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TMI Blog2021 (8) TMI 768X X X X Extracts X X X X X X X X Extracts X X X X ..... ience and Technology, Government of Karnataka,etc. The judgment of the single Bench of the Hon ble jurisdictional High Court was confirmed by the Division Bench of the Hon ble High Court in [ 2019 (8) TMI 1597 - KARNATAKA HIGH COURT] . Since the Hon ble High Court has categorically held that there is no violation of the condition imposed and has restored the approval dated 13.04.2016 and has further found that the assessee is having independent and distinct 16 units, i.e., let out to TCS, we hold that the CIT(A) is justified in directing the A.O. to grant deduction u/s 80IA(4)(iii) - Decided against revenue. - ITA No.2518, 2519, 2520, 2521, 2522, 2523/Bang/2019 - - - Dated:- 17-8-2021 - Shri George George K, JM And Shri B.R.Baskaran, AM Appellant by : Sri.Muzaffar Hussain, CIT-DR Respondent by : Sri.Balram R.Rao, Advocate ORDER Per George George K, JM These six appeals at the instance of the Revenue are directed against the consolidated order of the CIT(A) dated 30.09.2019. The relevant assessment years are 2009-2010, 2010-2011, 2011-2012, 2012-2013, 2014-2015 and 2015- 2016. 2. Common issue is raised in these appeals, hence, they were heard together ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Industrial park in Whitefield, Bangalore. The assessee-firm obtained approval from Industrial Park Scheme 2002, which has been notified by Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, Government of India, vide SO No.354(E) dated 01.04.2002. The approval was given by the Ministry to the assessee on 13.04.2006 under nonautomatic route. The criteria of approval under the automatic and non-automatic route is given in para 6 and 7 of the Scheme of 2002. The DIPP granted approval to the assessee for three units vide its letter dated 13.04.2006. The assessee had applied to CBDT for notification under Income-tax Rules for grant of deduction u/s 80IA(4)(iii) of the I.T.Act. Report was called from the Assessing Officer after causing necessary enquiry. The A.O. submitted his report dated 21.07.2011, which is reproduced at page 3 and 4 of the assessment order for assessment year 2009-2010, wherein it is observed that the assessee had violated the condition (4) of the approval granted on 13.04.2006 insofar as it has breached clause 6(f) of the Scheme 2002, namely, No single unit referred to in column (2) of the table given in the sub-paragraph (b) of para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the withdrawal of the approval. The Hon ble Karnataka High Court vide its judgment dated 18th November, 2015 held that the assessee was entitled to tax benefit under clause (iii) sub-section (4) to section 80IA of the I.T.Act since there is no violation of any of the conditions mentioned in the non-automatic route under IPS 2002. Accordingly, the Hon ble Court restored the approval granted vide order of DIPP dated 13.04.2006. The order of the Single Bench was affirmed by the Division Bench in Writ Petition No.3298/2016 (judgment dated 07.08.2019). 7. In the meanwhile, when the appeal was pending before the first appellate authority by the Revenue, the assessee brought to the notice of the CIT(A), the conclusions drawn by the Hon ble High Court, as regards restoration of approval granted to the assessee. The CIT(A) decided the issue in favour of the assessee and direct the A.O. to grant the benefit of section 80IA(4)(iii) of the I.T.Act. The relevant finding of the CIT(A) at para 6 and 7, reads as follow:- 6. I have carefully considered the facts of the case, the grounds of appeal and the statement of facts the written submissions filed, remand report received from the AO an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall begin to develop, develop and operate or maintain and operate an industrial park any time during the period beginning on the 1st day of April, 2006, and ending 011 the 31 st day of March, [2011I). (2) The undertaking and the Industrial Park shall be notified by the Central Government under the Industrial Park Scheme, 2008. (3) The undertaking shall continue to fulfill the conditions envisaged in the Industrial Park Scheme, 2008.] The above rule had been substituted. w.e.f. 08/01/2008. Prior to amendment the Rule18C read as under: 18C. Eligibility of Industrial Parks and Special Economic Zone for benefits under section 80-IA(4) (iii) (1) The undertaking .shall begin to operate-an industrial park during, the. period beginning on the 1st day of April, 1997, and ending on the 31 st day of March, 2002 (1A) The undertaking shall begin to develop or develop and operate or maintain and operate a special economic Zone any time during the period beginning on the 1 st day of April, 2001 and ending on 31 st day of March 2006. (2) The undertaking shall be duly approved by the Ministry of Commerce and Industry in the Central Government under the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustries and Commerce, Government of Karnataka had also certified the same. The said certificates are produced at Annexures 'P', `Q', and 'R', respectively, to the petition. I~ is this primary aspect and the limited ground on which the present petition is filed questioning the action of the respondent in withdrawing the approval. 