Income from license of Build-Operate-Transfer project taxable as business income

ACIT Vs Rcube Projects Pvt Ltd (ITAT Delhi)

ITAT Delhi held that the proceeds of license of Build-Operate-Transfer (BOT) Projects is not taxable as rental income. The same is taxable as business income.

Facts- Assessee company is engaged in the business of Real Estate development. The assessee filed a return declaring loss which was taken up for scrutiny assessment. The assessee has filed his return of income declaring revenue of Rs. 4.41 Crore and other income of Rs. 25,917/-.

As per the MOU of the assessee with DMRC, the assessee was entitled to have access to operate, manage and maintain the Licensed Space at the Specified Area during the Licence Period at the cost and risk of the License. So, the AO took the view that, for the total fixed assets of Rs.128.63 lacs include vehicles and rest of the assets is plant and machinery.

The licence was for the period of 15 years from the date of handing over as per MOU. The assessee has shown its entire income including rental income as business income. Therefore, the assessee was asked to explain as to why the rental income shown in the P&L account may not be taken as income from house property in view of the provisions of Section 269UA(f)(i) of the Income Tax Act, 1961.

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