Tribunal allows deduction for rental income from Ascendas under section 80IA(4)(iii)

The tribunal ruled in favor of the assessee, allowing the appeals and permitting the deduction for rental income from Ascendas under section 80IA(4)(iii). It was determined that the administrative building was part of the Mariner Block and common facilities, making the rent income eligible for deduction. The tribunal rejected the CIT(A)'s interpretation that only income from allocable areas qualified for the deduction, emphasizing the importance of common facilities for park operation.

---

---

Issues:
Denial of deduction u/s 80IA for rental income from Ascendas Property Management Services Ltd.; Exclusion of expenditure incurred towards earning rental income from Ascendas.

Analysis:
The appellate tribunal heard appeals against CIT(A) orders for assessment years 2006-07 and 2007-08 regarding denial of deduction u/s 80IA for rental income from Ascendas. The assessee developed an industrial park in Hyderabad and claimed deduction u/s 80IA(4)(iii). The Assessing Officer found the rented premises not part of the Mariner Block, thus disallowing the deduction. The CIT(A) upheld this decision, stating the administrative building was not part of the allocable area. The tribunal analyzed the building plan, approval letters, and notifications to determine the eligibility of the rental income. It was established that the administrative building was part of the Mariner Block and common facilities, making the rent income eligible for deduction u/s 80IA(4)(iii).

The tribunal found no dispute that the assessee operated Mariner and Auriga Industrial Parks. The administrative building was part of the Mariner Block, as per approved plans and correspondence with authorities. The scheme for industrial parks included common facilities like administrative buildings. The rent received from Ascendas was for providing world-class services to park tenants, thus integral to park operation. The tribunal concluded that the rent income was eligible for deduction u/s 80IA(4)(iii) based on the building's inclusion in the Mariner Block and common facilities.

The tribunal's decision was based on the scheme's objectives, approval letters, and notifications, which defined allocable areas and infrastructure development. The administrative building was considered part of common facilities, essential for park operation and maintenance. The tribunal rejected the CIT(A)'s interpretation that only income from allocable areas qualified for the deduction. Section 80IA did not restrict the deduction to income from allocable areas. As a result, the tribunal allowed the appeals, setting aside the CIT(A) orders and permitting the deduction for rental income from Ascendas.

In conclusion, the tribunal allowed the appeals, ruling in favor of the assessee regarding the eligibility of rental income from Ascendas for deduction u/s 80IA(4)(iii). The decision was based on the administrative building's inclusion in the Mariner Block and common facilities, essential for industrial park operation and maintenance.

---