TaxTMI 
TaxTMI 
2021 (8) TMI 768
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....m order dated 16.03.2017 wherein the Hon'ble Karnataka High Court ruled that the assessee shall be entitled to tax exemption in accordance with law which is distinct from mandating for a compulsory tax exemption to be extended to the assessee? 3. On the facts and circumstances of the case, whether the Ld.CIT(A) has erred in interpreting the interim order dated 16.03.2017 wherein the Hon'ble Karnataka High Court has not delved into the conditions necessary to treat the 16 ODCs of M/s.TCS as separate units and thereby the conditions laid down in Para 4 of the CBDT notification dated 01.03.2018 continue to remains in dispute? 4. On the facts and circumstances of the case, whether the Ld.CIT(A) has erred in accepting the 16 ODCs of M/s.TCS as separate units when the lease deed for all the 16 concerned properties in the Industrial park had been entered into by M/s TCS only? 5. On the facts and circumstances of the case, whether the Ld.CIT(A) has erred in accepting the 16 ODCs of M/s.TCS as independent taxable units despite it not adhering to the conditions of the Industrial Scheme 2002 which mandates that a State or Central tax law must treat them as independe....
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.... developing centre, which is distinctly separate and identifiable and qualified to be separate units as per the above referred Industrial park Scheme 2002. It was submitted by the assessee that as per the DIPP approval, it has to lease atleast three units whereas the assessee has housed 18 separate and distinct identifiable units, hence it had complied with the terms and conditions of the Industrial Park Scheme 2002. The assessee also relied on the judgment of the Hon'ble Karnataka High Court in the case of Primal Projects (P.) Limited v. DCIT reported in 123 Taxman.com 314 (Kar.). The Assessing Officer, however, observed that as per the non-automatic approval route, the assessee firm was bound to seek the notification from the Empowered Committee constituted by the Central Government and the assessee could not get the due notification, which was essential as per the Industrial Park Scheme 2002 in respect of non-automatic approval even though the assessee started operating and maintaining industrial park since assessment year 2006-2007. It was further stated by the A.O. that 16 units mentioned by the assessee were not independent and distinct. The A.O. concluded the assessment by d....
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....an assessee includes any profits and gains derived from any business industrial undertaking 'or an enterprise referred to in subsection:( 4) (such business hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to hundred per cent of profits .and gains derived from such business for the first five assessment years commencing at any time during the periods as specified in sub-section (2) and thereafter: twenty-five per cent of the profits and gains for further five assessment years: Provided that where the assessee is a company, the provisions of this sub-section shall have effect as if for the words "twenty-five per cent" the words "thirty per cent" had been substituted. ...... (4) This section applies to- (i) ... (ii) ... (iii) any undertaking which develops, develops and operates or maintains and operates an industrial park notified by the Central Government in accordance with the scheme framed and notified by that Government for the....
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....r section 80-IA. From a reading of the above Rule with the provisions of .the Act, it is clear the following approval from the DIPP, the notification has to be issued by CBDT in order for an assessee to be able to claim the tax benefit u/s 80-IA(4)(iii). Hence the appellant's claim that because it had fulfilled all the conditions laid down by the DIPP while granting approval, the notification by CBDT is not an essential requirement is not in accordance with the above provisions. 6.2 During the appellate proceedings, reliance was placed on the order of the Hon'ble Karnataka High Court, Single Judge Bench in Writ Petition no.13172/2013 (GM-RES) dated 18/ 11/2015 quashing the withdrawal of approval by DIPP. The relevant portion of the order 18 reproduced below: "6. It is evident from the above that there is no such condition imposed as is the case in respect of applications filed under the Automatic Approval Route. In that, the specific condition under 6(f) is that no allocable area exceeding 50% of the Industrial Park shall be occupied by a single unit. The allegation against the petitioner in the impugned order is that the petitioner had allocated ....
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....nt of objections to demonstrate that the petitioner is not in a position to deny that the so called independent units under the umbrella of TCS are indeed a single entity and not independent taxable units as sought to be claimed. 8. In the above background, the question .whether there has been a violation of any of the conditions imposed by the Empowered Committee, which has addressed the application of the petitioner and accorded the approval is examined with reference to the provisions of the Scheme. It is evident that the conditions, which are to be met as a precondition for the Automatic Approval Route are not applicable in so far as the Non-Automatic Approval Route is concerned. This is evident from a plain reading of the relevant provisions, namely, paragraphs 6 and 7. They are independent and the tenor of the provisions also indicate that the manner in which approval is granted is not the same. In that, the Empowered Committee examines the application on a case to case basis and considers the same on merits and thereafter, imposes conditions, There is no condition forthcoming, in the approval granted in favour of the petitioner, relating to restriction of allocation....
