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TMI Blog2020 (11) TMI 778X X X X Extracts X X X X X X X X Extracts X X X X ..... al test of an independent unit. Since, the assessee had applied for non automatic approval under paragraph 7 of the scheme, therefore, the requirement contained in paragraph 6(f), which requires a unit not to occupy more than 50% of the allocable area does not apply to the case of the assessee. Rule 18C of the Rules does not have a bearing on the claim of the assessee with regard to eligibility of deduction under Section80IA(4)(iii) of the Act in the fact situation of the case. Even otherwise, whether or not the assessee has complied with the conditions laid down in the Scheme in order to enable it to claim deduction under Section80IA(4)(iii) of the Act is a pure question of fact. The findings recorded by the tribunal have not been assailed by the revenue on the ground that the same are perverse. The aforesaid findings of fact could not be demonstrated to be perverse. - Decided against the revenue and in favour of the assessee - I.T.A. NO.196 OF 2011 - - - Dated:- 10-11-2020 - HON BLE MR. JUSTICE ALOK ARADHE AND HON BLE MR. JUSTICE H.T. NARENDRA PRASAD APPELLANTS (BY SRI. JEEVAN J. NEERALGI, ADV.,) RESPONDENT (BY SRI. PAVAN KUMAR, ADV., FOR SRI. S. PARTHASARATHI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under section 80IA of the I.T. Act for the financial year 2006-07 when the notification was issued by the CBDT, Ministry of Revenue on 31.05.2007 and therefore when the assessee had developed and started the Unit even before the approval and before getting notified by the CBDT. 2. The factual background, in which the aforesaid substantial questions of law arise for our consideration need mention. The assessee is engaged in the business of development of Information Technology parks and similar infrastructure facilities. The assessee was allotted 27 acres and 50 guntas of land in Phase-I and 33 acres of land in Phase-II on 10.11.2003 by Karnataka Industrial Area Development Board (KIADB) for development of Information Technology park and the allied infrastructure facilities. The assessee entered into a Joint Development Agreement (JDA) with M/s Millenia Realtors (P) Ltd. On 14.12.2003 to develop the Information Technology Park. The assessee on 16.12.2003 obtained permission to develop the lands in joint venture with M/s Millenia Realtors (P) Ltd. Thereafter, on 02.04.2005, the assessee entered into an agreement for sale of five units in 2A campus to individuals and subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that five separate functional units were operating in the Assessment Year in question. It was further held that it was not proper on the part of the Assessing Officer to decline the deduction under Section 80IA(4)(iii) of the Act on the ground that the assessee had started functioning even before the formal approval was issued under the scheme. Accordingly, the appeal preferred by the assessee was allowed. In the aforesaid factual background, the revenue has filed this appeal. 4. Learned counsel for the revenue submitted that in order to claim deduction under Section 80IA(4)(iii) of the Act, a assessee has to satisfy the conditions mentioned in the scheme framed and notified by the Central Government as well as the rules. It is further submitted that the tribunal failed to appreciate that the assessee did not comply with the conditions envisaged in the scheme and also did not comply with the requirement contained in Section 18C contained in the Income Tax Rules. It is also argued that as per the approval granted to the assessee, the assessee was required to develop an area of 2,41,620 square feet, out of which 95% was for industrial use, but developed only 2,01,350/- squar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the respondent has fulfilled the requirements as laid down in Section 80IA(4)(iii) of the Act are pure findings of fact, which has not been assailed by the revenue. It is also contended that tribunal has rightly applied the functional test and has held that the assessee has complied the requirement with regard to a unit and a unit should be a functionally independent unit having common facilities and the scheme does not envisage that a unit would mean a separate software company. It is also submitted that the units developed by the assessee were sold to different persons as held by the Assessing Officer himself in paragraph 19 of the order, which clearly shows that the units were separate entities capable of being sold separately and were subject to Stamp Duty And Registration Act. It is also pointed out that the assessee has not constructed the required area was not raised by the revenue and therefore, does not arise for consideration. It is also pointed out that mere delay in issuing the concerned Notification on the part of the Central Board of Direct Taxes (CBDT), deduction under Section 80I could not be denied to the assessee. In support of aforesaid submissions, reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a special economic zone any time during the period beginning on the 1st day of April, 2001 and ending on 31st day of March, 2006. (2) The undertaking shall be duly approved by the Ministry of Commerce and Industry in the Central Government under the scheme for industrial park or Special Economic Zones notified by the Ministry. (3) The undertaking shall continue to fulfill the conditions envisaged in the scheme. (4) On approval under sub-rule (2), the Central Board of Direct Taxes, shall notify industrial parks for benefits under Section 80-IA. 8. In exercise of powers conferred by clause (iii) of sub-section (4) of Section 80IA of the Act, the Central Government has framed the Scheme which is known as Industrial Park Scheme, 2002. Clause(2)(i) of the Scheme defines the expression 'unit' which means any separate and distinct entity for the purpose of one or more State or Central Tax law. Clause 6 of the Scheme deals with criteria for automatic approval. Clause 6(f) provides that no single unit referred to in Column No.2 (of the table given in sub paragraph (b) of paragraph 6) shall occupy more than 50% of the allocable industrial area of an industrial mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent with independent facilities, instrumentation, power connection, door number and facility of functioning independently. It has been held that each unit is in a position to carrying on its activity without depending on other units. Therefore, a finding has been recorded in favour of the assessee that the assessee has successfully satisfied the functional test of an independent unit. 10. The tribunal has further held that assessee had applied through non automatic approval to get its campuses approved for deduction under Section 80IA(4)(iii) of the Act. It has further been held that once the projects are approved and the notifications are issued by the competent authorities, the approvals and the notifications would relate to the date of commencement of the activities and therefore, the benefit of deduction cannot be deprived to the assessee on the ground that he had carried out substantial part of the software projects prior to grant of approval. Thus, the assessee has been held entitled to the benefit of deduction under Section 80IA(4)(iii) of the Act. 11. The submissions raised in this appeal on behalf of the revenue that the assessee was required to develop 95% of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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