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TMI Blog2016 (3) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... c. Moreover, AO did not make any enquiry into the present state of affairs of Assessee establishing a Cyber Centre as ‘Industrial Park’ and the extent of property leased and the nature of incomes earned which may effect in claim of deduction. In our view further enquiry may be required, if the claims are to be allowed. Since incomes are assessed under the head ‘income from house property, there is no need to set aside the orders of AO and CIT(A) on the issue of claim under Section 80IA and adjudicate the claim. - Decided in favour of assessee for statistical purposes. - ITA No.896/Hyd/2015, 897/Hyd/2015, 898/Hyd/2015, 899/Hyd/2015, 900/Hyd/2015 - - - Dated:- 17-2-2016 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER For The For Assessee : Shri S. Ravi, AR For The Revenue : Shri M. Sitaram, DR ORDER PER B. RAMAKOTAIAH, A.M. : These five appeals are by Assessee against the orders of the Commissioner of Income Tax (Appeals)-XI, Hyderabad dated 24-04-2015 for AYs. 2007-08 and 2009-10 to 2011-12 and order dt. 24-04-2015 for AY. 2008-09, which was separately passed. Since common issue is involved in all these appeals, these a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f land. This complex got completed in the year 1999 and was rented out to different persons and the rental income derived from it was shown and taxed under the head, 'Income from House property'. The share of Assessee and the mother in the land/built up area was in the ratio of 13:10 which in square feet translated to 75,918 sq. ft and 60,167 sq.ft respectively. 3.1. Assessee made an application on 14-10-2005, before Department of Industrial Policy Promotion (DIPP), Ministry of Commerce Industry, Government of India, for setting up an Industrial Park in terms with the Industrial Park Scheme, 2002. This application was made by Assessee in the capacity of an individual promoter. According to the terms and conditions mentioned in the said application, Assessee proposed to set up/construct the Industrial Park on the land at 8-2-681/3 3A, Road No.12, Banjara Hills, Hyderabad on a total area of 75,918 sq.ft i.e. on the same address where a building had been completed and from which rental income had been earned since then. Out of this total area, space of 63,018 sq. ft. was proposed to be earmarked for industrial use, which in terms of percentage translated to 90.13%. A mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the CBDT, exemption u/s 80IA(4)(iii) had to be granted by the AO. Assessee also relied on the legal opinion which had been obtained by him on 25-09-2008. 4. Ld. CIT(A) however, did not agree and decided the issue against Assessee by stating as under: 07.0 Decision: The assessment order and the written submissions .submitted by the appellant were carefully considered. On a perusal of the chronology of events leading to the claim for deduction u/s 80IA(4)(iii) of the Act, one thing that cries for attention is that the building in question, that has been given the nomenclature of 'Industrial Park' was already in existence before the application was made to the DIPP for setting it up. Another point that strikes the mind is that in spite of the fact that the said building was already in existence, investment of ₹ 10.48 crores was proposed to be made by/at the time of commencement of the Industrial Park i.e. 01.4.2005. 07.1 According to the IPSS -II Form (statutory requirement of half yearly statements to be filed before the DIPP), and the Tax Audit Reports (balance sheets, profit loss accounts) of the Assessee an investment of only ₹ 2.56 cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that: (i) The Industrial Park as approved by the Competent Authority was actually set up by him; (ii) The profit shown by him had actually been 'derived' from such Industrial Park; and (iii) All other procedural conditions prescribed under the IT Act have been fulfilled. Since the Assessee did not set up the Industrial Park for which the approval was given, he cannot use that approval as the basis for claiming the deduction in respect of the rental income from a property which he had constructed as early as in 1999 and the existence of which was not even disclosed to the Competent Authority. 07.3 According to the Assessee, he claimed the deduction on the basis of the legal opinion obtained on 25.9.2008 from Mr. Nihal Dalvi, Advocate, and the instructing chartered accountant for BSR Co. A copy of the same was submitted and has been perused. According to it, the building constructed by the Assessee in the year 1999 could be called an Industrial Park and deduction u/s 80IA(4)(iii) of the Act in respect of the rental income could be claimed even though the same had been shown under the head' Income from House property'. The Assessee as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer is, therefore, directed to re-compute the income under the head, 'Income from House Property' as per law. Needless to say that while doing so, he will allow only such deduction which is allowable under that head and will not allow other deductions such as depreciation. In view of the foregoing discussion, it is held that the Assessing Officer was correct in disallowing deduction u/s 80 IA (4)(iii) of the IT Act . 5. Ld. Counsel referring to the application made by Assessee placed in the Paper Book along with approval granted by the CDBT submitted that Assessee informed that the building was in existence. There was no suppression of information. It was the contention that all facts are disclosed including existence of building and existence of tenants. The mother and son jointly owned the property and applied separately and the same were approved by the relevant authorities. Therefore, AO cannot reject the claim, once the industrial park was approved. It was the submission that the subordinate authority like AO or CIT(A) cannot consider that the approval that was granted was automatically withdrawn. It was submitted that there was no proposal for its rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccupying the space of 48,326 sq. ft., only. What happened to the balance of the space- whether anybody is occupying the same or not- is not forthcoming from the record. Out of these four units, AO noted that the agreement with SIS Infotech occupying 17,804 sq. ft., to be an unit established much earlier, on a ten year lease. It is also on record that Assessee did not invest any amount for infrastructure stating that the same would be taken up by the occupants of the place, as they wanted bare structure lease. Even though Assessee obtained the approvals for development and maintaining and operate an Industrial Park, the record do support the apprehensions of Revenue that Assessee has simply converted the existing building, which was given on lease, to an Industrial Park without any further investment. 8. In the course of arguments, Ld. Counsel as part of the Paper Book, placed on record the approvals taken by mother of Assessee, Smt. Gavva Laxmi Devi, in whose case also it seems the dispute was pending before Ld. CIT(A). As seen from that application, the address in Column No. 3.1 of the application and the proposed location of the Industrial Park are same as that of # 8-2-682. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years. Thus as can be seen, deduction can be allowed only if there is income from the head Business. Sub-Section (4) applies to any enterprise carrying on business of (i) developing or (ii) operating and maintaining (or) (iii) developing, operating and maintaining any infrastructure facility which fulfills the conditions laid down. Since Assessee has not challenged the head of income under which income was directed to be assessed, nature of income has been crystallized as income from house property . The provisions Section 80-IA does not apply to the income from house property. As Assessee has accepted the incomes as income from house property , question of allowing deduction u/s. 80-IA does not arise. In view of this, the above grounds raised have become academic. Moreover, AO did not make any enquiry into the present state of affairs of Assessee establishing a Cyber Centre as Industrial Park and the extent of property leased and the nature of incomes earned which may effect in claim of deduction. In our view further enquiry may be required, if the ..... 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