· The issue whether income arising from letting out of premises or developed space in a SEZ is to be charged under the head 'Profits and Gains of Business' or under the head ‘Income from House Property' has been subject matter of litigation in recent years.
· Assessees claims the letting out as business activity, the income arising from which is to be charged to tax under the head 'Profits and Gains of Business', whereas the AO holds it to be chargeable under the head 'Income from House Property'.
· The CBDT, after referring to the judgments of Hon’ble Karnataka High Court in the case of Velankani Information Systems Pvt. Ltd. and CIT v. Information Technology Park Ltd.in the case of an undertaking which develops, develops and operates or maintains and operates an SEZ, notified in accordance with the scheme framed and notified by the Government, the income from letting out of premises or developed space in a SEZ, is to be charged to tax under the head 'Profits and Gains of Business'.
For further reading, refer the attachment.
Further Reading