2013 (10) TMI 755 - AT - Income Tax

Deduction u/s 80IA of the Income Tax Act for development, operation and maintenance of an industrial part under the Industrial Park Scheme, 2002 Held that - Assessee is entitled for deduction u/s 80IA (4) of the Act if it develops the Industrial Park. Being so, the assessee has to show that it has actually developed the Industrial Park during the relevant assessment year under consideration for claiming deduction u/s 80IA (4) of the Act by bringing on record contemporaneous documents like Electricity connection, water connection, connected documents like copies of approval, fire safety certificate from the competent authority along with complying the conditions laid down by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India vide their letter No.15/24/04-IP & ID dated 22-9- 2004 - Except the lease agreement with M/s Satyam Computers, no other document has been furnished to establish the fact that the Industrial Park has been developed during the relevant assessment year - Remitted the matter back to the file of the Assessing Officer for fresh consideration.

Summary

Issues Involved:
1. Eligibility for deduction under Section 80IA of the Income Tax Act.
2. Compliance with conditions of the Industrial Park Scheme, 2002.
3. Validity of the lease agreement and operational status of the Industrial Park.
4. Adequacy of supporting documents to establish the development of the Industrial Park.

Issue-wise Detailed Analysis:

1. Eligibility for Deduction under Section 80IA of the Income Tax Act:
The primary issue raised by the department was whether the assessee is eligible for deduction under Section 80IA of the Income Tax Act. The CIT (A) held that the assessee is eligible for the deduction, but the Assessing Officer (AO) had previously rejected this claim. The Tribunal referred to a similar case (M/s. Meenakshi Infrastructure Pvt. Ltd.) where it was held that the assessee is entitled to the deduction if it develops the Industrial Park.

2. Compliance with Conditions of the Industrial Park Scheme, 2002:
The AO cited several reasons for rejecting the deduction, including the claim that the Industrial Park was not operational as claimed by the assessee and that the required number of units was not maintained. The CIT (A) found that the number of units was later reduced by the Department of Industrial Policy and Promotion (DIPP) based on the assessee's request, and the area under operation was not altered. The Tribunal emphasized that the conditions under the Industrial Park Scheme, 2002, need to be adhered to, and the Central Government's approval plays a crucial role in determining compliance.

3. Validity of the Lease Agreement and Operational Status of the Industrial Park:
The AO contended that the lease agreement with Satyam Computers Services Limited (SCSL) did not substantiate the operational status of the Industrial Park. The CIT (A) disagreed, stating that the agreement with SCSL was valid and the Industrial Park was operational. The Tribunal noted that the assessee had entered into lease agreements and had developed the Industrial Park in a "plug and play" mode, making it operational and eligible for the deduction.

4. Adequacy of Supporting Documents to Establish the Development of the Industrial Park:
The Tribunal found that the assessee had not provided sufficient contemporaneous documents to establish the development of the Industrial Park during the relevant assessment year. The Tribunal remitted the matter back to the AO for fresh consideration, instructing the AO to verify the development of the Industrial Park through documents like electricity and water connection approvals, fire safety certificates, and other relevant approvals from the competent authorities.

Conclusion:
The Tribunal concluded that the assessee is eligible for deduction under Section 80IA (4) if it can prove the development of the Industrial Park during the relevant assessment year. The case was remitted back to the AO to verify the development through adequate supporting documents and to decide the issue in accordance with the law. The appeal filed by the department was treated as allowed for statistical purposes.