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2013 (8) TMI 330 - AT - Income TaxDeduction u/s 80IAB - transfer of bare shell building as an unauthorized operation under the SEZ Act. - co-developer agreement - A.O. and ACIT allowed deduction to assessee - CIT exercising power u/s 263 reversed order of ACIT holding that it is pre-judicial to Revenue's interest and proper inquiry was not done by A.O. - Held that:- assessing officer asked for justification of 80-IAB claim, which is duly responded by assessee. The assessment record means the proceedings sheets, material available on record and the replies of the assessee. Considering these aspects it emerges that all the required documents were filed and considered by assessing officer and on being satisfied, deduction u/s 80-IAB was allowed which is mentioned in the assessment order -Order is appear to be made while approving the co- developer agreement. This is possibly applicable to co-developer and not the assessee as the condition was put during the course of approval of the agreement between assessee and the co-developer. Be that as it may, in any case, the assessing officer having considered all these pleading and submissions, it cannot be held that he did not examine the allowability of the claim by proper inquiry - It clearly emerges from assessment record that relevant queries were raised by assessing officer, detailed submissions, developers and co-developers agreements were filed, justification of 80-IAB claim as provided by the assessee and the nature of debts owed by DLF Assets consequent to such transfer was also asked for by assessing officer - Following decision of CIT v. Anil kumar Sharma [2010 (2) TMI 75 - DELHI HIGH COURT] - Decided in favour of assessee. No fault attributable to assessee for causing hiatus to the proceedings was found. Assessee's detailed reply covering all the aspects was filed as back as 25-7-2011 i.e. 8 months prior to the proceedings. The CIT himself called the assessing officer in hearing and asked him to submit a report and ensure that the report is filed. Non-seeking of assessing officer's remand report also is not attributable to assessee. CIT failed to discharge his statutory duty and instead of taking a clear call and demonstrating errors made by assessing officer and prejudice caused to the revenue, the buck has been passed on to assessing officer by setting aside assessment order, which is against the letter and spirit of provisions of sec.263. Where the authority fails to carry out its statutory obligation, the order cannot be held as tenable and is liable to be quashed. SEZ Act authorizes activities include construction of bare shell/ cold shell/ warm shall buildings and transfer thereof. BOA has approved it and clarified the same. There is enough material on the record to hold that the transfer of bare shell buildings to co- developers constitute authorized activity. Merely because CIT in his perception held another possible view about claim u/s 80-IAB, the assessment order does neither become erroneous nor prejudicial to the interests of revenue - Following decision of Malabar Industrial Company Ltd vs. CIT [2000 (2) TMI 10 - SUPREME Court] and CIT vs. Max India Ltd. [2007 (11) TMI 12 - Supreme Court of India] - Decided in favour of assessee.
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