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TMI Blog2011 (2) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... Economic Zones etc, in accordance with the schemes and rules framed by the concerned authorities of the Government of India. The deduction claimed by the assessee company for the assessment year 2007-08 is Rs. 16,68,51,429 and for the assessment year 2008-09 Rs. 20,64,70,167. The claims were disallowed by the assessing authority stating that the assessee company has not complied with the mandatory conditions stipulated in the Scheme framed by the Central Government for claiming such deduction. He accordingly added back those claims to the income returned by the assessee. 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect the span of ten consecutive assessment years from the total eligible period of fifteen assessment years sub-section (2A) provides a specific time frame in the case of undertakings providing telecommunication services sub-section (3) provides certain conditions for claiming the deduction. Such conditions are that the eligible unit should not be formed by splitting up or reconstructing of an existing business or not by transferring plant and machinery already used to new undertaking, etc., 7. Now comes the crucial sub-section (4) of section 80-IA which deals with the characteristics of an eligible 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 infras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ready existing unit ; there should not be a transfer of plant and machinery already used in an existing unit; the undertaking should develop or develop and operate; operate and maintain IT parks and ancillary infrastructure so as to become an eligible business; that the claim is made for a fixed eligible period subject to the option available to the undertaking; the prescribed date of establishing the eligible business etc., In respect of the above statutory conditions, the Assessing Officer has no case against the assessee. The Assessing Officer has made it clear in the orders of assessment itself that regarding 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erated for 2007-08 and four units must be functional for the assessment year 2008-09. The developed area was constructed by the assessee in multi-storied structures. The developed area was leased out to IT firms like Accenture, etc., The Assessing Officer observed that all the floors of the same building are occupied by the same tenant and therefore, all the floors occupied by the same tenant could be construed only as one unit. The approval condition prescribes that a 'unit' means an unit recognised for any purpose under any of the laws of the Centre or State. On that basis, the assessee has claimed the operation 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, it is our considered opinion that the lower authorities have gone wrong in ignoring the contention of the assessee company and in coming to a conclusion that the assessee company was not operating five/four units independently for the impugned assessment years. The lower authorities have come to such a conclusion only for the reason that different floors are leased out to same tenants. 17. Therefore, we find that this objection raised by the assessing authority does not exist. The assessee was running five/four units as prescribed by the conditions of approval granted by the Ministry of Commerce and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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