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2017 (5) TMI 1097 - AT - Income TaxEligibility for deduction u/s. 80-IA - whether lease rental income shall continue to be eligible for deduction under section 80-IAB ? - Held that:- 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 to arise only on account of, or by virtue of, their being lessees. The lease rental income, on the lease of the house property thereto, would thus, in our view, notwithstanding the use of the words ‘profits and gains’ and ‘business’ in section 80-IAB(1), qualify to be eligible for deduction there-under. That is, the lease rental is within the contemplation of the profits derived by a developer of a SEZ from the ‘business’ of developing it, eligible for deduction u/s. 80-IAB.The head of income under which the said income is assessable, which is on the basis of the source – from amongst the specified sources under the Act, most appropriate for the said income, so that it is not assessable as business income but as income from house property, would not be a limiting or debilitating factor. We decide accordingly, and the assessee succeeds qua it’s alternate ground, i.e., in principle.’ Eligibility for deduction u/s. 80-IA(4)(iii) - Held that:- Besides drawing support from the terms of the relevant provision (s.80- IA(4)(iii)), the Revenue does on the O.M. dated 10/2/2016 by DIPP, GOI, stating the reasons for the non-notification of the assessee’s industrial park by CBDT, i.e., the relevant wing (Department) in the Central Government, which is to notify the same. There is, we are afraid to say, no reference to the satisfaction of the conditions of section 80-IA(4)(iii) in the order by the tribunal for AYs. 2010-11 & 2011-12 (also see r.18C(3)). This, i.e., the non-notification by the CBDT, has in fact been challenged by the assessee before the Hon’ble jurisdictional High Court (refer Gds. 2.2 to 2.4 of the Revenue’s appeal, and as also admitted by the ld. AR before us), so that our order, as that by the tribunal for the earlier years, would, and which is even otherwise the case, subject to the directions and the findings by the H’ble Court. We, accordingly, find no infirmity in the Revenue’ objection, which shall operate to fail the assessee’s claim for deduction under section 80-IA(4)(iii), and which has therefore been rightly denied by the Revenue, whose case is thus sustainable in law.
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