TMI Blog2011 (2) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... un back to the date of commencement of the activities - This is for the simple reason that once the assessee has acquired the land from a Government agency for a specific purpose, the assessee has to start complying with the conditions stipulated by the State Government agency. Developing of IT Parks takes sufficient long time. The assessee applies for the approval and notification as soon as the project is initiated. If the assessee waits to get order of approval and the notification order to initiate the project, the project would be a non-starter. It is on the basis of the applications already made to the concerned authorities that the assessee is carrying on the essential construction activities which consumes a lot of time - , it is almost impossible to insist that the assessee can initiate the project only after getting the final approval and the notification of the concerned authorities. The more equitable construction of the situation as always approved by law is that the Government approval and the CBDT notification once granted to the assessee, take care and cover of the earlier period as well - This is for the reason that the approval and notification have been granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. 3. The disallowances/additions were taken in first appeals before the Commissioner of Income-tax(A). The Commissioner of Income-tax(A) considered the issue and proceeded to decide the matter on the same line adopted by the assessing authority. He agreed with the view of the assessing authority that the assessee has not complied with the conditions prescribed by the Scheme and therefore not entitled for the exemptions. He confirmed the orders of the assessing authority on this point. 4. In the above context, the grounds raised by the assessee company for these two years relate to a single issue whether the lower authorities have erred in denying the assessee, the exemption provided under section 80-IA(4)(iii) of the IT Act, 1961. In this regard, almost common grounds raised for both the assessment years may be briefed below : (i) That the Commissioner of Income-tax(A) ought to have appreciated that the eligibility is to be considered for the undertaking where the prescribed conditions were satisfied by the assessee enabling it to claim the deduction under section 80-IA(4)(iii) ; (ii) That the Commissioner of Income-tax(A) ought to have appreciated that the nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le business entitled for the deduction as mentioned in sub-section (1). Clause (i) of sub-section (4) provides certain conditions to be fulfilled which are briefed below: (i) The undertaking is owned by a company registered in India or by a consortium of such companies or by an authority or institution established under any Central or State Act ; (ii) The undertaking has entered into an agreement with Central Government/State Government/Local Authority/Statutory Body for developing for operating and maintaining or developing, operating and maintaining new infrastructure facility ; and (iii) It has started or starts operating and maintaining the infrastructure facility on or after the first day of April, 1995. 8. The above conditions along with sub-clause (i) in fact apply to infrastructure facility detailed under the Explanation provided under that clause (i). According to the Explanation, infrastructure facility means a road including a toll-road, a bridge or a rail system, a highway project including integrated housing project, water supply project, water treatment system, irrigation project, sanitation and sewerage system, solid waste management system, airport, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those general conditions stipulated in the statute, the assessee company has complied with all of them. The undertaking is a company registered in India. It has developed IT Park on the basis of an agreement entered into between the undertaking and a Karnataka Government development agency. The undertaking has developed IT Parks and maintained it. It has made the claim within the prescribed time limit. The eligible business was set up before or after the time prescribed in the statute. On all these matters, the assessing authority has fairly observed that the assessee has fulfilled all the conditions. 12. The objections are in respect of the second set of conditions prescribed by the approving authorities like Ministry of Industry and Commerce and CBDT. In its approval, the Ministry has specified certain conditions that the assessee should have a minimum extent of developed area ; that the Industrial Park Scheme has to be undertaken after the approval is granted by the concerned authorities that there should be a minimum of five units for the assessment year 2007-08 and a minimum of four units for the assessment year 2008-09 becoming functional ; that a single unit should not occ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of five units against the units working in each of the five floors of the building. Each floor has been treated as an independent unit by the assessee. The assessee has made such a claim in the light of the Explanation given to the expression 'unit' in the approval condition prescribed by the Ministry of Industry and Commerce. Therefore, even though the assessee had in fact units running in five floors for assessment year 2007-08 and four floors for assessment year 2008-09, the Assessing Officer refused to treat them as five independent units and four independent units respectively. He instead treated them as single unit for the reason that all these floors are leased out to a single tenant and units are run by the same tenant. 15. Therefore, the issue to be decided is whether the units working in different floors whether should be treated as a single unit or to be treated as several units. For the purpose of the approval granted by the Ministry of Industry and Commerce, 'unit' means a separate unit recognized for any purpose by any of the laws of the Centre or the State. In the present case, even though the assessee company has leased out the five/four floors to particular t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Industry. 18. The other prominent objection raised by the assessing authority is that the assessee company has developed and started the units even before the approval and before getting notified by the CBDT. The assessee has started developing the undertaking after entering into lawful agreements with a State Government agency declaring its intention to set up IT Park under a specific Scheme promulgated by the Government of India in the Ministry of Commerce and Industry. 19. The IT Parks developed by the assessee company were approved under the Industrial Park Scheme, 2002. The assessee had applied through non-automatic approval to get its campuses approved under section 80-IA(4)(iii) of the Act. In fact the assessee made applications in respect of five units in campus II-A and four units each in campuses 4A and 4B. The approval as sought for by the assessee was granted vide approval letter dated.05.12.2006. Campus II-A was notified by the CBDT through letter dated.31.05.2007. In respect of campuses 4A and 4B, the Ministry's approval was received vide letter dated.10.04.2007 and later on notified by the CBDT on 31.05.2007. It is to be seen that once the projects are approve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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