Industrial park deduction follows the undertaking, with fixed-deposit interest excluded and partnership firm status upheld.

Section 80IA(4)(iii) eligibility follows the approved industrial park and the transferred undertaking, so a transferee formed after the notified date may still claim the remaining deduction period under section 80IA(12). The deduction is not confined only to operation-and-maintenance income where the whole undertaking is transferred, but interest on fixed deposits is not income derived directly from the undertaking; related interest expenditure must be correspondingly considered. The note also states that, where partnership requirements are satisfied and the partner companies have authorised participation, assessment as a partnership firm is proper and treatment as an association of persons is unwarranted.

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Issues: (i) Whether the transferee undertaking was entitled to deduction under section 80IA(4)(iii) of the Income-tax Act, 1961 despite its constitution after the notified date under the Industrial Park Scheme; (ii) whether the deduction was confined only to income from operation and maintenance, and whether interest on fixed deposits formed part of eligible income; (iii) whether the assessee was liable to be assessed as an association of persons instead of as a partnership firm.

Issue (i): Whether the transferee undertaking was entitled to deduction under section 80IA(4)(iii) of the Income-tax Act, 1961 despite its constitution after the notified date under the Industrial Park Scheme.

Analysis: The industrial park had been duly approved and notified under the Industrial Park Scheme, 2002. The transfer of the undertaking to the successor firm was treated as a transfer of the undertaking itself, and section 80IA(12) was applied to recognise availability of the benefit to the transferee for the remaining period. The later constitution of the transferee did not disqualify the claim, since the statutory requirement was linked to the undertaking and the approved industrial park, not to the date of formation of the transferee entity.

Conclusion: The transferee undertaking remained eligible for deduction, and the Revenue's objection on the basis of the date of constitution failed.

Issue (ii): Whether the deduction was confined only to income from operation and maintenance, and whether interest on fixed deposits formed part of eligible income.

Analysis: The provision was construed as allowing deduction in respect of the income of the undertaking operating the industrial park, and not merely a restricted slice of income attributable to operation and maintenance alone where the entire undertaking stood transferred. However, interest earned on fixed deposits was held not to be income derived directly from the industrial undertaking. At the same time, the interest could not be brought to tax in isolation without allowing the corresponding interest expenditure linked to the deposits.

Conclusion: Deduction was not confined only to operation and maintenance income, but interest income from fixed deposits was excluded from eligible business income with corresponding expenditure to be allowed.

Issue (iii): Whether the assessee was liable to be assessed as an association of persons instead of as a partnership firm.

Analysis: The conditions governing recognition of the partnership firm were found to have been satisfied, and the partner companies had authorised participation in the firm. The Revenue's basis for treating the assessee as an association of persons was not accepted.

Conclusion: The assessee was correctly assessed as a partnership firm and not as an association of persons.

Final Conclusion: The Revenue's challenge failed on all substantive grounds, and the common orders granting relief to the assessee were sustained.

Ratio Decidendi: For deduction under section 80IA(4)(iii), the decisive requirement is the approved undertaking and its eligible industrial park, not the date of constitution of the transferee entity; interest lacking direct nexus with the undertaking is outside eligible profits, though related expenditure must be adjusted accordingly.

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