2013 (6) TMI 851 - HC - Income Tax

Deduction under Section 80IA (4) - whether income of the assessee from the Industrial Park whether to be assessed under the head Income from Business, without going into admissibility of the claim on merits - Held that - Apex Court reported in COMMR. OF INC. TAX v. COCANADA RADHASWAMI BANK LTD 1965 (4) TMI 11 - SUPREME COURT held that the head under which income is assessed is not relevant for the purpose of claiming exemption under the Act. When the Revenue had accepted the view of the Commissioner of Income Tax (Appeals) on Section 80IA that the assessee had complied with Section 80IA(4)(iii) of the Act, there remains nothing for an enquiry either as to the nature of the receipt or for that matter the facilities developed to be treated as an industrial park to consider the question of deduction under Section 80IA(4)(iii) of the Act. When the character of the receipt is not a question to be gone in the matter of considering the claim of deduction under Section 80IA(4)(iii) of the Act, we do not find that any useful purpose would be served for the Revenue to again insist on a decision on the character of the receipt. - Decided in favour of assessee

Summary

Issues:
1. Jurisdiction of the Tribunal to consider issues not raised in the appeal.
2. Character of receipt for deduction under Section 80IA of the Income Tax Act.
3. Validity of remanding the matter back to the Assessing Officer.
4. Interpretation of the Industrial Park Scheme, 1999.
5. Applicability of CBDT notification on the respondent.
6. Relevance of considering the approval of the appellant's buildings as an "Industrial Park."
7. Availability of deduction under Section 80IA if income is not under the head of 'profits and gains from business.'

Jurisdiction of the Tribunal:
The High Court addressed the issue of the Tribunal's jurisdiction to consider issues not raised in the appeal. The Tribunal had remanded the matter back to the Assessing Officer for verification of the nature of the receipt, despite the Revenue not challenging the eligibility for relief under Section 80IA of the Income Tax Act. The High Court held that the Tribunal's remand order was unjustified as the eligibility criteria under Section 80IA(4) were met, and there was no need for further inquiry into the character of the receipt.

Character of Receipt for Deduction under Section 80IA:
The case involved the character of a receipt for claiming deduction under Section 80IA of the Income Tax Act. The Commissioner of Income Tax (Appeals) had allowed the deduction, considering the income derived from letting out an Industrial Park as business income. The High Court upheld this decision, emphasizing that the nature of the receipt was immaterial once the Ministry's approval was obtained, making the assessee eligible for the deduction under Section 80IA(4)(iii).

Validity of Remand by Tribunal:
The Tribunal's decision to remand the matter back to the Assessing Officer for further verification was challenged. The High Court deemed the Tribunal's remand order as academic and unjustified, as the issue had already reached finality with the Commissioner of Income Tax (Appeals) allowing the deduction under Section 80IA. The High Court set aside the Tribunal's order, stating that no useful purpose would be served by re-examining the character of the receipt.

Interpretation of Industrial Park Scheme, 1999:
The case involved the interpretation of the Industrial Park Scheme, 1999, framed by the Central Government under Section 80IA(4) of the Income Tax Act. The recognition of the assessee as a developer of an Industrial Park under this scheme was crucial for claiming the deduction under Section 80IA. The High Court upheld the recognition and eligibility of the assessee for the deduction based on the scheme's provisions.

Applicability of CBDT Notification:
The High Court considered the applicability of a notification issued by the CBDT on the respondent. The Court emphasized that the notification issued by the CBDT was binding on the respondent, highlighting the importance of adhering to such notifications in tax matters.

Relevance of Approval for Industrial Park Buildings:
The High Court discussed the relevance of considering the approval of the appellant's buildings as an "Industrial Park" pursuant to the Industrial Park Scheme, 1999. The Court emphasized that the approval obtained by the assessee for developing an Industrial Park was a significant factor in determining the eligibility for deduction under Section 80IA.

Availability of Deduction under Section 80IA:
The case also addressed the availability of deduction under Section 80IA if the income did not fall under the head of 'profits and gains from business.' The High Court clarified that the relief under Section 80IA was available for eligible undertakings, irrespective of the character of the receipt, as long as the conditions under Section 80IA(4) were satisfied. The Court upheld the Commissioner of Income Tax (Appeals) decision to allow the deduction under Section 80IA, even if the income was treated as income from house property.

In conclusion, the High Court set aside the Tribunal's order and allowed the appeals filed by the assessee, emphasizing the eligibility for deduction under Section 80IA based on the recognition as a developer of an Industrial Park and the compliance with the scheme's provisions.