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Dy. Commissioner of Income Tax, Circle 11 (3) , Bangalore Versus M/s. Gopalan Enterprises India Pvt. Ltd

Deduction under Section 80IB(4)(iii) denied - eligibility of functional test of an independent unit - Held that:- In the instant case, even though the assessee company had leased out the five/four floors to particular tenants, the tenants were carrying on their operation as independent units as the activities were functionally different. Each floor was physically identified for all functional purposes. Facilities and instrumentations were provided independently. Activities were carried on as ind .....

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r only for the reason that the entire developed area had been leased out to a single company. It was not possible to insist that every floor of the structure should be leased out to different companies. The test is not that who operates the independent units run in the multi-storied structure. It is also not the question whether all the stories are occupied by one tenant or different tenants. The test to be applied is the functional test. The unit must physically independent with physically inde .....

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claim for deduction under Section 80IA(4)(iii) of the Act for Assessment Years 2005-06 and 2011-12 - Decided in favour of assessee. - I.T. A. Nos.1058 & 1059/Bang/2014 - Dated:- 4-9-2015 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER For The Appellant : Dr.P.K. Srihari, Addl. CIT (D.R.) For The Respondent : Ms. Girija G.P., C.A. ORDER Per Shri Jason P. Boaz, A.M. These appeals by Revenue are directed against the orders of the Commissioner of Income Tax (Appeals .....

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5,42,02,182 due to the denial of the assessee's claim for deduction under Section 80IA(4)(iii) and 80IB(10) of the Act aggregating to ₹ 4,65,70,805 (i.e. ₹ 2,32,51,080 and ₹ 2,33,19,725 respectively). A co-ordinate bench of the Tribunal in its order in ITA No.99/Bang/2011 dt.2.1.2013 allowed the assessee's claim for deduction under Section 80IB(10) of the Act but restored the assessee's claim for deduction under Section 80IB(4)(iii) to the file of the Assessing Off .....

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of the assessee was determined at ₹ 3,54,23,189 due to the denial of deduction of ₹ 3,29,18,939 claimed under Section 80IA(4)(iii) of the Act. 2.2 On appeal, the learned CIT (Appeals)-I, Bangalore disposed off the assessee's appeal for Assessment Year 2005-06 and 2011-12 vide orders dt.30.4.2014 allowing the assessee's claim for deduction under Section 80IA(4)(iii) of the Act. 3. Aggrieved by the orders of the CIT (Appeals) I, Bangalore dt.30.4.2014 for Assessment Years 2005 .....

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on the order of the CIT (Appeals) for the A.Y. 2007-08 in ITA No.191/DC-11(3)/A-I/12-13 dtd.30.08.2013 and A.Y. 2004-05 in ITA No.182/DC-11(3)/AI/ 2009-10 dated 28.3.2013 in order to follow the rule of consistency without appreciating the fact that the orders relied upon have not been accepted and appeals to the ITAT have been preferred as the assessee had not fulfilled the conditions laid down by the Ministry of Commerce and Industry while granting the approval. 3. The learned CIT (Appeals) err .....

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ation Services Ltd. and M/s. Transworks IT Services were actually one and same as these companies were amalgamated into one by an order of the Hon'ble High Court of Mumbai. 5. The learned CIT (Appeals) erred in allowing relief by relying on the order dt.30.8.2013 for the A.Y. 2007-08 wherein reliance was placed on the order for the A.Y. 2004-05 in the assessee's own case without appreciating the averment in the order for A.Y. 2004-05 that the assessee started with one tenant in the perio .....

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craves leave to add, to alter, amend or delete any of the grounds that may be urged at the time of hearing of the appeal. 4. The Grounds at S.Nos.1, 7 & 8 are general in nature and therefore no adjudication is called for thereon. 5. Grounds at S.Nos.2 to 6 Deduction u/s.80IA(4)(iii) of the Act. 5.1 The Grounds raised at S.Nos.2 to 6 (supra) are in respect of a single issue of assailing the impugned orders of the learned CIT (Appeals) for allowing the assessee the deduction claimed under Sect .....

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2.1.2015 for Assessment Year 2007-08 had upheld the grant of deduction under Section 80IA(4)(iii) of the Act claimed by the assessee. The learned Authorised Representative submitted that in view of the above orders of the co-ordinate bench, Revenue s appeals are liable to be dismissed. 5.3 Per contra, the learned Departmental Representative supported the orders of the Assessing Officer wherein the defects had been pointed out in the assessee's claim. It was also submitted that the Department .....

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nt Year 2007-08, has upheld the assessee's claim for deduction under Section 80IA(4)(iii) of the Act following the decision of another co-ordinate bench in the assessee's own case in ITA Nos.921 to 924/Bang/2013 dt.18.7.2014 for Assessment Years 2004-05, 2006-07, 2008-09 and 2009-10. At paras 7 & 8 of its order, the coordinate bench in its order for Assessment Year 2007-08 has held as under 07. We have duly considered the rival contentions and gone through the record carefully. We fi .....

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First Appellate Authority(FAA).Relying upon the decisions of the ITAT,Bangalore Bench in the case of Primal Projects Pvt. Ltd.(139ITJ233),the assessee argued that it was entitled to claim deduction u/s.80IA4(iii).FAA called for a remand report from the AO. as the same was never brought to the notice of the AO, who sent his report by his letter dated 14-03-2013. The assessee filed further submission by its letter dated 27-03-2013 and reiterated that their case is squarely covered by the decision .....

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s made out by the AO. The assessee also furnished the details unit-wise allocable area and super built-up are leased to the various tenants. After considering the facts and reasons given by the AO in the assessment order as well as remand report and the submissions made by the assessee,FAA held that the assesse had fulfilled the first set of statutory condition for claiming deduction u/s. 80IA(4)(iii) of the Act,that the AO had denied the deduction mainly on the following two grounds; i) That th .....

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rojects Pvt. Ltd.(supra).Referring to the decision of the Primal Projects Pvt. Ltd.(supra),he held that the test was not who operated the independent units run in the multistoried structure, that it was also not in question whether all the stories were occupied by one tenant or different tenants, that the test to be applied was functional test, that the unit must be physically independent with independent facilities and instrumentation, power connection, door number and the facility of functioni .....

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d. (supra)and the AO in his remand report has stated that fact of both the cases are similar. We would like to reproduce the order of Primal Projects Pvt. Ltd. Therefore, the issue to be decided was whether the units working in different floors 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 Commerce & Industry, unit means a separate unit recognized for any purpose by any of the laws of the Centre or the State. .....

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had constructed multistoried buildings for the purpose of developing infrastructure facilities as approved by the Ministry of Commerce & Industry itself was a testimony that the assessee company had developed the infrastructure facility in the form of multi-storied structure to accommodate independent units to operate for themselves. Those identities and indualities did not disappear only for the reason that the entire developed area had been leased out to a single company. It was not possi .....

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