PR. COMMISSIONER OF vs. M/S PRASAD TECHNOLOGY

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ITA No. 855 of 2018

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. 855 OF 2018

BETWEEN :

(BY SHRI. E.I. SANMATHI, ADVOCATE)

AND :

M/s PRASAD TECHNOLOGY PARK PVT. LTD. #2/10, 3RD FLOOR 80 FEET ROAD POOJARI LAYOUT RMV 2ND STAGE BANGALORE-560 094 PAN: AAAGP 8351J …RESPONDENT

(BY SHRI. BALRAM R. RAO, ADVOCATE) . . . .

THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:06/07/2018 PASSED IN ITA

Digitally signed by S P SUDHA Location: HIGH COURT OF KARNATAKA

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ITA No. 855 of 2018

NO.2134/BANG/2017, FOR THE ASSESSMENT YEAR 2014-2015. PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT 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 order dated 06.07.2018 in ITA No.2134/Bang/2017 passed by the ITAT1. Though this appeal has been admitted to consider four questions of law, after hearing Shri. E.I. Sanmathi, learned Standing Counsel for the Revenue and Shri. Balram R. Rao, learned Advocate for the assessee, in our considered opinion, following three questions arise for consideration: 1. Whether on the facts and 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

1 Income Tax Appellate Tribunal

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Commerce vide letter dated 13.06.2006 on the assessee's application? 2. 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? 3. 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? 2. Brief facts of the case are, assessee has constructed and set up a Technology Park in the name and style of 'M/s. Prasad Technology Park Pvt. Ltd.,' in Bengaluru. Pursuant to a Scheme dated April 1, 2002, issued by the Ministry of Commerce and Industry, assessee

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ITA No. 855 of 2018

applied for approval in the Non Automatic Rule. The assessee filed its returns for the A.Y. 2014-15 and claimed deduction under Section 80IA(4)(iii) of the IT Act. The Assessing Officer by his order dated December 20, 2016 disallowed the same on the ground that the assessee had rented out more than 50% of the allocable Industrial area to M/s. IBM Daksh which is in contravention of the Industrial Park Scheme, 2002. 3. Shri. Balaram, learned Advocate for the assessee submitted that after disallowance by the Assessing Officer, assessee challenged the said order before CIT(A). CIT(A) allowed the appeal by following its order dated March 21, 2014 in assessee's own case for the A.Y.2007-08 and 2008-09. The said order was challenged by the Revenue before the ITAT and by the impugned order, the ITAT has dismissed Revenue's appeal. 4. Shri. Sanmathi's solitary contention is, assessee had violated the condition that it could not have leased out

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ITA No. 855 of 2018

more than 50% of the total area; and CBDT Notification was issued on 21.02.2012 and it cannot have retrospective effect. 5. We have simultaneously considered ITA No.498/2013 for the A.Y.2008-09 in assessee's own case. During that assessment year, the ITAT had called for a Remand Report by the CIT(A) and a finding was recorded that the assessee had not leased out more than 50% of the total area in favour of any one of the lessees. Based on that finding, the ITAT has allowed assessee's appeal. Following the said order, the ITAT has dismissed Revenue's appeal in this case. 6. Shri. Sanmathi's contention that the assessee had leased out more than 50% of the total allocable area in favour of one of the lessees (M/s. IBM Daksh) has been found to be incorrect based on the Remand Report submitted by the Assessing Officer. Although that aspect was before the CIT(A), the CIT(A) had dismissed the appeal

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for A.Y 2007-08 on a different ground. The ITAT has recorded cogent reasons while allowing the appeal for A.Y 2007-08. 7. In view of the above, the solitary ground urged by Shri. Sanmathi must fail. Hence, 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

SPS List No.: 1 Sl No.: 49