DCIT Vs K Raheja IT Park (Hyderabad) Ltd. (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT) Mumbai dismissed appeals filed by the revenue challenging the Commissioner of Income Tax (Appeals)’s order regarding deductions claimed under Section 80IA(4)(iii) of the Income Tax Act, 1961, by K Raheja IT Park (Hyderabad) Ltd. The appeals pertained to assessment years 2012-13 to 2018-19. The core issue was whether income derived from the operation and maintenance of the industrial park should be classified as “income from house property” or “business income,” a classification crucial for determining eligibility for the deduction. The revenue argued that the income was from house property and thus ineligible for the deduction, while the assessee maintained it was business income derived from an approved industrial park project.
K Raheja IT Park’s business involves real estate development, operation and maintenance of industrial and non-industrial parks, and other commercial segments. They had claimed deductions under Section 80IA(4)(iii) for income earned from license fees, maintenance services, and interest. The Assessing Officer (AO) disallowed the deduction, citing previous disallowances for earlier assessment years and maintaining a consistent view. However, the CIT(A) allowed the assessee’s appeal, relying on previous Tribunal decisions in the assessee’s favor for earlier assessment years. These prior decisions had established that the assessee could not be denied the deduction in subsequent years if it had been allowed in previous years, absent any change in circumstances.
The ITAT upheld the CIT(A)’s order, noting the recurring nature of the dispute and the consistent relief granted to the assessee in previous appeals. The tribunal emphasized that the assessee’s income stemmed from a project developed with government approval under the Industrial Park Scheme, 2002. This scheme, notified by the Department of Industrial Policy and Promotion, facilitates projects eligible for deductions under Section 80IA(4)(iii). The ITAT observed that the assessment order did not indicate any violations of the scheme’s conditions by the assessee, despite the revenue’s contention that the minimum requirement of 30 industrial units was not met. Crucially, the assessment order itself did not specify any non-compliance with this condition.
The ITAT also referred to CBDT circular no. 16/2017, which clarifies that income from letting out premises in an industrial park developed and operated in accordance with a government-notified scheme is taxable under the head “profits and gains of business or profession.” The tribunal noted that the assessee had been declaring the income as business income and claiming depreciation on the rented premises following this circular. The ITAT’s decision reinforces the principle of consistency in tax treatment, particularly when dealing with recurring issues and established precedents. The tribunal’s order effectively confirms that income derived from approved industrial park projects, meeting the prescribed conditions, qualifies for the deduction under Section 80IA(4)(iii) of the Income Tax Act.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
