), had held that the income derived by the company from shops and stalls Is ....
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....mbhu Investment P. Ltd., the immovable was a tiny property and the so called amenities provided to the occupants only as against the amenities provided In a STP to feed a special purpose. Letting out of a building In a STP is incidental whereas the fact in the case of Sambhu Investment was rather predominant and, thus, Sambhu Investment case cannot, at any stretch of Imagination, be equated with that of the present assessee. 9.4. Taking into account the facts and circumstances of the issue, we are, therefore, of the firm view that the case laws on which the Revenue placed reliance cannot come to its rescue." 19. Thus, from the reading of the aforesaid decisions, we find that the decision of the Hon'ble Supreme Court in the case of Shambhu Investments P. Ltd. (supra) was found distinguishable from the facts before the Tribunal in the above cases in as much as in the case of M/s. Shambhu Investment letting out was found to be predominant and in the case before the Tribunal letting out of a building in an I T Park was only incidental. It was found that the assessee developed 4.7 million sq.ft. of IT Park in a sprawling area of more than 55 acres by providing various amenities....
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....nd of appeal of the Revenue is allowed for statistical purpose. 7. In ground No. 3 of the appeal, the grievance of the Revenue is that the ld. CIT(A) erred in directing the Assessing Officer to allow the expenses claimed by the assessee towards valuation of real estate portfolio and towards issue of Initial Public Offer, holding them as revenue expenditure. 8. The brief facts of the case are that the Assessing Officer was of the view that the expenditure towards payment of consultation fee of ₹ 24,71,920/- for valuation of the real estate portfolio for new project and consultancy charges paid to a merchant banker for an IPO of ₹ 10,13,840/- are capital in nature and accordingly disallowed the same while assessing the income of the assessee. The Assessing Officer relied on the decision in the case of CIT vs. J.K. Chemicals Ltd. 207 ITR 985 (Bom). 9. Before the ld. CIT(A), the ld. AR of the assessee argued that the facts in the case of CIT v. J.K. Chemicals are totally different. It was submitted that in that case, the company was engaged in the business of manufacturing fertilizer, incurred expenditure to obtain a project report and a market survey to set up a new uni....
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....bove arguments of the assessee, deleted the additions made on both the counts by observing as follows: "6. I have considered the arguments of the learned Authorised Representative. It appears that the assessing officer was under the mistaken impression that these expenditure incurred by the appellant for a new project of the appellant company. However the facts demonstrated by the learned Authorised Representative show that it is not so. I agree with the contentions of the learned Authorised Representative that these expenses were incurred on revenue account only. The assessing officer has not disputed the incurring of the expenditure by the appellant in the course of its business. As long as the expenditure is incurred during the course of the business and for the purpose of its business no disallowance could be made in respect of such expenditure. The facts and circumstances relating to the incurring of such expenditure do not show that they are either capital in nature or personal in character. I have therefore no hesitation in coming to the conclusion that these are expenses to be allowed in computing the income from business of the appellant company and accordingly the disal....
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....ned for an IPO to raise funds. The assessee has dropped the project and treated the expenditure as revenue and has written it off. Following the rationale of the decision in M/s. EID Parry Ltd of Madras High Court in 257 ITR 253, the same is required to be disallowed." He also relied on the decision of the Hon'ble Bombay High Court in the case of CIT vs. J.K. Chemicals Ltd. 207 ITR 985 (Bom.). He further argued that the expenditure has been claimed by the assessee under section 37 of the Income Tax Act. His argument was that under this section, expenditure incurred wholly for the purposes of the business of the assessee was allowable deduction to the assessee. The assessee has not shown how the expenditure incurred in question was wholly for the purposes of the business of the assessee. He also relied on the decision of the Hon'ble Madras High Court in the case of EID Parry (India) Ltd. vs. CIT 257 ITR 253 (Mad) and the decision of the Hon'ble Gujarat High Court in the case of CIT vs. Ambika Mills Limited 236 ITR 921 (Guj.) and submitted that the Hon'ble High Court has held that the expenditure incurred by the assessee for getting feasibility report for setting up a new steel pla....
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....nefit to the assessee so as to fall under the capital field. 17. Further, no material could be brought before us to show that the aforesaid expenditures were incurred for any non-business purposes. 18. On the other hand, the ld. AR of the assessee, submitted that valuation report was obtained for the purpose of bank loan, which was availed by the assessee for its business purposes. Further, the IPO was also considered for the existing business only. As the expenditures in question were incurred out of commercial expediency and were not for acquiring any capital asset of enduring nature, the ld. CIT(A) was fully justified in allowing the deduction for the same. 19. He also relied upon the decision of the Hon'ble Kerala High Court in the case of CIT, Kerala vs. Commonwealth Trust Ltd. 120 ITR 491 and the decision of the Mumbai Bench of ITAT in the case of Nimbus Communications Ltd. vs. ACIT 132 TTJ 351. 20. The ld. DR placed reliance upon the decision in the case of CIT v. J.K. Chemicals Ltd. (supra) and also in the case of EID Parry (India) Ltd. (supra). 21. We find that in the case of EID Parry (India) Ltd. (supra), it was observed by the Hon'ble Madras High Court that the exp....