7. On the above allegation that there has been violation of the terms of allotment by the petitioner and it is this stand of the respondents, which is sought to be reiterated in the statement of objections, which Sri Dixit would highlight and emphasize to reiterate that there has indeed been a violation as admittedly, the petitioner in its application. had undertaken not to allocate more 'than 50% of the area to anyone unit and further, had also filed an affidavit to undertake that there would not be any such allotment. In the, face of which it is not tenable for the petitioner now to retract from the sworn statement in this regard. And it is also not demonstrated that 16 units said to be under the umbrella of TCS are independent taxable unit as would be the requirement under the Scheme to bring a unit under the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.3 Subsequently, however, the DIPP had preferred Writ' Appeal no.3298 of 2016 against the above order of the Single- Judge Bench of .the Hon'ble Karnataka High Court. During the appeal proceedings, the appellant's counsel informed the Hon'ble Court that CBDT notification had not been obtained by the DIPP despite the above order quashing the withdrawal of the approval. The two interim orders of the Hon ble Karnataka High Court dated 16/03/2017 and 12/07/201'7 are reproduced below: Hon ble Justice Chief Justice and Budihal R.B. 16/03/2017 Order in WA 3298/2016 Order on I.A.No.1 of 2016 Mr.D.L.N.Rao, learned senior advocate appear with his junior, Srimathi S.R.Anuradha, learned advocate and accepts notice for the sole respondent. After hearing the learned advocates appearing for the parties and considering the averments contained in the affidavit annexed to the application for condonation of delay, we are satisfied that the appellants were prevented by sufficient cause from presenting the memorandum of writ appeal in time. Therefore, the delay in filing the writ appeal is condoned The application for condonation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved the said Industrial Park vide Ministry of Commerce and Industry letter No. 15/61/2005- IP ID dated 13.04.2006. And whereas the Central Government cancelled the above approval granted vide Ministry of Commerce and Industry letter No. 15/61/2005-IP ID-II dated 08.03.2013. And whereas the Hon ble High Court of Karnataka by its order dated 18.11.2015 in writ petition no. 13172 of 2013 quashed the above cancellation order dated 08.03.2013. And whereas DIPP, Department of Industrial Policy and Promotion, has filed a Writ Appeal no. 3298 of 2016 against the order of Hon ble High Court of Karnataka in writ petition no. 13172 of 2013. And whereas the Empowered Committee has revoked the order for withdrawal of approval dated 08.03.2013 in compliance to the directions of Hon ble High Court of Karnataka subject to the outcome of Writ appeal no. 3298 of 2016 filed by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry. Now, therefore, in exercise of the powers conferred by clause (iii) of sub-section (4) of section 80IA of the said Act and in pursuance of directions of Hon ble High Court of Karnataka in the order dated 18.11.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilities as are for common use for industrial activity which are identifiable and are provided on commercial terms. 4. No single unit referred to in column (2) of the Table given in sub-paragraph (b) of paragraph 6 of S.O. 354(E) dated the 1st April, 2002, shall occupy more than fifty per cent of the allocable industrial area of an Industrial Park. For this purpose a unit means any separate and distinct entity for the purpose of one and more State or Central tax laws. Compliance to this condition is subject to the outcome of Writ appeal 3298 of 2016 filed by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry in the Hon ble High Court of Karnataka. 5. Necessary approvals, including that for foreign direct investment or nonresident Indian investment by the Foreign Investment Promotion Board or Reserve Bank of India or any authority specified under any law for the time being in force, shall be taken separately as per the policy and procedures in force. 6. The tax benefits under the Act can be availed of only after the number of units indicated in Para 1 (vii) of this notification, are located in the Industrial Park. 7. M/s Abhil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. However, it was pointed out to the AR that para 4 of the above notification dated 01/03/2018 expressly states that compliance of the condition that no single unit would occupy more than 50% of the allocable industrial area was subject to the outcome of the Writ Appeal no.3298 of 2016 and hence the relief sought in appeal would also be contingent on the outcome of the Writ Appeal. 6.6 The appellant's AR sought time for submitting details of the outcome of the Writ Appeal. Subsequently, the Hon'ble Karnataka High Court has delivered its verdict in Writ Appeal no.3298 of 2016 on 07/08/2019. The relevant portion of the said judgment is reproduced below: We have examined the case of the appellant and we have gone through the sanction made under the Automatic Route and Non-Automatic Route of IPS 2002. It is found form the Non-Automatic Route which allowed 90% for industrial purpose and! 0% for commercial use. When such is the condition and the compliance by the respondent, we do not find any infirmity in the order passed by the learned single Judge. The petitioner has not placed any justifiable ground for withdrawal of the scheme allotted under Non-Automa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court that the conditions enumerated in section 6(f) of IPS 2002 is only applicable to automatic route. The Hon ble High Court further held that the assessee has established 16 independent and distinct units allocated to TCS and this is evident from the documentary evidence that are placed on record, such as certificate issued by the Joint Director, District Industrial Centre, Certificate from the Department of Information Technology, Biotechnology and Science and Technology, Government of Karnataka,etc. The judgment of the single Bench of the Hon ble jurisdictional High Court was confirmed by the Division Bench of the Hon ble High Court in Writ Petition No. 3298/2016. Since the Hon ble High Court has categorically held that there is no violation of the condition imposed and has restored the approval dated 13.04.2016 and has further found that the assessee is having independent and distinct 16 units, i.e., let out to TCS, we hold that the CIT(A) is justified in directing the A.O. to grant deduction u/s 80IA(4)(iii) of the I.T.Act. Hence, we uphold the order of the CIT(A) as correct and in accordance with law. 11. In the result, the appeals filed by the Revenue stand dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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