TaxTMI 
TaxTMI 
2021 (8) TMI 768
X X X X Extracts X X X X
X X X X Extracts X X X X
....gh 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 independent tax units and till date the 16 ODCs have not been recognized as such by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te 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 denying the benefit of section 80IA of the I.T.Act by observing that Industrial Park in quest....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eferred 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 period beginning on the 1st day of April, 1997 and ending on the 31st day of March, 2002: Provided that in a case where an undertaking develops an ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....x 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 an area comprising more than 90% of the area in favour of the entity, namely, Tata Consultancy Services (TCS). The petitioner would point out that not only did no such condition was imposed in so far as the petitioner's park was concerned, tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ground, 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 of any extent of industrial area to anyone particular unit. Even if the TCS and its several units in the park is considered as a single unit, the prohibition contained in so far as the allocation applicable in respect of the Automatic Approval Route cannot b....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 March, 2018 S.O. 910(E)-Whereas the Central Government in exercise of the powers conferred by clause (iii) of subsection (4) of section 80-IA of the Income-tax Act, 1961(43 of 1961)(hereinafter referred to as the "Act"), has framed and notified a scheme for industrial park, by the notifications of the Government of India vide number S.O. 354(E), dated the 1st day of April, 2002, for the period beginning on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns 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 units : 3 Units (viii) Total investments proposed (Amount in Rupees) : Rs. 29,50,00,000 (ix) Investment on built up space for Industrial use (Amount in Rupees) : Rs. 9,55,95,000 (x) Investment on Infrastructure Development including investment on built up space for industrial use (Amount in Rupees) : Rs. 29,50,00,000 (xi) Proposed date of commencement of the Industrial Park : 31-10-2005 2. The minimum investment on infrastructure development in an Industrial Park shall not be less than 50% of the total project cost.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 Assistance Unit of the Secretariat for Industrial Assistance, Department of Industrial Policy and Promotion, Udyog Bhawan, New Delhi-110001 along with a copy of the agreement executed between the transferor and transferee undertaking for the aforesaid transfer. 11. The conditions mentioned in this notification as well as those included in the Industrial Park Scheme, 2002 should be adhered to during the period for which benefits under this scheme are to be availed. The Central Government may withdraw the above approval in case M/s Abhilash Software Development Centre, Bengaluru, fails to comply with any of the condition....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on'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. In the result, the assessee's appeals are allowed." 8. The Revenue being aggrieved, has filed these appeals before the Tribunal. The learned Departmental Representative submitted that the Hon'ble High Court has directed that the assessee would be entitled to tax exemption only in accordance with law and the CIT(A) without examining whether the assessee is operating more than three independent units, had allowed the appeals of the assessee. 9. The learned AR has filed a brief synopsis narrating the chronology of events and the judgment of the Hon'ble Karnataka High Court in Writ Petition No.13172/2013 and the Division Bench judgment confirming the same. The learned AR....