DCIT v. Golflink Software Park P Ltd. (ITAT Bangalore) – The taxpayer was not only letting out its building for rent, but also carried on a complex commercial activity of setting up a software technology park in which various amenities and fit-outs have been provided. The Tribunal relied on the Supreme Court’s decision of CIT v. National Storage Pvt Ltd [1967] 66 ITR 596 (SC) . The Tribunal relying on the decision of Global Tech Park P Ltd held that, since the entire activity carried out in an organised manner to earn profit out of the investment made by the taxpayer, it should be treated as a commercial venture.
Accordingly, the rental income should be chargeable to tax as business income. where it has been distinguished the significance of leasing out a bare building and a building along with various amenities. The Tribunal distinguished the case of Shambhu Investment P Ltd where immovable property was insignificant, however, in the present case the taxpayer had developed 4.7 million square foot of IT park in a sprawling area of more than 55 acres by providing various amenities such as roads, street, lights, etc. Further letting out of a building in an IT park is incidental whereas in the case of Sambhu Investment such lettingout was predominant. The Tribunal held that letting out of building along with amenities and fit-outs amounted to complex commercial venture of the taxpayer and had to be taxed under the head ‘Profits or Gains of Business or Profession’. Since, the activities of the taxpayer constituted as business, interest, depreciation and other expenditure were incurred in the ordinary course of the business and were allowable as business expenditure.
IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH ‘B’
BEFORE SHRI N BARATHVAJA SANKAR, VICE PRESIbENT ANb
SHRI GEORGE GEORGE K, J.M.
