Opinion Of Eminent Legal Luminaries On Controversial Issues

Whether Lease Rent Received In Approval Industrial Park Is Untitled For Deduction U/s. 80IA?

QUERY: An assessee has constructed units in an industrial park approved by the Government. The said units were given on lease and rent collected from lessees. Is assessee eligible for deduction under section 80-IA(4)(iii)?
ANSWER: Generally the income falling under sections 80-IA or 80-IB should be of business income. Where the assessee merely derives rental income. Such income may not be eligible. But an exception is possible where income is derived from lease, while supplying all infrastructure services of SEZ.

Thus if an assessee has developed industrial park approved by the Government and thereafter it has leased out units with all infrastructure facilities, then, it would be entitled for deduction under section 80-IA (4)(iii) of the Act, as per the following decisions of the Tribunals.

(i) VITP(P) Ltd. v. ACIT [138 ITD 407 (Hyd.)]

(ii) R. R. Industries Ltd. v. DIT [Bearing Nos. 2194 to 2199/Mad/2010 dated November 18, 2011 of Chennai]

In these cases, it has been held that letting out of the building/units predominantly as Industrial Park would be entitled for deduction under section 80-IA(4)(iii) of the Act.

Posted in Income-tax

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