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ITA No. 498 of 2013
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 17TH DAY OF OCTOBER, 2022 PRESENT THE HON'BLE MR. JUSTICE P.S. DINESH KUMAR AND THE HON'BLE MR. JUSTICE T.G. SHIVASHANKARE GOWDA INCOME TAX APPEAL NO. 498 OF 2013
BETWEEN :
COMMISSIONER OF INCOME TAX C.R. BUILDINGS-III QUEENS ROAD BANGALORE-560 001
DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 12(2) KARNATAKA BANGALORE …APPELLANTS
(BY SHRI. E.I. SANMATHI, ADVOCATE)
AND :
M/S PRASAD TECHNOLOGY PARK PVT. LTD. NO.2/10, 3RD FLOOR 80 FEET ROAD POOJAR LAYOUT RMV II STAGE BANGALORE-94 …RESPONDENT
(BY SHRI. S. PARATHASARATHI, ADVOCATE) . . . .
THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 10/05/2013 PASSED IN ITA NO.139/BANG/2013 AND S.P.28/BANG/2013, FOR THE ASSESSMENT
Digitally signed by S P SUDHA Location: HIGH COURT OF KARNATAKA
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ITA No. 498 of 2013
YEAR 2008-09, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND ETC.
THIS ITA, COMING ON FOR HEARING, THIS DAY, P.S. DINESH KUMAR J., DELIVERED THE FOLLOWING:
JUDGMENT
This appeal by the Revenue, is directed against the order dated May 10, 2013 in ITA No.139/Bang/2013 and S.P.28/Bang/2013 passed by the ITAT1. Though four questions of law are raised by the Revenue in the memorandum of appeal after hearing Shri. E.I. Sanmathi, learned Standing Counsel for the Revenue and Shri. S. Parthasarathi, learned Advocate for the assessee, in our considered opinion, following three questions fall for consideration: 1. Whether on the facts and in the circumstances of the case, the Tribunal is correct in law holding that the assessee is entitled for deduction under Section 80IA(4)(iii) of the IT Act without appreciating the fact brought out in the assessment order that the assessee has not fulfilled all the terms and conditions as envisaged in the Notification SO No.354 (E) dated 01.04.2002 as also in the approval accorded by the Government of India, Ministry of Commerce vide letter dated 13.06.2006 on the assessee's application?
1 Income Tax Appellant Tribunal
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ITA No. 498 of 2013
Whether on the facts and in the circumstances of the case, the Tribunal is correct in law holding that the Notification to be issued by CBDT is only a formality once the approval is granted by the Ministry of Commerce and Industry, Govt. of India, without appreciating the fact that the CBDT has issued a Notification imposing certain additional terms and conditions as per Rule 18C(4) after the approval was accorded by Ministry of Commerce as per Rule 18C(2) and as such the Notification is not a mere formality?
Whether on the facts and circumstances of the case the Tribunal is correct in law in allowing appeal of assessee even though assessee has violated the conditions laid down in Industrial Park Scheme 2002, of not letting more than 50% of allocable area to a single tax entity (in this case more than 90% is occupied by IBM Daksh Business Process Services Pvt. Ltd.) and further assessee was not able to submit the approval letter issued by the CBDT, which is mandatory as per Rule 18C(4) of the Income Tax Rules?
Learned Standing Counsel for the Revenue has urged two contentions. Firstly that assessee has leased out more than 50% of the area. The Assessing Officer, holding that M/s. IBM Daksh had occupied more than 90% of the allocable area, has denied the benefit under Section 80IA(4)(iii) of the IT Act. On appeal, the CIT(A) called for a remand Report and has recorded in para 3.2(c) as follows:
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ITA No. 498 of 2013
"3.2 (c) The AO who conducted the field enquiry reported that the two other units were not operating in the Park premises. However, the appellant produced lease deeds in respect of these units, along with a map indicating their location. These lease deeds were verified by the present AO and it was seen that each unit occupied 650 sq. ft. in the constructed Park. On this basis, the AO has requested for the issue to be decided on merits.
CIT(A) dismissed the appeal on the ground that CBDT Notification was issued on February 21, 2012 and the same could not be applied retrospectively. On further appeal, the ITAT following the judgment in the case of Creative Infocity Ltd., Vs. Under Secretary (ITA-I) & II2 held that Notification to be issued by CBDT is only a formality and once the approval is accorded by Ministry of Commerce and Industry, the assessee is entitled to the benefits under Section 80IA(4)(iii) of the IT Act.
We have carefully perused the authority in Creative Infocity Ltd. In that case, the CBDT notification was not an issue. In identical circumstance, the Gujarat High Court has held that once the approval is given by the Ministry of
2 (2012)206 Taxman 413 (Guj) [para 6]
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ITA No. 498 of 2013
Commerce, it is the duty of the Revenue to notify the Industrial park for the benefit under Section 80IA of the Act and accordingly issued a mandamus directing the CBDT to issue Notification. We are in respectful agreement with the view taken by the Gujarat High Court. Hence, both grounds urged by the Revenue must fail.
In view of the above, the following: ORDER
(a) Appeal is dismissed.
(b) The questions of law are answered in favour of the assessee and against the Revenue. No costs.
Sd/- JUDGE
Sd/- JUDGE
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