News Update

Vinod Kumar, IRS, 2002 Batch, is no moreCabinet okays privatisation of 20 PSUs: PanagariyaIndian Industry required to move to global norms: KantDDA, DUSIB sign MoU to implement PMAY in DelhiFM inaurgurates CII Centre for Arbitration and MediationPM praises Cyprus for being 8th largest investor in India and invites Cypriots to invest in IndiaPay Commission recommendations on allowances - Lavasa panel propses modificationsCBDT signs 2 APAs relating to IT & Banking (See 'TII Brief' in TII)CBDT gives addl charge of Gujarat + Ahmedabad zones to P C Modi & Surat to Rajani K GuptaGovt to develop 100 more airports, says Jayant SinhaCentral Excise - Refunds - Passing on the incidence to the ultimate buyer - Supreme Court dismisses review petitionTariff Values of Gold, Silver and all Edible oils (except Crude Soya bean oil) reducedSimplification of tax regime to increase compliance: FMFM says no surprises likely in GST rate fixationKenyan Ambassador Karau appointed as New Chair of Agri PanelAbolition of FIPB to pave way for more FDI reforms: FMNo medical certificate required for PF withdrawal for illnessCX - Classification - Polyester Covered Yarn and Nylon Covered Yarn fall under CSH No. 5402.62/61: SCI-T - Seized material must have some nexus to additions sought to be made by AO and must be relevant for forming belief regarding escaped income: HCST - Reason that officials were involved in matters pertaining to challenge in some other matters, and, therefore, there has been delay in filing appeals is vague and cryptic: HCST For another field formation of same tax collection mechanism to take an alternative stand and, that too, for limited period of time is best described as 'tax opportunism': CESTATTrichy Customs seizes FC worth Rs 29 lakh from pax heading for MalaysiaFinance Secretary Panel submits report on allowances recommended by 7th Pay Panel; Now, Panel of Secretaries to examine itAamby Valley Reserve Price - Apex Court fixes at Rs 37392 CroreJharkhand is Third State to pass SGST law
Untitled Document



16/2017; Dated: April 25, 2017

Subject: Lease rent from letting out buildings/developed space along with other amenities in an Industrial Park/SEZ- to be treated as business income.

The issue whether income arising from letting out of premises / developed space along with other amenities in an Industrial Park/SEZ is to be charged under head 'Profits and Gains of Business' or under the head 'Income from House Property' has been subject matter of litigation in recent years. Assessees claim the letting out as business activity, the income arising from which to be charged to tax under the head 'Profits and Gains of Business', whereas the Assessing officers hold it to be chargeable under the head 'Income from House Property'.

2. The matter has been considered by the Board, Income from the Industrial Parks/SEZ established under various schemes framed and notified under section 80IA(4)(iii) of the Income-tax Act, 1961 ('Act') is liable to be treated as income from business provided the conditions prescribed under the schemes are met.

In the case of Velankani Information Systems Pvt Ltd, NJRS Citation (2013-LL-0402-44), the Hon'ble Karnataka High Court observed that any other interpretation would defeat the object of section 80IA of the Act and government schemes for development of Industrial Parks in the country. SLPs filed in this case by the Department have been dismissed by the Hon'ble Supreme Court.

In a subsequent judgement dated 30.04.2014 in ITA No.76 & 78/2012 in the case of CIT vs. Information Technology Park Ltd. NJRS Citation (2014-LL-0430-141) = 2014-TIOL-820-HC-KAR-IT, the Karnataka High Court has reaffirmed its earlier views. It has held that, since the assessee-company was engaged in the business of developing, operating and maintaining and Industrial Park and providing infrastructure facilities to different companies as its business, the lease rent received by the assessee from letting out buildings along with other amenities in a software technology park would be chargeable to tax under the head " Income from Business" and not under the head "Income from House Property". The judgement has been accepted by the Board.

3. In view of the above, it is now a settled position that in the case of an undertaking which develops, develops and operates or maintains and operates an industrial park/SEZ notified in accordance with the scheme framed and notified by the Government, the income from letting out of premises/ developed space along with other facilities in an industrial park/ SEZ is to be charged to tax under the head 'Profits and Gains of Business'.

4. Accordingly, henceforth, appeals may not be files by the Department on the above settled issue and those already filed may be withdrawn/ not pressed upon.

5. The above may be brought to the notice of all concerned.


D S Chaudhry