2023 (2) TMI 1020 - HC - Income Tax

Deduction u/s 80-IA(4)(iii) - Violation of conditions laid down in Industrial Park Scheme, 2002 - AO disallowed the same on the ground that the assessee had rented out more than 50 per cent. of the allocable Industrial area which is in contravention of the Industrial Park Scheme, 2002 - HELD THAT - Revenue contention that assessee had leased out more than 50 per cent. of the total allocable area in favour of one of the lessees (M/s. IBM Daksh) has been found to be incorrect based on the remand report submitted by the Assessing Officer. Although that aspect was before the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax (Appeals) had dismissed the appeal for the assessment year 2007-08 on a different ground. The Income-tax Appellate Tribunal has recorded cogent reasons while allowing the appeal for the assessment year 2007-08.The questions of law are answered in favour of the assessee.

Summary

Issues Involved:
1. Entitlement for deduction under section 80-IA(4)(iii) of the Income-tax Act, 1961.
2. Notification issuance by the Central Board of Direct Taxes after Ministry of Commerce approval.
3. Violation of conditions under the Industrial Park Scheme, 2002.

Entitlement for deduction under section 80-IA(4)(iii) of the Income-tax Act, 1961:
The appeal by the Revenue challenged an order passed by the Income-tax Appellate Tribunal regarding the entitlement of the assessee for deduction under section 80-IA(4)(iii) of the Income-tax Act, 1961. The Tribunal allowed the deduction, leading to the Revenue's appeal. The main contention was whether the assessee fulfilled all terms and conditions as per the relevant notifications and approvals. The Tribunal found in favor of the assessee, emphasizing that the Central Board of Direct Taxes notification was not merely a formality after Ministry of Commerce approval. The Tribunal concluded that the assessee was entitled to the deduction, despite the alleged non-compliance with certain conditions.

Notification issuance by the Central Board of Direct Taxes after Ministry of Commerce approval:
The case involved a dispute regarding the notification issuance by the Central Board of Direct Taxes after the Ministry of Commerce approval. The Revenue contended that the notification was not a mere formality, especially after the Central Board of Direct Taxes imposed additional terms and conditions. However, the Tribunal upheld the assessee's position, stating that the notification was not a mere formality and that the assessee was still entitled to the deduction under section 80-IA(4)(iii) of the Income-tax Act, 1961.

Violation of conditions under the Industrial Park Scheme, 2002:
The issue of violation of conditions under the Industrial Park Scheme, 2002 arose due to the assessee leasing out more than 50% of the allocable area to a single tax entity, IBM Daksh Business Process Services Pvt. Ltd. The Assessing Officer disallowed the deduction claimed by the assessee based on this violation. However, the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal both ruled in favor of the assessee. The Tribunal found that the assessee did not breach the 50% limit based on a remand report and allowed the appeal, dismissing the Revenue's contentions. The Tribunal held that the solitary ground urged by the Revenue must fail, and the appeal was ultimately dismissed with costs not awarded.