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TMI Blog2014 (11) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant facts are that the respondent-assessee is a company incorporated under the provisions of the Companies Act, 1956, whose specific objective was of providing state of the art office space along with other facilities specially useful for the newly start-up business units. In pursuance of this object the assessee company developed a commercial complex, named as 'IndiaCo iCenter Plaza'. Since the assessment year 1999-2000, assessee company was earning income by way of license fee by giving out the use of office space along with other facilities in the premises IndiaCo iCenter Plaza to various users. The income so earned by the assessee was being offered as 'business income' and it is emerging from record that till the assessment year preceding to the assessment year 2007-08, such income was being accepted by the Department as business income. In this context, the learned counsel for the respondent-assessee also referred to an assessment order passed u/s 143(3) of the Act dated 27.09.2007 for assessment year 2005-06 wherein income derived by way of 'license fee' from letting out of the aforesaid commercial property was accepted as 'business income&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "IndiaCo icentre" located at 214, Navi Peth, Pune. The building owned by the appellant consists of 5 floors, having built up area of about 27,000 sq.ft. Subsequently, these premises have been let out by start up companies and small entrepreneurs. It is seen that the leased premises have wooden fixtures for work static cupboards, electrical fittings and 24 hours generator back up. The other services provided include, inter alia, the following : (a) Conference rooms (b) Rest rooms (c) Two/ four wheeler parking (d) Cafeteria/pantry (e) 24 hour security (f) Conference equipments such as LCD projector, PA system etc. (g) Telephone lines/ instruments (h) ISP & net work service (i) Cleaning & sanitation services. 9. All these services cannot be described as standard and uniform services in any rental agreement. The appellant has argued that execution of lease agreements was done essentially to protect appellant's ownership rights over the cabins. Further, the letting out the cabins was inseparable from providing the services referred to above, such as conference facilities, internet facilities and telephone connectivity, as these could not be availed of without the use of ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and license agreement mentions a consolidated figure, by way of license fee or compensation, the invoices show billing separately for cabin, computer terminal, AC, tubes, fans, UPS, ISP, network service and net-switch charges. No doubt, other services such as conference with equipment (LCD, PA system) pantry, parking, security etc. are mentioned as complementary but appellant states that these are included in the license fee itself. 11. During the course of appellate proceeding, the learned Authorised Representative has drawn my attention to the fact that the municipal taxes charged by Pune Municipal Corporation are as per commercial rates and electricity tariff charged by MSEB are also at commercial tariff rates, applicable to commercial properties. Further, during the impugned years, substantial expenses have been incurred on diesel expenses for generator used for centralized air-conditioning and power back-up, and also on security services for the building in question. He therefore submitted that the facts of the case are on all fours with the facts of the case in DCIT v. Magarpatta Township Developer & Construction Co. [ITA No. 822/PN/2011 date 18.09.2012] as decided by Pune ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the lease arrangements, which have been noted by the CIT(A) in para 8 of the impugned order, to point out that the services provided by the assessee to the users of the premises clearly establish that it is a case where a commercial property has been exploited as a business venture. In sum and substance, reliance has been placed on the conclusion drawn by the CIT(A). 7. We have carefully considered the rival submissions. The crux of the controversy before us relates to the taxability of 'license fee' earned by the assessee by allowing various licensees to use and occupy the office space in premises 'IndiaCo iCenter Plaza' developed and owned by the assessee. As per the Revenue, the leave and license arrangement is merely a tenancy agreement by way of which assessee is allowing the licensees to use the premises along with certain complementary services and therefore the same is assessable as income under the head 'house property'. The sum and substance of the argument of the Revenue is based on the premise that the leave and license arrangement is primarily to allow use of the immovable property by the licensees. On the contrary, as per the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the present case. In the present case, the CIT(A) has brought out from the Memorandum of Association of the assessee that the main object of assessee company was to provide young technocrats and start-up business owners with various facilities, including 'office infrastructure facilities', development facilities, etc. under one roof called 'incubation clusters'. The Memorandum of Association of the assessee company, a copy of which has been placed at pages 6 to 44 of the Paper Book, support the aforesaid factual finding of the CIT(A). In such 'incubation clusters', assessee's objective was to provide all logistics support services like state of the art office space, discussion rooms, board rooms, equipments, computers, internet connection, phone lines, printers, messaging services, printing services, communication facilities, etc.. It has been explained by the learned counsel in the course of hearing that in pursuance to aforesaid objects, assessee company constructed and developed a facility, named, 'IndiaCo iCenter Plaza' at Pune. The office space alongwith other facilities in the said complex have been let out to start-up companies and small ..... X X X X Extracts X X X X X X X X Extracts X X X X
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