2020 (11) TMI 922 - HC - Income Tax

Deduction u/s 80IA(4)(iii) - conditions laid down by the Ministry of Commerce for the same have not been fulfilled by the assessee as noted by AO after physical verification of the premises - tribunal allowed deduction - Whether unit means separate floor - whether the appellate authorities were correct in holding that one of the lessee occupying more than 50% of the allocable area would not amount to occupation of 50% of the allocable area by an unit, admittedly when more than 50% of the allocable area was occupied by one lessee (unit) and the same was contrary to the conditions contemplated under the Industrial Park Scheme 2002 for claiming deduction under Section 80IA(4)(iii) of the Act under which the assessee has undertaken not to allow single unit to occupy more than 50% of the allocable industrial area and recorded perverse finding? HELD THAT - No dispute with the legal proposition that in order to claim the benefit of deduction under Section 80IA(4)(iii) of the Act, the conditions mentioned in the Scheme have to be complied with. In the present case the order of the Tribunal is cryptic and no finding has been recorded by the Tribunal whether or not the assessee has fulfilled the conditions laid down in the scheme. Tribunal has recorded a finding that an identical issue has been dealt by it in the case of PIRAMAL PROJECTS P. LTD. 2011 (2) TMI 92 - ITAT, BANGALORE and the case of the assessee is also similar. However, no reasons have been assigned by the Tribunal. The Tribunal is the final fact finding authority and has to record the reasons for its conclusions. Since the Tribunal has failed to assign any reasons for recording the finding with regard to the fact whether or not the assessee has fulfilled with the terms and conditions laid down in the scheme, we are left with no option but to quash the order passed by the Tribunal. Not necessary to answer the substantial questions of law. The Tribunal shall decide the matter afresh.

Issues:
1. Eligibility for deduction under section 80IA(4)(iii) of the Income Tax Act, 1961.
2. Interpretation of the term "unit" in the context of the Industrial Park Scheme 2002.
3. Compliance with conditions for claiming deduction under Section 80IA(4)(iii) of the Act.

Eligibility for Deduction under Section 80IA(4)(iii):
The case involved an appeal under Section 260-A of the Income Tax Act, 1961, regarding the eligibility of the assessee for a deduction under Section 80IA(4)(iii). The Tribunal had held in favor of the assessee, allowing the deduction. The revenue contended that the conditions for eligibility, specifically related to the allotment of industrial area to a single unit, were not met by the assessee. The revenue argued that the burden of proof lay with the assessee to establish compliance with the eligibility conditions. The Tribunal's order was challenged based on the lack of findings regarding the fulfillment of conditions by the assessee. Citing relevant case law, the revenue sought remittance of the matter to the Tribunal for proper examination. The assessee, on the other hand, argued that the approval granted by the Government of India for setting up the industrial park included the establishment of four units, which were operational. The assessee emphasized the distinct nature of each unit and contended that the conditions were fulfilled. The assessee relied on previous judgments to support their position.

Interpretation of the Term "Unit" in the Industrial Park Scheme 2002:
The Industrial Park Scheme, 2002, framed by the Central Government, defined the term "unit" as any separate and distinct entity for taxation purposes. The scheme laid down specific criteria for automatic and non-automatic approvals, including the condition that no single unit should occupy more than 50% of the allocable industrial area. The compliance with these conditions was deemed necessary to claim the benefit of deduction under Section 80IA(4)(iii) of the Act. The case highlighted the importance of adhering to the scheme's provisions to qualify for the tax benefit.

Compliance with Conditions for Deduction under Section 80IA(4)(iii):
Upon reviewing the submissions and the factual background, the Court found that the Tribunal's order lacked essential findings on whether the assessee had fulfilled the conditions specified in the Industrial Park Scheme, 2002. The Tribunal's failure to provide reasons for its conclusions led the Court to quash the order and remit the matter back to the Tribunal for a fresh decision. The Court emphasized the Tribunal's role as the final fact-finding authority and stressed the need for a thorough examination of the assessee's compliance with the scheme's conditions. The Court directed the Tribunal to determine whether the assessee met the requirements to claim the deduction under Section 80IA(4)(iii) after affording both parties an opportunity to present their case.

In conclusion, the judgment highlighted the significance of complying with the conditions outlined in the Industrial Park Scheme, 2002, for claiming deductions under Section 80IA(4)(iii) of the Income Tax Act, 1961. The case underscored the necessity for proper examination and findings by the Tribunal regarding the fulfillment of eligibility criteria by the assessee.

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