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2017 (5) TMI 1033 - ITAT CHENNAIDeduction u/s. 80-IAB - eligibility criteria - house property income of a developer of a SEZ - Held that:- 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 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. The assessee’s eligibility for deduction u/s. 80 IAB, to which the house property income of a developer of a SEZ has been opined by us as exigible. In this regard, we observe no finding by the assessing authority on the assessee satisfying the condition/s of s. 80-IAB. True, it has been allowed deduction in assessment in respect of the income assessable as business income, so that the said conditions are impliedly met. We yet consider it necessary that a definite finding in the matter should precede the allowance of the said deduction/s. The reason is that, firstly, the units in the info tech park should presumably be set up by firms engaged in IT/IT enabled services, while one of them, as afore noted, is a bank (SBI). Two, the lease period as per the SEZ Rules, 2006 (r. 11(5)), as mentioned in Coimbatore Hitech Infrastructure Pvt. Ltd. (2012 (7) TMI 464 - ITAT CHENNAI ), to which reference was made by the assessee, is to be for a period of five years while the lease agreement with TCS Ltd. is for three years. This gives rise to a doubt if the assessee qualifies for deduction u/s. 80IAB on its lease rental income and, further, in its entirety, i.e., including the units for which the lease period may be five years or more. We have already expressed a view of eligibility of the house property income to deduction u/s. 80IAB. Subject to therefore a positive finding, which the AO shall cause upon been satisfied, per a speaking order, and after allowing the assessee a reasonable opportunity to present its case, recording his reasons either way, we allow the assessee’s claim for deduction u/s. 80IAB
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