Commissioner Of Income Tax Central – 1 v. M/S.rr Industries Limited,Rr Tower Iii, Thiruvika Industrial Estate,Guindy, Chennai – 600 032

DATED: 03.07.2018 THE HONOURABLE MR.JUSTICE S.MANIKUMARandTHE HONOURABLE MR.JUSTICE SUBRAMONIUM PRASADT.C.A.No.336 of 2018 Commissioner of Income Tax Central – 1,No.108, Mahatma Gandhi Road,Chennai. .. Appellant/Respondent Vs. M/s.RR Industries Limited,RR Tower III, ThiruViKa Industrial Estate,Guindy, Chennai – 600 032... Respondent/Appellant Prayer: Appeal filed under Section 260A of the Income Tax Act,1961, against the order of the Income Tax Appellate Tribunal,'B' Bench, Chennai, dated 13.09.2013 in I.T.A.No.335/Mds/2013, against the order of the Commissioner of Income Tax(Appeals)-V,chennai-34, dated 30.11.2012 made in CIT(A)-V/ITA.NO.397/2011-12against the order of the Assistant Commissioner of Income TaxCompany circle-V(4), chennai-34, dated 21.12.2011 and made inPAN.NO.AAACR3594H Assessment year 2009-2010. For Appellant: Mr.T.R.Senthil Kumar Senior Standing Counsel for Income Tax.J U D G E M E N T (Judgement of this Court was made by S.MANIKUMAR, J.) Challenge in this Tax Appeal, is to an order passed by theIncome Tax Appellate Tribunal in ITA No.335/Mds/2013, dated13.09.2013, by which, the Tribunal has allowed the appealpreferred by the assessee against the order of the Commissionerof Income-Tax (Appeals-V), Chennai, dated 30.11.2012, for theAssessment Year 2009-10. 2. Revenue has come up with the instant appeal, raising thefollowing substantial question of law:-“Whether the ITAT has correctlyinterpreted the judgement of Hon'ble HighCourt so as grant relief to the assessee https://hcservices.ecourts.gov.in/hcservices/ u/s.80IA(4) without going into admissibility of the claim on merits ?” 3. When the matter was taken up for admission, at theoutset, Mr.T.R.Senthil Kumar, learned Senior Standing Counselfor Income Tax Department fairly submitted that, on a similarissue, between the same parties, a Hon'ble Division Bench ofthis Court in M/s.R.R.Industries Limited, Chennai – 32 Vs. TheIncome Tax Officer (OSD), Chennai – 34, in Tax Case (Appeals)Nos.139 to 145 of 2012 vide judgement dated 26.06.2013, relatingto the assessment years 2002-03 to 2008-09, held the issues infavour of the assessee and the instant appeal relates toassessment year 2009-10. He also submitted that challenge tothe said order dated 26.06.2013, is pending before the Hon'bleApex Court in Civil Appeal Nos.5912 to 5918 of 2015. 4. The only issue raised in this appeal is whether theTribunal has correctly interpreted the judgement of this Court,so as to grant relief to the assessee u/s.80IA(4) i.e., theincome of the assessee from the Industrial Park whether to beassessed under the head “Income from Business”, without goinginto admissibility of the claim on merits. 5. The Hon'ble Division Bench of this Court inM/s.R.R.Industries Limited, Chennai – 32 Vs. The Income TaxOfficer (OSD), Chennai – 34, in Tax Case (Appeals) Nos.139 to145 of 2012 (stated supra), at paragraphs 5 to 9 held as follows:"5. By consent of both the parties, evenat the time of admission stage, the mainappeals are taken up for consideration. 6. Learned senior counsel for the appellant pointed out that on the admittedfact that the Revenue had not challenged theissue under Section 80IA of the Income TaxAct before the Tribunal, the order now passedby the Tribunal directing the AssessingOfficer to go into the character of thereceipt, is too academic on facts and theorder of remand is wholly unjustified. Tothat end, he referred to Section 80IA(4) ofthe Income Tax Act and submitted that therelief under Section 80IA of the Act isavailable only for the undertaking which areeligible as per the eligibility criteriagiven under sub Section 4 of Section 80IA.Thus when, once the Department had acceptedthe reasoning of the Commissioner of IncomeTax (Appeals), that irrespective of thecharacter of the receipt, the assessee was appellant pointed out that on the admittedfact that the Revenue had not challenged theissue under Section 80IA of the Income TaxAct before the Tribunal, the order now passedby the Tribunal directing the AssessingOfficer to go into the character of thereceipt, is too academic on facts and theorder of remand is wholly unjustified. Tothat end, he referred to Section 80IA(4) ofthe Income Tax Act and submitted that therelief under Section 80IA of the Act isavailable only for the undertaking which areeligible as per the eligibility criteriagiven under sub Section 4 of Section 80IA.Thus when, once the Department had acceptedthe reasoning