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TMI Blog2012 (8) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... Bengal wanted to set up IT and ITES projects of large, medium and small scale. HSBC Electronic Data Processing India Pvt. Ltd. (HDPI) a company having expertise in providing back office processing services including call centre services approached the Govt. of West Bengal to establish a group processing centre in Kolkata. The Govt. of West Bengal signed an MoU with the assessee for designing and constructing a custom built IT facility of an area of 1,80,000 sq.ft. as per the specification of HDPI and lease it to HDPI. For this purpose, the Govt. of West Bengal through its Dept. Of IT transferred land measuring 3.5 acres situated at salt lake city to the assessee under long term lease for 99 years for a total one time lease rental of Rs. 129.5 lakhs. The assessee in terms with the MOU constructed the IT complex as per the specification of HDPI and after completion of the complex entered into a lease agreement with HDPI giving the building and land on lease to HDPI on monthly lease rental at the rate of Rs. 21.75 per sq.ft. During the relevant previous year the assessee received lease rent of Rs. 1,65,75,441/- from HDPI Ltd. The assessee filed its return of income for the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fications which include providing a 2000KVA Gen set and has handed over the same to HDPI." The CIT(A) also took note of the fact that HDPI while paying lease rent to the assessee has deducted tax u/s 1941 of the Act. After considering the argument of the assessee and examining the facts along with the principle of law laid down by the Apex Court as well as different High Courts the CIT(A) held in the following manner:- "5.2 From the above facts and circumstances, it is very clear that the appellant constructed a building with certain specifications and gave it on rental to M/s HDPI. The appellant is legally the owner of the building for 99 years under a lease agreement with the Govt. of West Bengal and is thus, legally entitled to claim rent. Once the building was handed over, M/s HDPI received full rights which are given to a tenant including the right to sub let the complete building or any portion of it. In the day to day running of the business of back office process of HDPI in the concerned building, there is no activity being carried out by the appellant. There is no such provision also in the rental agreement. The fact that the appellant has taken loan for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng into MOU with Govt. of West Bengal and HDPI was development of IT infrastructure facility and not to become owner of property to derive rental income. The learned counsel further contended that the assessee had not merely developed or constructed an ordinary building having normal civil specifications but has provided many other amenities and facilities as follows:- 1) Provision of uninterrupted power supply by providing back up DG sets. 2) Provision of Air Conditioning facility through installation of chilling plants. 3) Sewerage treatment 4) Effluent disposal and treatment 5) Water supply arrangement 6) Installation of telephones, internet and communication network. 7) Installation of industrial cabling 8) Fire alarms and fire safety systems and equipments 9) Installation of closet circuit cameras, access control systems and other security systems. 10) Provisions of internal roads & landscaping 11) HT Panel/breakers with 2000 KVA transformer 12) Common area lighting 13) 4 Passenger and one service elevators 14) 200 over ground car parking spaces and 250 parking spaces for 2 wheelers. 15) Software industry friendly building construction with corridors, room layou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scale. The HSBC Electronic Data Processing India Pvt. Ltd., (HDPI) approached the Govt. of West Bengal to establish a Group Processing Centre for providing back office processing services. With the aforesaid objective a MOU was reached between Got. of West Benga, HDPI and L&T Infocity Infrastructure Ltd. (now known as MS Paharpur Pragnya Tech Park Pvt. Ltd.). As per the terms of the MOU land of 3.542 acres was allotted to the assessee on lease for a period of 99 years for construction of customized building and its related infrastructure of 1,80,000 sq.ft. for an IT Complex which is to be given on lease to M/s HDPI for its exclusive use The assessee after developing the complex has entered into lease agreement with HDPI for a period of 9 years with a lock-in-period of 6 years. The initial lease period of 9 years is also subject to renewal for another 9 year. From the MOU, it is clear that the assessee was given lease of land only for developing a customized IT Complex for HDPI Ltd. and it is provided in the MOU that as soon as the development of the IT Complex is over the same shall be given on lease to HDPI Ltd. From this it is clear that the development of the IT Complex was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affirmative. (B) Was it the intention to make the letting of the two practically one letting (page 363) : From a plain reading of the agreement it appears that the intention of the parties to the said agreement is clear and unambiguous by which the first party has allowed the second party to enjoy the said table space upon payment of the comprehensive monthly rent. Hence, this question should be answered in the affirmative. (C) Would one have been let alone, and a lease of it accepted, without the other (page 363) ? As we have discussed hereinbefore that it is composite table space let out to various occupants, the amenities granted to those occupants including the user of the furniture and fixtures are attached to such letting out and the last question, in view of the same, must be answered in the negative. 14. Applying the said test we hold that by the said agreement the parties have intended that such letting out would be an inseparable one. 15. Hence, we hold that the prime object of the assessee under the said agreement was to let out the portion of the said property to various occupants by giving them additional right of using the furniture and fixtures and other common ..... X X X X Extracts X X X X X X X X Extracts X X X X
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