TMI Blog2015 (3) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... claim but it was only an enhanced claim which is statutorily linked to the eligible profits which get enhanced as result of search. Therefore we do not find any legal infirmity on the finding of the ld CIT(A) and so confirm the same. We also concur with the conclusion of the ld CIT(A) wherein it is observed that if the disallowance u/s 40A(3) is directly relatable to the profit of the eligible projects, then the deduction u/s 80IB be accordingly recomputed, subject to verification of the records including the seized records.In the result the grounds raised by the revenue for Assessment Year 2005-06 stands dismissed. - decided in favour of assessee. Payments in excess of ₹ 20,000/- disallowed - payment made on the dates when banks were closed due to holiday - Held that:- The facts are not clear as to whether the payments were made on the holidays when the banks were closed. We therefore set aside the impugned order on this issue and remand the same back to the file of AO for fresh adjudication, in accordance with law after providing due and reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Notional interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts which needs to be vacated and order of the AO be restored. 5. That the appellant craves leave to add or amend any one or more of the ground of the appeal as stated above as and when need for doing so may arise. 2. All the aforesaid grounds project the grievance regarding the direction of the CIT(A) to allow deduction u/s 80IB of the Income Tax Act, 1961 (herein after the Act ). 3. The relevant facts are that the appellant had furnished an original return of income on 18/01/2006 for the instant assessment year declaring income of ₹ 34,89,935/- after claiming a deduction of ₹ 41,83,813/- u/s 80IB of the Act. This claim of deduction u/s 80IB of the Act was allowed by an order dated 10/07/2007 u/s 143(3) of the Act. Pursuant to search on 06/02/2009 u/s 132 of the Act, where incriminating documents were seized, which revealed that the assessee was receiving partially cash on the sale of flats/shops. The documents included agreements for booking of shops/commercial space in Supertech Shopprix Mall located at Vaishali and Kaushambhi. Avante Garde project located at Vaishali and Rameshwar Orchid at Kaushambhi. The original agreement forms were later on cancelle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the case have been considered. It is noted that sec. 153A starts with a non-obstante clause meaning thereby that the issue of notice requiring a person to furnish a return of income is in the nature of fresh proceedings. Therefore, while examining claims made in the course of such proceedings, the merits have to be examined afresh and cannot be denied only on the ground that such claim had not been made in the original proceedings/return of income. Secondly, clause (a) of sub-section (1) clearly specifies that the return of income filed in response to the notice issued will be treated as if it were a return required to be furnished u/s 139. This again indicates that a return filed in response to notice u/s 153A stands on equal footing with a return filed u/s 139. If an assessee was eligible to make a claim in a return filed u/s 139, there is no reason why such claim could not have been made in our return filed in response to a notice issued u/s 153A. Finally, clause (i) of the Explanation to that section specifies that all other provisions of this Act shall apply to the assessments made under this Section . Obviously, such provisions would also include section 80IB, if a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceedings unless relatable to the items sought to be taxed as escaped income. It is noted that the Hon ble Court observed that it would be open to as assessee to put forward claims for deduction of any expenditure in respect of that income on the non-taxability of the items of all. In brief, it has been held that claims, to the extent that they relate to be additional income brought to tax in the reassessment proceedings, can be entertained in such proceedings. By the same analogy, if additional business income is being brought to tax in an assessment framed u/s 153A and such additional income would otherwise be eligible for deduction u/s 80IB, there can be no reason why such deduction would not be allowable. 8. Likewise, in respect of the action of AO not allowing deduction u/s 80IB in respect of disallowance made u/s 40A(3) the ld CIT(A) directed that the deduction u/s 80IA be further re-computed, if the disallowance is directly relatable to the eligible project on the basis of records including seized records. 9. The Revenue has challenged the aforesaid conclusion of the ld CIT(A). 