2016 (9) TMI 1524 - AT - Income Tax

Deduction u/s. 80IA(4)(iii) - entertained of claim as the industrial park constructed by the assessee - it was not notified by the CBDT which is prerequisite for claiming the deduction under section 80IA(4)(iii) - HELD THAT - Condition precedent for claiming deduction under section 80IA(4)(iii) is that the unit should be notified by the Central Government in accordance with the scheme of the Act. Admittedly assessee had applied for notification of its industrial park but CBDT vide letter dater dated 13.5.2014 has rejected application of the assessee. Therefore claim of the assessee is not maintainable. This aspect has been considered by both the authorities below and rightly rejected the claim of deduction. Revenue authorities have rightly denied the claim of the assessee which we uphold and reject grounds of the appeal of the assessee. Charging of interest u/s 234B - HELD THAT - Assessee is very much aware that for claiming deduction under section 80IA(4)(iii) conditions provided therein are to be complied with i.e. condition precedent for claiming deduction is that the industrial park of the assessee has to be notified by the Central Government. Application to the Central Government for notification of assessee s industrial undertaking ipso facto does not entitle the assessee to claim the deduction under section 80IA(4)(iii). Presumption of the assessee that mere application for notification of the industrial undertaking by the Central Government the assessee will be entitled for the impugned deduction is ill-logical and unfounded and therefore we cannot buy this proposition of assessee in not charging interest under section 234B of the Act. Even otherwise also charging of interest under section 234B is mandatory and consequential in nature. Therefore we reject this additional ground of appeal of the assessee.

Summary

Issues Involved:
Non-allowance of Deduction u/s. 80IA(4)(iii) of the Income Tax Act, 1961.

Detailed Analysis:

Issue 1: Non-allowance of Deduction u/s. 80IA(4)(iii)
The assessee, a firm developing an industrial park, claimed a deduction of ?59,22,530 under section 80IA(4)(iii) of the Act. However, the Central Board of Direct Taxes had not notified the industrial park, a prerequisite for claiming the deduction. The Assessing Officer (AO) disallowed the claim, emphasizing that tax benefits are only available to notified undertakings. The Commissioner of Income Tax (Appeals) upheld the decision, stating that the industrial park's notification was essential for claiming the deduction. The AO's reasons for disallowance were recorded, outlining the conditions necessary for claiming the deduction under section 80IA(4)(iii). The Tribunal concurred with the lower authorities, highlighting that the unit must be notified by the Central Government to claim the deduction. As the CBDT had rejected the application for notification, the claim was deemed not maintainable. The Tribunal upheld the denial of the claim, dismissing the appeal.

Issue 2: Charging of Interest under Section 234B
The assessee raised additional grounds regarding the charging of interest under section 234B of the Income Tax Act and cited judgments of High Courts in support. However, the Tribunal found the cited case laws irrelevant, as the assessee was aware that compliance with the conditions of section 80IA(4)(iii) was necessary to claim the deduction. Mere application for notification did not entitle the assessee to the deduction. The Tribunal deemed the presumption of entitlement based on the application illogical and unfounded, rejecting the additional ground. Charging interest under section 234B was considered mandatory and consequential. Consequently, the Tribunal dismissed this additional ground of appeal.

In conclusion, the Tribunal upheld the denial of the deduction under section 80IA(4)(iii) due to non-notification of the industrial park by the CBDT. Additionally, the Tribunal rejected the additional ground raised by the assessee regarding the charging of interest under section 234B, emphasizing the mandatory nature of interest charges. The appeal of the assessee was ultimately dismissed by the Tribunal.