Deduction u/s 80IA(4) can be claimed for the Income Earned under the Head “Income from House Property”; ITAT Hyderabad [Read Order]

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The Income Tax Appellate Tribunal, Hyderabad in a recent ruling held that the assessee can claim deduction u/s 80IA(4) for his income falls under the head “Income from House Property.”

The Tribunal was deciding an appeal filed by the assessee raising a question that whether the income from approved industrial park, though offered by the assessee as “Income from House Property” is eligible for deduction under section 80IA(4) of the Income Tax Act.

The assessee company is in the business of development and maintenance of infrastructure facilities. For the A.Y. 2010-2011, the assessee filed its return of income declaring income at Rs.15,96,24,114 and claimed deduction under section 80IA to the tune of Rs.13,02,62,800. During the assessment proceedings under section 143(3) of the I.T. Act, the A.O. perused the profit and loss account of the assessee and observed that the assessee had income from house property and also business income. He observed that the assessee has got approval from the Government of India, Ministry of Finance vide notification dated 29th August, 2006 whereby the Government allocated 8 buildings for setting-up of industrial park with the built-up area of 1,32,851.81 sq. metres and lease rent received from the tenants of these buildings has been claimed as deduction under section 80IA(4) of the Act. He observed that the assessee has also derived income from other buildings which was offered as income from house property but the assessee did not claim deduction under section 80IA(4)(iii) of the Act on the said income. On perusal of the provisions of sub-section (1) of section 80IA, the A.O. observed that the deduction under section 80IA is allowable only with regard to business income and not the income from house property. He, therefore, disallowed the claim of the assessee and brought it to tax.

On appeal, CIT(A) sustained the original order. Therefore, the assessee filed an appeal before the Appellate Tribunal contending that the heads of income are prescribed only to classify the income under different sources but not to deny the legitimate claim of an assessee. The Revenue, on the other hand, submitted that submitted that the assessee has by itself offered the income under the head ‘Income from House Property” and therefore, is not eligible for deduction under section 80IA as the provision itself mentions “profits and gains derived by an undertaking to be eligible for the deduction.”

The ITAT, while allowing the appeal, found that the assessee has got the approval from the Government of India to set-up and maintain the industrial park. For claiming the deduction under section 80IA, sub-section (4) enumerates the enterprises which are eligible for such deduction. Clause-(iii) of sub section(4) of section 80IA prescribes the ‘eligible undertaking’ to be an undertaking which develops and operates or maintains and operates an industrial park (or Special Economic Zone) notified by the Central Government in accordance with the scheme framed and notified by that Government for the period beginning 1st day of April, 1997 and ending of 31st March, 2006. The second proviso thereto provides that the provisions of this clause shall have effect as if for the figures, letters and words 31st March, 2006, the figures, letters and words “31st day of March, 2011” had been substituted. This second proviso has been inserted by the Finance Act, 2006 w.e.f. 01.04.2007. In the instant case, the approval by the Government of India has been granted vide notification dated 29th August, 2006. Therefore, the case of the assessee falls under the second proviso to clause (iii) of sub-section (4) of section 80IA of the Act.

Read the full text of the order here.

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