10. Before us the ld.CIT DR, Dr Ramesh Chandra contended that the AO has disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight not have been sought at the time of original assessment proceedings and, therefore, it is open for an assessee to claim a new deduction while filing return under Section 153A of the Act, which deduction was not claimed under the regular assessment. Replying to the contention raised by the ld. AR, the ld. DR contended that a comprehensive reading of the provisions of Section 153A of the Act would reveal that it is not open for the assessee to claim any deduction, which was not claimed in the original assessment proceedings. Attention was drawn to second proviso to Section 153A of the Act, which provided for abatement of only 'pending assessment or reassessment' on the date of initiation of the search and not the concluded assessment proceedings. It was submitted that the assessee having failed to claim the deduction while filing original return under Section 139 and having failed to furnish any revised return under Section 139(5) of the Act and those assessments having become final, it is not open for the assessee to use the proceedings under Section 153A of the Act to reopen the concluded assessments. It was also submitted that the assessee can only claim income or exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t along with the return was not mandatory but directory and that if the audit report was filed at any time before the framing of the assessment, the requirement of section 80-IA(7) would be met. 13. Similar view has been expressed by the jurisdictional High Court in the case of ACIT Vs. Murlidhara Prasad 118 ITR 393 (All) where it was held that filing of declaration before assessment is sufficient. Furthermore, the statutory position for claim of deduction is linked to the profits of the eligible profit. In other words, when the profits of the eligible project have increased then the consequential statutory impact will be on the amount of deduction u/s 80IB. so when the profits increase, the deduction/ incentive envisaged u/s 80IB increases. On one hand when the revenue has accepted the increase in profit though surfaced due to the search, the impact of the said increase in profit has to be also on the deduction allowable under Section 80IB of the Act, more particularly when the mandate on AO u/s 153A is to compute the total income of assessee. In the light of the aforesaid distinguishable facts, the ratio of Jai Steel cited (supra) by the revenue is of no help to the departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o get its accounts audited for the A.Y.2005-06 to A.Y.2009-10 under Section 142 (2A) of the Act. Initially, the auditor was required to submit report within 90 days of the relevant order of the AO dated 30.12.2010. Subsequently, the time was extended till 31.05.2011. The auditor submitted its report on 26.05.2011. In the assessment order, the AO has noted that the documents found in seized revealed that the assessee was receiving on money on the sale of flats/shops. The documents included agreements for booking of shops/commercial space in Supertech Shopprix Mall located at Vaishali and Kaushambhi Avante Grade project located at Vaishali and Rameshwar Orchid at Kaushambi. These original agreements forms were later on cancelled and fresh agreement was prepared showing a much lesser sale consideration. The sale consideration was partially being received in cash. Form the seized documents, the total undisclosed income comes to ₹ 32,71,38,984/- out of which ₹ 5,68,80,271/- pertains to the year under consideration. This has been accepted by the assessee. However, the assessee had claimed deduction which included expenses of ₹ 3,49,52,143/. Out of the above expenses, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground raised for Assessment Year 2009-10 is dismissed as infractuous. As regards ground raised in Assessment Year 2007-08 and 2008-09, we hold that the CIT(A) is justified in deleting the disallowance, on the ground that the payment have been made in cash to the Govt, which fact was clarified by the AO by a remand report to ld CIT(A). Since the payment have been made by the cash to the Govt, the CIT(A) was justified in allowing the said claim of the assessee. Therefore we confirm the order of the ld CIT(A) on the said ground. Therefore the ground raised by the Revenue is rejected. 18. Now we will deal with appeals of the assessee. In the first instance, we will deal with the appeal for Assessment Year 2006-07 in ITA No.4367/Del/2013 wherein, the assessee has taken the following ground:- 1. That on the facts and in the circumstances of the case and in law, the Hon ble Commissioner of Income Tax (Appeals), Meerut has erred in not allowing the expenses amounting to ₹ 69,60,469/- paid in excess of ₹ 20,000/- which are specifically exempt in view of the Rule6DD(k) of Income Tax Rules, 1962. 2. That on the facts in the circumstances of the case and in law, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 2009-10 in ITA No.4269 and 4370-Del-2013 and vide grounds No.1,2 and 3 in ITA No.4368/Del/2013 in Assessment Year 2007-08 are similar to the issues involved in grounds No.1 and 2 of the appeal for the Assessment Year 2006-07 in ITA No.4367/Del/2013, therefore our findings given in the former part of this order shall apply mutatis mutandis for these assessment years. 24. Now the only issue remaining for adjudication is the Ground No. 4 for the Assessment Year 2007-08 in which the main grievance of the assessee relates to the confirmation of the disallowance of ₹ 21,440/- made by the AO u/s 40A(3) of the Act. Regarding this issue, the ld counsel for the assessee submitted that the cash payment in respect of which the disallowance have been made did not exceed ₹ 20,000/- because it was not a single payment but the total of few payments. The ld DR supported the orders of the authorities below. In our opinion this issue also needs to be re-examined by the AO as the facts are not clear. 25. In the result the appeals of the department are dismissed and the appeal of the assessee are allowed for statistical purposes. Order pronounced in the open court on 18.02.2015. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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