of the Commissioner of IncomeTax (Appeals), that irrespective of thecharacter of the receipt, the assessee was entitled to the relief under Section 80IAwith other conditions therein under Section80IA(4) thus admittedly stood satisfied, theremand order of the Tribunal by directing theAssessing Officer to find out the nature ofthe receipt is not sustainable in law. Hesubmittedthatsuchenquiryisinconsequential as to the relief underSection 80IA. 7. We agree with the submissions made bylearned senior counsel for the assessee. Asalready seen, two questions were raisedbefore the Commissioner of Income Tax(Appeals), one relating to nature of receipton letting out the property as an industrialpark as approved by designated authority fromthe Investment Promotion & InfrastructureDevelopment Cell of the Secretariat ofIndustrial Assistance of the Department ofIndustrial Policy and promotion in Ministryof Commerce and Industries of the Governmentof India and other relating to disallowanceof claim of deduction under Section 80IA ofthe Act on the ground of the receipt beingheld as income from house property. Onanalysing the facts and on going through thecertificate issued, the first AppellateAuthority held that the unit was eligible forrelief under Section 80IA of the Act. As tothe character of the receipt, he held thatincome received by the assessee was to beassessed as income from business only. Thus,on the claim of deduction for the above saidreceipt under Section 80IA, the Commissionerof Income Tax (Appeals) pointed out that theapproval of the Ministry stated that theassessee was eligible for deduction underSection 80IA (4)(iii) of the Act whichspecificallyreferredtodeveloping,operating and maintaining of industrial part.Admittedly the assessee had made theapplication for development of an industrialpark under the scheme notified by theGovernment in accordance with law. TheCommissioner of Income Tax (Appeals) furtherpointed out that the scheme recognised theactivity of any undertaking engaged in thedevelopment of infrastructure facilities orbuilt up space with common facilities in any area allotted or earmarked for the purpose ofsoftware development as industrial park asbusiness activity. Thus, while agreeing withthe assessee on the character of the receiptof lease rental as business income, he alsoagreed in principle that the deduction underSection 80IA would be allowed, even if therental income is assessed as income fromhouse property. Further he relied on thedecision of the Apex Court reported in 57 ITR306 - COMMR. OF INC. TAX v. COCANADARADHASWAMI BANK LTD that the head under whichincome is assessed is not relevant for thepurpose of claiming exemption under the Act.When the Revenue had accepted the view of theCommissioner of Income Tax (Appeals) onSection 80IA that the assessee had compliedwith Section 80IA(4)(iii) of the Act, thereremains nothing for an enquiry either as tothe nature of the receipt or for that matterthe facilities developed to be treated as anindustrial park to consider the question ofdeduction under Section 80IA(4)(iii) of theAct. In the background of the above state ofaffairs, we hold that the view of theCommissioner of Income Tax (Appeals) in thisregard does not call for any interference.For the reasons best known and we think,rightly so, the Revenue did not challengeorder of the Commissioner of Income Tax(Appeals) on 80IA deduction before theTribunal. The said fact is not disputed bythe Revenue too. Thus, when the character ofthe receipt is not a question to be gone inthe matter of considering the claim ofdeduction under Section 80IA(4)(iii) of theAct, we do not find that any useful purposewould be served for the Revenue to againinsist on a decision on the character of thereceipt. 8. In the light of the above, the orderof remand passed by the Tribunal is onlyacademic that the Tribunal cannot pass anorder of remand for further enquiry on theissue which had already reached finality.Even though learned standing counsel for theRevenue placed heavy reliance on Rule 11 ofthe Income Tax (Appellate Tribunal) Rules,1962, we do not find any ground to uphold the https://hcservices.ecourts.gov.in/hcservices/ said stand considering the fact that thesubject matter of the appeal before theTribunal being one on the character of thereceipt and the issue regarding thedeductibility under Section 80IB irrespectiveof the character of the receipt not being anissue raised by the Revenue even as anadditional ground, when the Revenue had nogrievance at all as regards the considerationfor grant of relief under Section 80IA(4)(iii) of the Act, we do not find anyjustification in the order of the Tribunal,ordering remand on the issue which does notarise at all for the purpose of a decisionthereon. Further there is nothing on recordto show that the Revenue raised this as anadditional issue even for the purpose ofconsidering Rule 11. 