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2014 (9) TMI 196 - AT - Income TaxProceedings u/s 263 – Deduction u/s 80IB(10) - Jurisdiction of CIT - Doctrine of merger – Held that:- Following the decision in Sobha Developers Ltd. Versus Commissioner of Income-tax (LTU) [2013 (9) TMI 638 - ITAT BANGALORE] - there was no merger of the order of the AO with that of any appellate authority when the CIT invoked and exercised jurisdiction u/s.263 of the Act in passing the impugned order and that two views did not exist on the question whether the Assessee was only a “Builder” and not a “Builder and developer” of housing project - what is the role of the sister concern of the assessee in so far as it relates to sale of land is concerned and as to how despite being not owner of the land pursuant to a registered sale deed was in fact entitled to all ownership rights as envisaged u/s.2(47)(v) of the Act. The question as to whether the Assessee was a developer and builder of housing project or merely a builder and was not entitled to deduction u/s.80IB of the Act was not examined by the AO in the order of Assessment - The order of the AO was erroneous to this extent - the exercise of jurisdiction by the CIT u/s.263 of the Act was proper - CIT has concluded that the Assessee is only a “Builder” and not a “Developer and Builder” of housing project - such a finding is without any basis and without bringing on record material and contrary to the claim made by the Assessee – it cannot be sustained and is hereby vacated - the CIT has concluded that the assessee is a “builder” without rebutting any of the submissions and contentions put forth by the assessee with regard to the various activities carried out by the assessee in the reply to the show cause notice issued under section 263 of the Act – the findings of the CIT is vacated in this regard and the directions issued u/s 263 of the Act modified – decided partly in favour of assessee. Shortfall in remittance of TDS – Deduction u/s 40(a)(ia) – Held that:- CIT ought not to have straightaway held that there was a shortfall in remittance of TDS of and disallowance relating to the shortfall needs to be disallowed u/s 40(a)(ia) - the assessee has requested the CIT to inform as to how the shortfall was arrived at - the assessee has filed a reconciliation of TDS payable before the AO which should be examined and verified before any disallowance can be contemplated or made u/s 40(a)(ia) of the Act - the direction of the CIT is modified as to the AO for making a disallowance u/s 40(a)(ia) of the Act to the extent that the AO is directed to examine the assessee's claim of reconciliation of TDS and the plea that the gross tax deducted in Form 3CD report is erroneous - If, however, the AO’s finding after verification is to the contrary, then requisite disallowance u/s 40(a)(ia) will have to be made – Decided partly in favour of assessee.
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