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2022 (5) TMI 676 - ITAT DELHIDeduction u/s 80IAB - Income has been derived from any activities in the SEZ duly approved by the Board of Approval under the SEZ Act - whether the assessment of lease income from commercial space in SEZ, should be taxed under the head “Income from house property” or as “business income”? - HELD THAT:- It is an undisputed fact that assessee is a co-developer of commercial properties under the SEZ and has been approved as a co-developer and the name of the developer has already been mentioned above and each developer has got the separate approval from the Board of Approval, Ministry of Commerce for setting up of Information Technology and IT Enabled Services SEZ on the land parcel owned by the Developer. The assessee had approached the Government of India to seek approval of being a ‘co-developer’ in respect of the above mentioned SEZs which was granted by the Department of Commerce (EPZ Section), Ministry of Commerce & Industry and the details of approval has already been noted above. The assessee was required to provide infrastructure facilities and to undertake, operation and maintenance in relation to the aforesaid projects and the activities have already been mentioned above. The assessee had converted the bare shell buildings into warm shell and providing other facilities and has let out the units purely for rental income. Income earned from lease rentals for renting out a property per se, ostensibly falls under the head ‘income from house property’, unless it is shown that there was some systematic activity falling into the nature of business. Whence, the lease rental income of the assessee has been accepted to be assessed under the head ‘income from house property’ in AY 2012-13 and again in AYs 2017-18 & 2018-19, then we do not find any reason as to why the income from the same activity is not to be classified under the head ‘income from house property’ in these years. Hon’ble Supreme Court in the case of CIT-I vs. Reliance Energy Ltd.[2021 (4) TMI 1237 - SUPREME COURT] in the context of section 80IA, held that the scope of section 80IA (5) is limited to determine the quantum of deduction under sub-section (1) of section 80IA by treating eligible business for ‘only source of income’ and same cannot be pressed into service for reading a limitation of deduction under subsection (1) only to ‘business income’ - while computing the deduction, what is required to be seen is that the only source of income derived from eligible business, is eligible for deduction and same cannot be limited to only business income. Here in this case also, there is no dispute that the income which has been derived by the assessee is derived from approved activity under SEZ which is the only source of income for which the deduction u/s 80IA(b) is to be allowed. It is immaterial that whether the income derived has been shown from house property or business income or any other head. Thus, we hold that income derived from approved activity from the SEZ is liable to be allowed as deduction u/s 80IA. No reason to deviate from this finding and moreover the lease rental incomes received by the assessee are otherwise liable to be taxed under the head ‘income from house property’. The statute or the provisions contained u/s 80IAB does not make any distinction that if the income has been derived from approved activities in SEZ, the same has to be classified under a particular head and then only deduction would be allowed, albeit it only says that where the gross total income of the assessee, being a developer, includes any profits and gains derived by an undertaking from any business of developing a SEZ, therefore, income has been derived from any activities in the SEZ duly approved by the Board of Approval under the SEZ Act is allowable for deduction u/s 80IAB. Accordingly, the order of the ld. CIT (A) is confirmed and the Revenue’s appeal for AY 2013-14 is dismissed.
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