9. In the circumstances, the order ofthe Tribunal is set aside and the appealsfiled by the assessee are allowed. No costs.Consequently, connected MPs are closed." 6. Following the above Division Bench judgement, in theinstant case pertaining to assessment year 2009-10, the Tribunalordered as follows: "6. We have heard the submission made bythe representatives of both the sides and haveperused the orders of the authorities below aswell as the judgment of the Hon'ble Madras HighCourt in Tax Case (Appeal) Nos.139 to 145 of2012 decided on 26.06.2013 in the case ofassessee for AYs.2002-03 to 2007-08. TheHon'ble High Court while allowing the appeal ofthe assessee has held as under: 7. We agree with the 9. In the circumstances, the order ofthe Tribunal is set aside and the appealsfiled by the assessee are allowed. No costs.Consequently, connected MPs are closed." 6. Following the above Division Bench judgement, in theinstant case pertaining to assessment year 2009-10, the Tribunalordered as follows: "6. We have heard the submission made bythe representatives of both the sides and haveperused the orders of the authorities below aswell as the judgment of the Hon'ble Madras HighCourt in Tax Case (Appeal) Nos.139 to 145 of2012 decided on 26.06.2013 in the case ofassessee for AYs.2002-03 to 2007-08. TheHon'ble High Court while allowing the appeal ofthe assessee has held as under: 7. We agree with the submissions made by learned seniorcounsel for the assessee. Asalready seen, two questions wereraised before the Commissioner ofIncome Tax (Appeals), one relatingto nature of receipt on letting outthe property as an industrial parkas approved by designated authorityfrom the Investment Promotion &Infrastructure Development Cell ofthe Secretariat of IndustrialAssistance of the Department ofIndustrial Policy and promotion in Ministry of Commerce and Industriesof the Government of India andother relating to disallowance ofclaim of deduction under Section80IA of the Act on the ground ofthe receipt being held as incomefrom house property. On analysingthe facts and on going through thecertificate issued, the firstAppellate Authority held that theunit was eligible for relief underSection 80IA of the Act. As to thecharacter of the receipt, he heldthat income received by theassessee was to be assessed asincome from business only. Thus, onthe claim of deduction for theabove said receipt under Section80IA, the Commissioner of IncomeTax (Appeals) pointed out that theapproval of the Ministry statedthat the assessee was eligible fordeduction under Section 80IA (4)(iii) of the Act which specificallyreferred to developing, operatingand maintaining of industrial part.Admittedly the assessee had madethe application for development ofan industrial park under the schemenotified by the Government inaccordancewithlaw.TheCommissionerofIncomeTax(Appeals) further pointed out thatthe scheme recognised the activityof any undertaking engaged in thedevelopmentofinfrastructurefacilities or built up space withcommon facilities in any areaallotted or earmarked for thepurpose of software development asindustrialparkasbusinessactivity. Thus, while agreeing withthe assessee on the character ofthe receipt of lease rental asbusiness income, he also agreed inprinciple that the deduction underSection 80IA would be allowed, evenif the rental income is assessed asincome from house property. Furtherhe relied on the decision of theApex Court reported in 57 ITR 306 - COMMR. OF INC. TAX v. COCANADARADHASWAMI BANK LTD that the headunder which income is assessed isnot relevant for the purpose ofclaiming exemption under the Act.When the Revenue had accepted theview of the Commissioner of IncomeTax (Appeals) on Section 80IA thatthe assessee had complied withSection 80IA(4)(iii) of the Act,there remains nothing for anenquiry either as to the nature ofthe receipt or for that matter thefacilities developed to be treatedas an industrial park to considerthe question of deduction underSection 80IA(4)(iii) of the Act. Inthe background of the above stateof affairs, we hold that the viewof the Commissioner of Income Tax COMMR. OF INC. TAX v. COCANADARADHASWAMI BANK LTD that the headunder which income is assessed isnot relevant for the purpose ofclaiming exemption under