Proviso To Sec 80IA(12) Applies Only In Case Of Transfer Of Operation & Maintenance Of Industrial Park, Clarifies Chennai ITAT

Referring to CBDT Circular no. 10/2014, the Chennai ITAT emphasized that if an undertaking is transferred to another undertaking other than by way of amalgamation and demerger and in other cases, the transferee undertaking shall be eligible for deduction for remaining unexpired period u/s 80IA(4)(iii) of the Income Tax Act.

The Bench comprising of Manomohan Das (Judicial Member) and Manjunatha. G (Accountant Member) observed that, “proviso to section 80IA(12) of the Act applies only when there is a transfer of operation and maintenance of industrial park. In the facts of the appellant case, the entire undertaking which developed the industrial park has been transferred and not merely the operation and maintenance alone. Therefore, in our considered view, the reasons given by the Assessing Officer to allow deduction u/s. 80IA(4) of the Act only to operation and maintenance is not in accordance with law.” (Para 12)

As per the brief facts of the case, the Assessee's return was selected for scrutiny, wherein the AO called upon the assessee to furnish necessary evidences to justify deduction claimed u/s. 80IA(4)(iii). In response, the assessee submitted that the industrial park developed by the company was duly approved by the Department of Industrial Policy and Promotion (DIPP) under Ministry of Commerce and Industry. The said industrial park was also notified by the CBDT, in accordance with the Industrial Park Scheme, 2002. The assessee further stated that, during the financial year, the company along with four other companies formed a partnership firm has transferred the industrial park as its capital contribution as a going concern. The AO held that assessee was not entitled for deduction u/s. 80IA(4), because the new undertaking which is taking up operation and maintenance of industrial park is not approved under Industrial Park Scheme, 2002 & Industrial Park Scheme, 2008. On appeal, the CIT(A) directed the AO to allow deduction claimed u/s. 80IA(4), towards entire income including income under the head rent, operations and maintenance of pit out etc.

The Coram pointed that there is no merits in the reasons given by the AO to deny deduction u/s. 80IA(4)(iii), for the simple reason that the industrial park developed by the assessee company is approved under Industrial Park Scheme, 2002 and the assessee has developed the same within time prescribed under said scheme.

The Bench observed that transfer u/s. 80IA(4)(iii), is qua the undertaking and not qua the assessee. Therefore, the reasons given by the AO to deny deduction u/s. 80IA(4)(iii), with the successor undertaking is not formed within date prescribed under Industrial Park Scheme, 2002 & Industrial Park Scheme, 2008 is not correct and devoid of merits.

The Bench further observed that the AO is once again failed to understand the provisions of section 80IA(4)(iii), in right perspective because as transfer u/s. 80IA(4)(iii) is qua the undertaking and not qua the assessee.

Therefore, on finding that CBDT Circular No. 779, explains the manner and method of claiming deduction u/s. 80IA(4)(iii) which was also strengthened by press release issued by Government of India, the ITAT dismissed the Revenue's appeal.

Counsel for Appellant/ Department: R. Clement Ramesh Kumar

Counsel for Respondent/ Taxpayer: Ajith Chordia

Case Title: Deputy Commissioner of Income Tax verses M/s. Olympia Tech Park (Chennai) Private Limited

Case Number: ITA No.: 1704/Chny/2018

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