TaxTMI 
TaxTMI 
2011 (11) TMI 775
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....he conditions laid down by the Ministry of Commerce/CBDT that 90% of allocable area shall be earmarked for industrial use. 3. Brief facts of the case are that the assessee is a partnership firm engaged in the business of construction. The assessee's income includes income from house property and business income derived from sale of flats in Block Nos. I and II of White House constructed by it. The assessee had shown sale proceeds in respect of Block II at Rs. 79,04,900 besides showing rental income of Rs. 5,22,23,691 from the said block. The entire net profit from Block II shown at Rs. 3,93,90,365 had been claimed as deduction u/s. 80IA(4)(iii) on the ground that Block III of White House has been notified as an Industrial Park under the Industrial Park Scheme, 2002. According to the assessee, Block III had been operated and maintained as an industrial park in terms of section 80IA(4)(iii) after obtaining approval from the Ministry of Commerce, Government of India, as well as from the CBDT, New Delhi. According to the Assessing Officer, the assessee has not complied with the conditions specified by the approving authority, viz. the Ministry of Commerce. The assessing officer extr....
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....ea occupied under the proposed activities to the total area worked out only to 34.91%. Assessee submitted before the assessing officer that excluding the floor area of 12968 sq. ft for common facilities, the total area available for leasing out is 154671, and deducting therefrom the area sold in the ground floor, duly offering the income from such sale to tax, of 5293 sq. ft., balance area comes to 149378. On that basis, submitting a list of tenants with the area under their occupation and activities undertaken by them, assessee submitted before the assessing officer that more than 90% area was allocated for use by the tenants for approved activities. 5. The assessing officer was not convinced with the above explanation of the assessee. According to him, as per the assessee's application, the total area of the industrial park was 281273.97 sq. ft, and deducting therefrom the area of common facilities of 104108, the net allocable area works out to 177165 sq. ft. As against this, the assessing officer noted, the assessee constructed a total area of 2,72,829, which is less than the approved area of 281273.97 sq. ft. On this count itself, according to the assessing officer, assessee....
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....ce support for R&D/Marketing Research'. From the certificate, it is clear that the space was utilized for office purpose only as against he claim of 'Research and Medical Testing'. Besides the total area under the said company was 13941 sq. ft. as per the lease deed as against 16643 sq. ft. mentioned by the assessee. 9. In view of the above, the assessing officer, concluding that the assessee has failed to fulfil the conditions mentioned in para-1 of the letter of the Government, granting approval to the assessee, which were as per the proposal made by the assessee itself, rejected the claim of the assessee for deduction under S.80IA(4)(iii) of the Act. 10. On appeal, the CIT(A) after noting the facts of the assessee and the submissions of the parties at length, noted in the first place that as per the approval received, the proposed area of the Industrial park was 26,130.99 sq.mts. and the percentage of allocable area earmarked for industrial use was 90% whereas that earmarked for commercial use was 10% and the proposed number of Industrial units to be located in the industrial park was 03. He also noted that in view of the approval given by the Central Government, the CBDT,....
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....mmon area that the rent for each premises was decided under the agreements, and as such it is the total area specified in the agreements that is to be considered as used for specified industrial purposes by the respective parties. Taking note of the areas let out for commercial purposes, the CIT(A) observed that even if the area sold of 5,293 sq. ft. is considered as used for commercial purposes, the total of the area used for commercial purposes comes to 16,901, and consequently, after excluding the area of 16,901 considered as used for commercial purposes, the allocable area left is 1,50,718, which happens to be 89.92% of the total area, i.e. almost 90%. 12. The CIT(A) found no merit in the view taken by the assessing officer that even if the assessee had not let out or used all of such 1,50,718 sq. ft. for approved industrial purposes during the year, it cannot be denied that all of such area had been 'developed' as per the approval of the Central Government and was fit to be used for the specified industrial purposes, and for this purpose relied on the decision of the Hyderabad Bench of the Tribunal in the case of Meenakshi Infrastructures P. Ltd. V/s. DCIT(44 SOT 59) in thi....
