TMI Blog2012 (11) TMI 1253X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee as the main business activity of the assessee company is development of Biotech Park and not sub-leasing of land. ii. On the facts and in the circumstances of the case, the id. CIT(A) failed to appreciate that the expenses debited to the P L a/c were incurred in relation to the Construction WIP and not towards sub-lease of land and therefore, the disallowance was rightly made in the assessment order on proportionate basis. iii. On the facts and in the circumstances of the case, the ld. CIT(A) failed to appreciate that even the construction WIP was being transferred by the assessee company to Investments, thereby offering rental income as income from House property and no business income was being offered to tax even in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated as income from other sources as the same was not the business activity of the assessee. The assessee filed a detailed reply vide letter dt. 12.12.2008. It was explained by the assessee that as per the Memorandum and Articles of Association of the assessee company, one of the activities of the assessee company is to sublease of the business, moveable or immovable of the property, rights and effects for the time being of the company. It was explained that in line with the object clause of the company, the sublease income has been shown as business income of the assessee company. So far as claim of expenses are concerned, the assessee explained that the expenses pertain to the land sub-leased and the 15 acres of land taken back by MIDC. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities for bio technology and life science. It was explained to the Ld. CIT(A) that in order to provide quality infrastructure facility acquisition of land and its development to make the same suitable for use and for sublease was the part of the main object of the assessee company. To substantiate its claim, the assessee further explained to the Ld. CIT(A) that it acquired took on lease land during A.Y. 2005-06 under agreement with MIDC. The land so taken on lease from MIDC was to be developed and then only to be sub-leased for which the assessee had to spent sizeable amount on development of land. The assessee further explain that it developed land and also sub-leased land to those units/corporation who were in the same business of devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid to have set up/commenced its activity. As the assessee could have transferred the land to other parties only on sublease basis, therefore, the income received on account of sublease was its business income. After discussing all the facts into totality, the Ld. CIT(A) held that the subleased income received by the assessee was its business income. 5. Before us, the Ld. Departmental Representative relied upon the findings of the lower authorities and also relied upon the decision of Hon ble High Court of Andhra Pradesh in the case of CIT Vs. Sponge Iron India Ltd. (1993) 201 ITR 770. The Ld. Counsel for the assessee reiterated what has been stated/argued before the Ld. CIT(A). 6. We have considered the rival submissions and perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce with the JVA, which are set out in the Fifth Schedule hereto. Thus, as per the above clause, the assessee could sublease portion of land to units engaged in Biotechnology or developing the land to plan and construct buildings and units engaged in Biotechnology. It is to be remembered that the assessee company was not formed with an objective of carrying out any manufacturing production or service activity. The assessee company was formed to develop technology park/Biotechnology park for the purpose of achieving its objective. 7. The Ld. CIT(A) has given a correct finding that as the assessee company was not having any land of its own, therefore it could only sublease the land which has been made available to the assessee-company by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04-05 relevant to A.Y. 2005-06. Accordingly, we direct the AO to treat the sublease income under the head profit and gains of business or profession. This ground of the Revenue is dismissed. 8. The next ground relates to the direction of the Ld. CIT(A) who allowed set off of brought forward business laws. As we have already held that the business has been set up in financial year 2004-05 relevant to A.Y. 2005-06, we do not find any infirmity with the findings of the Ld. CIT(A) that the assessee is eligible for set off of brought forward business laws as income from sublease of land has been directed to be treated under the head of profit and gains of business or profession. This ground of the appeal is accordingly dismissed. 9. The ne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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