Appellate Tribunal: Power and scope: Section 80-IA: A. Ys. 2002-03 to 2008-09: CIT(A) holding rental income from towers constructed in industrial park was business income and eligible for deduction u/s. 80-IA: Revenue not challenging this finding before Tribunal: Tribunal cannot pass remand order for further enquiry on issue of character of receipt:

The assessee constructed towers in the industrial park and let them out to software concerns providing a platform with plug and play infrastructure. It claimed deduction u/s. 80-IA of the Income-tax Act, 1961, treating the rental income as business income. The Assessing Officer assessed the income as income from house property and disallowed the assessee’s claim for deduction u/s. 80-IA. The Commissioner (Appeals) held that the assessee had complied with section 80-IA(4)(iii) and accordingly was eligible for deduction u/s. 80-IA. He held that the income received by the assessee was to be assessed as income from business. He also agreed in principle that the deduction u/s. 80-IA would be allowed, even if the rental income was assessed as income from house property.

Before the Tribunal the Revenue challenged the view of the Commissioner (Appeals) only on his holding the income derived from letting out of industrial park buildings as income from business as against the finding made by the Assessing Officer that it was to be treated as income from house property. No question was raised on the view of the Commissioner (Appeals) that irrespective of the character of the receipt, the deduction was available. On considering the nature of the receipt, the Tribunal agreed with the submission of the assessee that income derived by developing and operating or maintaining an industrial park was assessable under the head “profits and gains of business and profession” as could be inferred from the provisions of section 80-IA(4)(iii) of the Act. The Tribunal held that the assessee as well as the Revenue had not brought out any materials to show that the facilities developed by the assessee after completion of the development was treated as an industrial park by any authority and it was not clear whether the alleged industrial park was so notified by the Central Government or not. In the absence of any material to show that what was predominant in the letting out in the building and whether the facilities were incidental, the Tribunal viewed that it was necessary to restore the issue back to the Assessing Officer for proper verification.

On appeal by the assessee, the Madras High Court reversed the decision of the Tribunal and held as under:

“i) When the Revenue had accepted the view of the Commissioner (Appeals) on section 80-IA that the assessee had complied with section 80-IA(4)(iii), nothing remained for an enquiry either as to the nature of the receipt or for that matter the facilities developed to be treated as an industrial park to consider the question of deduction u/s. 80-IA(4)(iii).

ii) The view of the Commissioner (Appeal) in this regard did not call for any interference. The Revenue did not challenge the order of the Commissioner on the section 80-IA deduction before the Tribunal.

iii) Thus, when the character of the receipt was not a question to be gone into in the matter of considering the claim of deduction u/s. 80-IA(4)(iii), no useful purpose would be served for the Revenue to again insist on a decision on the character of the receipt.

iv) The order of the Tribunal was set aside and the appeals filed by the assessee are allowed.”