Tribunal upholds deduction under Section 80IA(4)(iii) of Income Tax Act

The Tribunal dismissed the Revenue's appeals for both assessment years, affirming the CIT (A)'s decision to allow the deduction under Section 80IA(4)(iii) of the Income Tax Act, 1961. The Tribunal relied on the principle of consistency and previous decisions in the assessee's favor, finding no merit in the Revenue's contentions.

---

---

Issues Involved:
1. Deduction under Section 80IA(4)(iii) of the Income Tax Act, 1961.

Detailed Analysis:

1. Deduction under Section 80IA(4)(iii) of the Income Tax Act, 1961:

Facts of the Case:
The assessee, a private limited company engaged in real estate development, filed returns for Assessment Years (A.Y.) 2005-06 and 2011-12. For A.Y. 2005-06, the assessee declared an income of Rs. 2,60,575, which was later assessed at Rs. 5,42,02,182 due to the denial of deductions under Section 80IA(4)(iii) and 80IB(10) of the Act. The Tribunal allowed the deduction under Section 80IB(10) but remanded the issue of Section 80IA(4)(iii) back to the Assessing Officer (AO) for fresh examination, which was subsequently denied. For A.Y. 2011-12, the declared income was Rs. 25,04,250, assessed at Rs. 3,54,23,189 due to the denial of deduction under Section 80IA(4)(iii).

Appeal to CIT (Appeals):
The Commissioner of Income Tax (Appeals) [CIT (A)] allowed the assessee's claim for deduction under Section 80IA(4)(iii) for both assessment years. The Revenue appealed against these orders.

Revenue's Grounds of Appeal:
The grounds raised by the Revenue included:
- The CIT (A) erred in directing the AO to allow the deduction under Section 80IA(4)(iii) by relying on previous orders for A.Y. 2007-08 and 2004-05, which were under appeal.
- The CIT (A) failed to appreciate that the assessee did not meet the conditions laid down by the Ministry of Commerce and Industry.
- There were fewer tenants than required, and a significant portion of the area was leased to a single tenant, M/s. I-Flex Solutions Ltd.
- Two of the companies were amalgamated, reducing the number of tenants.
- Reliance on previous orders without considering the specific facts of the case.

Tribunal's Findings:
- The Tribunal noted that different co-ordinate benches had upheld the assessee's claim for deduction under Section 80IA(4)(iii) for earlier years, including A.Y. 2004-05, 2006-07, 2008-09, and 2009-10.
- The Tribunal found that the assessee met the functional test of having independent units with separate facilities, as held in previous decisions.
- The Tribunal emphasized consistency in decisions and upheld the CIT (A)'s orders allowing the deduction.

Conclusion:
The Tribunal dismissed the Revenue's appeals for both assessment years, affirming the CIT (A)'s decision to allow the deduction under Section 80IA(4)(iii) of the Income Tax Act, 1961. The Tribunal relied on the principle of consistency and previous decisions in the assessee's favor, finding no merit in the Revenue's contentions.

Order Pronouncement:
The order was pronounced in the open court on 4th September 2015.

---