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....wn for any reason, the appellant would be entitled to the benefit of deduction under S.80IA(4)(iii)." 14. Aggrieved by the order of the CIT(A), Revenue is in appeal before us. 15. The Learned Departmental Representative strongly supporting the order for the assessing officer submitted that the assessee has failed to fulfil the conditions laid down by the Ministry of Commerce/CBDT that 90% of the allocable area shall be earmarked for industrial use, and consequently the assessee is not entitled for the relief under S.80IA(4)(iii) of the Act. He submitted that the decision of the Hyderabad Bench of the Tribunal in the case of Meenakshi Infrastructure P. Ltd. (supra) has no application to the facts of the present case, and therefore, the CIT(A) was not justified in following the same. 16. The learned counsel for the assessee, on the other hand, strongly relying on the order of the CIT(A), submitted that the assessee is very much entitled to the relief under S.80IA(4)(iii) of the Act. Reiterating the contentions urged before the lower authorities, he submitted that the industrial park constructed by the assessee has been approved by the Ministry of Commerce, Government of Indi....
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..... ft. of the office given to Avenion Limited on 1st Floor, 1604 sq. ft. office space given to Doosan Infrastructure Ltd. on the 1st floor of the complex; 3364 sq. ft. of office given to Papyrus Software (P) Ltd on 6th Floor and 6944 Sq. ft. of office given to Bharti Telecom Ltd. on 7th floor, besides committing small errors in the areas mentioned. In addition, the assessing officer has also taken extra area of 1782 sq. ft. on 4th floor of office given to Aurona Technologies. He further submitted that in the case of India Cements Ltd. and Dr.Reddy's Labs Ltd., the assessing officer has taken the area excluding common area on which also the assessee gets lease rent, whereas in all other cases, he has included common area which is specifically mentioned in the lease deeds. He also took us through the reconciliation statement extracted by the CIT(A) in para 5.6 of the impugned order, and submitted that the net allocable area is only 149396 sq.ft. and out of it the assessee has used almost 97% of the area for specified purpose and has let out only about 3% of the allocable area for commercial purpose. He further submitted that though the assessee has sold a small portion of the area in ....
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....Area meant for restaurant and other common facility (The assessee was found to provide eating facility as common facility as mentioned in Annexure-5 of the application) 12950 154689 Less: Area sold 5293 Allocable area 149396 21. However, it was found that 97.79% of allocable area had been used for specified purposes as below : (In sq. ft.) Total area as per assessment order (Annexure -I) 137526 Add: Area for which rental agreements are filed and not considered by Assessing Officer in assessment order but considered in remand report 19034 Add: Area lying vacant during A.Y. 2007-08 but lent subsequently in A.Y. 2008-09 for specified purposes. Avenion Limited 1534 Doosan Infra Care Ltd. 1604 3138 159698 Less Area excess taken by A.O. in Asst. order 1782 Total area 157916 Less: Area used for common facility (Restaurant) 8373 149543 Less: Area lying vacant during A.Y. 2007-08 3138 Allocable area 146405 Used for Commercial purpos....
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....on area, that the rent for each premises was decided under such agreements. Accordingly, we are of the view that it is the total area specified in the agreements that is to be considered as used for specified industrial purposes by the respective parties. 24. So far as the commercial user is concerned, the area let out to M/s. Doosan Heavy Industries & Constructions Co. Ltd., 1582 sq. ft., Mrs. Naina thakkar, 1653 sq. ft. and used for the restaurant, 8373 sq. ft. totalling to 11,608 sq. ft. have been considered by the Assessing Officer as used for 'commercial purposes'. No other area was found used for commercial purposes. Even if the area sold, 5293 sq. ft., is considered as used for 'commercial purposes', the total of the above comes to 16,901 sq. ft. Therefore, it is clear that after excluding the area of 16,901 sq. ft. considered as used for commercial purposes, the allocable area left is 1,50,718 sq. ft. which happens to be 89.925 of the total area, i.e., almost 90%. 25. The Assessing Officer has opined that even if the assessee had not let out or used all of such 1,50,718 sq. ft. for approved industrial purposes during the year, it cannot be denied that all of such area....
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....ft. let out to the restaurant is considered in the nature of common facility provided in the industrial park by the developer, the user for commercial purposes would not be more than 10%. 27. Further, it is seen that this Tribunal in the case of Meenakshi Infrastructures P. Ltd. vs. DCIT (supra) have opined that "when the Central Government approves the assessee's project under Industrial Park Scheme framed by the Central Government, the conditions under sec. 80IA(4)(iii) are satisfied." It is clear that while the assessee has received such approval and notification, the same has not been withdrawn till date for contravention of any of the conditions, even though there is a specific provision for withdrawal, in case the Central Government finds that the conditions prescribed therein have not been adhered to. However, it is also clear that such withdrawal has to be done by the Central Government only and as long as this is not done, the assessee having such approval and notification cannot be denied the deduction. Under the circumstances, I am of the view that since the assessee had developed the industrial park duly approved and notified by the Central Government and the same ha....