the Act.When the Revenue had accepted theview of the Commissioner of IncomeTax (Appeals) on Section 80IA thatthe assessee had complied withSection 80IA(4)(iii) of the Act,there remains nothing for anenquiry either as to the nature ofthe receipt or for that matter thefacilities developed to be treatedas an industrial park to considerthe question of deduction underSection 80IA(4)(iii) of the Act. Inthe background of the above stateof affairs, we hold that the viewof the Commissioner of Income Tax (Appeals) in this regard does notcall for any interference. For thereasons best known and we think,rightly so, the Revenue did notchallenge order of the Commissionerof Income Tax (Appeals) on 80IAdeduction before the Tribunal. Thesaid fact is not disputed by theRevenue too. Thus, when thecharacter of the receipt is not aquestion to be gone in the matterof considering the claim ofdeduction under Section 80IA(4)(iii) of the Act, we do not findthat any useful purpose would beserved for the Revenue to againinsist on a decision on thecharacter of the receipt." The ld. Counsel for the assessee has alsoplaced on record the copy of the letter dated1st August 2001 from the Department ofIndustrial Police & Promotion, Secretariat forIndustrial Assistance Investment Promotion &Infrastructure Development Cell, Ministry ofCommerce & Industry, Govt. of India whereapproval has been accorded to the assessee forsetting up an industrial park in terms of thescheme notified by the Ministry in exercising ofpowers u/s.80IA sub-section 4(iii) of the Act. https://hcservices.ecourts.gov.in/hcservices/ In view of the judgment of the Hon'ble HighCourt in assessee's own case and the fact thatthe assessee is operating industrial park dulyapproved by the competent authority, we are ofthe considered opinion that the assessee isentitled to claim deduction u/s.80IA and theincome of the assessee is assessable under thehead 'Income from Business'. The appeal of the assessee is allowed,accordingly." 7. Though Mr.T.R.Senthil Kumar, learned counsel for theRevenue submitted that the decision rendered by a Hon'bleDivision Bench of this Court in M/s.R.R.Industries Limited,Chennai – 32 Vs. The Income Tax Officer (OSD), Chennai – 34, inTax Case (Appeals) Nos.139 to 145 of 2012 vide judgement dated26.06.2013, relating to the assessment years 2002-03 to 2008-09,is pending before the Hon'ble Apex Court in Civil AppealNos.5912 to 5918 of 2015, we are of the considered view that thesame will not be an impediment, in dealing with the instant taxappeal. 8. Section 262 of the Income Tax Act relates to 'Appeals toSupreme Court'. As per sub-section 3 of Section 262 of theIncome Tax Act, where the judgment of the High Court is variedor reversed in the appeal, effect shall be given to the order ofthe Supreme Court in the manner provided in Section 260 of theAct. Statute itself, provides for a remedy to the Revenue, asto how a judgment of the Hon'ble Supreme Court should be giveneffect. 9. In the light of the statutory provision and discussion,we are not inclined to accept the contentions of the learnedcounsel for the Revenue in that regard. Substantial questionsof law have already been answered against the revenue, in thecase of M/s.R.R.Industries Limited, Chennai – 32 Vs. The IncomeTax Officer (OSD), Chennai – 34, in Tax Case (Appeals) Nos.139to 145 of 2012 vide judgement dated 26.06.2013. Following thesame, instant Tax Case Appeal No.336 of 2018 is dismissed. Nocosts. //True Copy// Sub Assistant Registrar kk To 1.The Registrar Income Tax Appellate Tribunal, 'B' Bench, Chennai. 2.The commissioner of Income Tax(Appeals)-V,121, Mahatma Gandhi Road, Chennai-34. 9. In the light of the statutory provision and discussion,we are not inclined to accept the contentions of the learnedcounsel for the Revenue in that regard. Substantial questionsof law have already been answered against the revenue, in thecase of M/s.R.R.Industries Limited, Chennai – 32 Vs. The IncomeTax Officer (OSD), Chennai – 34, in Tax Case (Appeals) Nos.139to 145 of 2012 vide judgement dated 26.06.2013. Following thesame, instant Tax Case Appeal No.336 of 2018 is dismissed. Nocosts. //True Copy// Sub Assistant Registrar kk To 1.The Registrar Income Tax Appellate Tribunal, 'B' Bench, Chennai. 2.The commissioner of Income Tax(Appeals)-V,121, Mahatma Gandhi Road, Chennai-34. 3.The Assistant Commissioner of Income Tax Company Circle-V(4), Room No.409, IV Floor,Main Buildings, Aaykar Bhawan, 121,Mahatma Gandhi Road,Chennai-34. +1cc to Mr.T.R.Senthil Kumar, Advocate sr.no.42994T.C.A.No.336 of 2018br(co)nr 01/08/2018