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....as, already, entered appearance through its learned advocate formal service Of notice to the respondent is dispensed with. The respondent shall be entitled to tax; exemption. However, such exemption shall, abide by the result of the writ appeal. Honble Justice CHIEF JUSTICE AND P.S.DINESH KUMAR 12/07/2017 Order in WA 329812016 We have passed an interim order on March 16, 2017, holding, inter alia, that the respondent - writ petitioner shall be entitled to tax exemption subject to the result of the writ appeal. Mr.D.I.N.Rao, learned senior advocate, appears and submits that the tax exemption for the relevant years has not been issued. Mr. Prabhuling Navadagi, learned Additional Solicitor General, seeks for time. He assures the court that the needful shall be done. Post this appeal on July 19, 2017. 6.4 Pursuant to the directions of the Court, the DIPP revoked the order for withdrawal of approval and the CBDT issued notification dated 01/03/2018, which is reproduced below:- MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi, the 1st ....
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.... in the Hon'ble High Court of Karnataka, the Central Government, hereby, notifies the undertaking, being developed and being maintained and operated by M/s Abhilash Software Development Centre, Bengaluru, as an industrial park for the purposes of the said clause (iii) subject to the terms and conditions mentioned in the annexure of the notification. [Notification No. 13/2018, F.No.178/15/2011-ITA-I] ROHIT GARG, Director ANNEXURE The terms and conditions on which the approval of the Government of India has been accorded for setting up of an industrial park by M/s. Abhilash Software Development Centre, Bengaluru. 1. (i) Name of the Industrial Undertaking : M/s Abhilash Software Development Centre. (ii) Proposed location : Plot No. 96 & 104 P2, E.P.I.P. Industrial Area, Whitefield, Bengaluru- 560066. (iii) Proposed Area of Industrial Park : 17,000 Sq. Mtrs. (iv) Proposed activities : Software supply services. (v) Percentage of allocable area earmarked for Industrial use : 90.00% (vi) Percentage of allocable area earmarked for commercial use : 10.00% (vii) Minimum number of industrial uni....
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....use (iii) of sub-section (4) of section 80-IA of the Income-tax Act, 1961 are to be availed. 8. In case the Industrial Park did not commence by 31.03.2006, fresh approval will be required under the Industrial Park Scheme, 2008, subject to the applicability under that Scheme for availing benefits under sub-section 4(iii) of Section 80-IA of the Income-tax Act, 1961. 9. The approval will be invalid and M/s Abhilash Software Development Centre, Bengaluru, shall be solely responsible for any repercussions of such invalidity, if (i) the application on the basis of which the approval is accorded by the Central Government contains wrong information/misinformation or some material information has not been provided in it. (ii) it is for the location of the industrial park for which approval has already been accorded in the name of another undertaking. 10. In case M/s Abhilash Software Development Centre, Bengaluru, transfers the operation and maintenance of the industrial park (i.e., transferor undertaking) to another undertaking (i.e., the transferee undertaking), the transferor and transferee shall jointly intimate to the Entrepreneurial Assist....
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....tomatic Route", then liberty is reserved to the respondent to made necessary application for the tax benefit. In such an event, the same shall be considered by the appellant. This court vide order date 161h Mar 2017, has recorded that the respondent shall be entitled to tax exemption, the same shall be extended to the respondent, in accordance with law." "Under these circumstances, the appeal is to be dismissed. Accordingly, the appeal is dismissed. The order passed by the learned single judge is confirmed. 6.7 With the above mentioned decision, the condition laid down in para 4 of the notification dated 01/03/2018 is no longer in dispute. The Hon'ble Karnaataka High Court vide its interim order dated 16/03/2017 had already ruled that the appellant was entitled to tax exemption subject to the outcome of the Writ Appeal. Since the Writ Appeal has been decided in favour of the appellant, there are no grounds to further deny the appellant the deduction u/s 80-lA. Respectfully following the directions of the Hon'ble Karnataka High Court, the grounds of appeal raised in the 'present appeals are allowed for all the assessment years in question. 7. I....