The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the assessee was entitled to a deduction under Section 80IA(4)(iii) of the Income Tax Act, 1961, as no violation of scheme conditions was found.
The revenue has appealed against the orders of the Commissioner of Income Tax Appeals [CIT(A)] for the assessment years (AY) 2012-2013 to 2018-19.
The assessee had claimed deductions under Section 80IA(4)(iii) of the Income Tax Act, 1961, for income derived from license fees, maintenance services, and interest, among other sources.
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The Assessing Officer (AO) had disallowed the deductions for the assessment years 2012-13 to 2014-15, noting that the income was from house property and not business income.
The assessee appealed before the CIT(A), and the latter allowed the assessee’s appeal, relying on previous tribunal decisions that had granted the deduction under Section 80IA(4)(iii) for earlier assessment years.
The revenue challenged the CIT(A)’s decision before the ITAT and contended that the income in question was not business income and that the assessee had not met the condition of setting up a minimum of 30 industrial units, which is a prerequisite for claiming the deduction under Section 80IA(4)(iii).
The ITAT observed that the Industrial Park Scheme, 2002, notified by the Government of India, facilitates projects for setting up industrial parks that are eligible for deductions under Section 80IA(4)(iii). The bench found no evidence that the assessee had violated any conditions specified in the scheme, including the requirement of setting up a minimum of 30 industrial units.
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The ITAT referred to the Central Board of Direct Taxes (CBDT) Circular No. 16/2017, which clarified that income from letting out premises or developed space in an industrial park or Special Economic Zone (SEZ) should be classified as business income if the park or SEZ is developed and maintained in accordance with the government’s scheme. The assessee had been declaring the income as business income and claiming depreciation on the rented premises, in line with this circular.
The bench found no infirmity in the CIT(A)’s order and dismissed the revenue’s appeals for all the assessment years in question.
The ITAT, comprising Amarjot Singh (accountant member) and Kavitha Rajagopal (judicial member) allowed the revenue’s appeal.
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