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D. TEST TRACK USAGE INCOME - TO BE TREATED AS OPERATING IN NATURE:

45. The assessee's test track which is used to undertake stability testing on trucks, buses and heavy vehicles at high speed for customers has also been rented :-14-: IT(TP)A. Nos.50 & 132/Chny/2024 to third parties from which they earn test track usage income. It was submitted that the test track usage income is an integral part of the regular business operations of the assessee and accordingly, must be treated as operating income.

46. The TPO has also acknowledged the fact that the said income has been earned from renting the space used for undertaking stability testing and the said income is incidental in nature (Page 9 of TP order - Page 171 of Memorandum of Appeal).

47. The ld.AR submitted that the test track usage income is incidental to the operations of the assessee and must be included as a part of the operating income of the assessee. It is also submitted that the income from test track usage is similar to the scrap sales income earned by a company, which is incidental to the operations of the main business activity. It may be noted that it has been settled by the decisions of this Hon'ble Tribunal that income from scrap sales must be treated as operating.

48. Relying upon the said principle, the ld.AR submitted that the test track usage income must be treated as operating in nature.

49. The ld.DR relied on the orders of the AO and DRP.

50. We have heard the rival contentions and gone through the records and orders of the authorities. The assessee's test track which is used to undertake stability testing on trucks, buses and heavy vehicles at high speed for customers is an important and essential nature of activity of the assessee. The facility has also been rented to third parties from which they earn test track usage income which is :-15-: IT(TP)A. Nos.50 & 132/Chny/2024 incidental to the nature of activities of the assessee, and we find that the TPO has accepted such revenue as incidental to the business of the assessee. Similarly

51. Therefore, considering the test track facility to undertake stability testing on trucks, buses and heavy vehicles at high speed for customers is incidental to the business, the income earned from such facilities from third parties are to be treated as part of the operating income for computing the margin. The numerous decisions have been delivered in support of treating the incidental income as operating in nature and hence by following the decision of the tribunal decisions we direct the TPO to consider 'test track usage income' received by the assessee as operating income and ordered accordingly. Thus, we allow the grounds of appeal filed by the assessee.