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2016 (6) TMI 452 - ITAT MUMBAI

2016 (6) TMI 452 - ITAT MUMBAI - TMI - Reopening of assessment - Deduction under section 80IB(10) allowed excessively to the extent that it is beyond the amount of income under the head ‘business or profession’ - CIT(Appeals) allowing assessee’s claim for deduction under section 80IB(10) to the extent of gross total income and not restricting the same to extent of income under the head ‘business and profession’ - Held that:- It is a trite law that ‘reason to believe’ referred to in Sec. 147 of t .....

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it is contrary to the legal position approved by the Hon’ble Bombay High Court in the case of J.B. Boda & Co. Pvt. Ltd. (2010 (10) TMI 1102 - BOMBAY HIGH COURT ).

In view of the aforesaid discussion, in our view, the reasons recorded by the Assessing Officer suffer from an infirmity of being misconceived in law and, therefore, initiation of proceeding thereupon is bad in law. Consequently, the assessment finalised by the Assessing Officer u/s 143(3) r.w.s. 147 of the Act dated 6.12.2 .....

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urn arises out of an order passed by Assessing Officer under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short the Act ) dated 06/12/2012. 2. In its appeal the solitary grievance of the Revenue is against the action of the CIT(Appeals) in allowing assessee s claim for deduction under section 80IB(10) of the Act to the extent of gross total income of ₹ 71,99,25,721/- and not restricting the same to ₹ 68,18,56,583/- i.e. to extent of income under the head business and pro .....

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pened the assessment by issuing notice under section 148 of the Act and vide order dated 6/12/2012 reassessed the income at ₹ 14,36,67,009/-, inter-alia, restricting the relief under section 80IB(10) of the Act to the extent of ₹ 68,18,56,583/-. The action of the Assessing Officer in restricting the claim of deduction under section 80IB(10) is the subject matter of controversy in the Revenue s appeal. 3.1 The stand of the Assessing Officer is that the claim of deduction under section .....

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tion under section 80IB(10) of the Act. There is no dispute between assessee and the Revenue that the quantum of deduction under section 80IB(10) of the Act is ₹ 71,99,25,721/-. In its return of income, assessee claimed a deduction of ₹ 71,99,25,721/- under section 80IB(10) of the Act as it was within the limit of its gross total income amounting to ₹ 82,58,43,666/-. However, in the impugned assessment the Assessing Officer restricted the claim of deduction to ₹ 68,18,56, .....

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; 68,18,56,583/-. As per the Ld. DR, section 80IB(10) was relating to the business of development of the housing project and thus deduction was allowable to the extent of business income and not gross total income of an assessee, which may include incomes other than the business income also. The plea of the assessee, which has also been affirmed by the CIT(Appeals), is to the effect that the provisions of section 80IB(10) of the Act do not place any such restriction and the deduction allowable c .....

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7; 71,99,25,721/-. In the impugned assessment finalized u/s 143(3) r.w.s. 147 of the Act, the gross total income (before allowing deduction under Chapter VI-A) was arrived at ₹ 82,55,23,592/- which comprised of (i) income from house property - ₹ 13,51,076/-, (ii) income from business - ₹ 68,18,56,583/-; and, income from other sources - ₹ 14,23,15,933/-. The total taxable income has been computed by the Assessing Officer at ₹ 14,36,67,009/- after allowing deduction u .....

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deduction in respect of profits and gains from certain industrial undertaking in order to compute the total income of an assessee. Sub-section (1) of Sec. 80IB prescribes that where the gross total income of an assessee includes any profits and gains derived from any business referred to in the sub-sections prescribed therein, the assessee shall be allowed in computing total income a deduction from such profits and gains in the manner as may be prescribed. The sub-section relevant for our purpos .....

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lowable. For that matter, sub-section (1) of Sec. 80A prescribes that in computing the total income there shall be allowed from the gross total income, deductions specified in Sec. 80C to 80U of the Act subject to the conditions prescribed therein. The claim of the assessee is u/s 80IB(10) which is also liable to be governed by the prescription of Sec. 80A(1) of the Act. Sub-section (2) of Sec. 80A further prescribes that the aggregate amount of deductions under Chapter VI-A shall not, in any ca .....

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ount of deductions under various sections of Chapter VI-A are to be individually computed and such aggregate of deductions is liable to be restricted to the amount of gross total income prescribed in Sec. 80B(5) of the Act. In fact, the point made out by the Revenue that the deduction u/s 80IB(10) of the Act is allowable to the extent of profits of business is neither expressly and nor by implication understood from the provisions of Chapter VI-A of the Act. No doubt, the profits derived from th .....

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stricted to the extent of income from business or profession. 8. We find that the aforesaid conclusion of the CIT(Appeals) is in consonance with the parity of reasoning laid down by the Hon'ble Bombay High Court in the case of M/s. J.B. Boda & Co. P. Ltd. in Income Tax Appeal No. 3224 of 2009 dated 18.10.2010. In the said case, the amount of eligible deduction u/s 80-O of the Act (which is also a part of Chapter VI-A) was determined at ₹ 1,29,41,830/- but the Assessing Officer rest .....

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by specifically noting the definition of gross total income contained in Sec. 80B(5) of the Act. In our considered view, the aforesaid reasoning upheld by the Hon ble Bombay High Court squarely applies in the present case and the CIT(Appeals) has rightly allowed the claim of the assessee for deduction u/s 80IB(10) of the Act to the extent of availability of gross total income. Thus, on this aspect, the stand of the assessee is upheld and the Revenue fails in its appeal. 9. In the cross-objectio .....

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e property - ₹ 13,51,076/-, (ii) income from business - ₹ 68,18,56,583/-; and, income from other sources - ₹ 14,23,15,933/-. While computing the total income at ₹ 10,59,17,945/-, the Assessing Officer allowed deduction u/s 80IB(10) of the Act to the extent of ₹ 71,99,25,721/-, as claimed by the assessee. Subsequently, the Assessing Officer recorded reasons and issued notice u/s 148 of the Act dated 6.7.2012 reopening the assessment on the ground that certain income .....

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ssessment u/s 148 of the Act was also bad in law. The CIT(Appeals), while affirming the stand of the assessee on merits, however, upheld the validity of the initiation of proceedings by issuance of notice u/s 148 of the Act. The said decision of the CIT(Appeals) has been challenged by the assessee by way of cross-objection before us. 12. Before us, the learned representative for the assessee vehemently pointed out that there was no justification for invoking the provisions of Sec. 148 of the Act .....

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be pointed out that the impugned reassessment would tantamount to a mere change of opinion, which is impermissible in law. Further, the learned representative also pointed out that the reasons recorded by the Assessing Officer are on a wrong footing and therefore there is no justification for initiation of proceedings u/s 147/148 of the Act. In the course of arguments, reliance has been placed on the following decisions to assail the initiation of proceedings u/s 147/148 of the Act :- i) Sharp .....

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lly considered the rival submissions. Sec. 147 of the Act empowers the Assessing Officer to assess or reassess an income which had escaped assessment for any assessment year provided he has reasons to believe , subject to other requirements of the section. In the present case, the point set up by the Assessing Officer is that excessive claim of deduction u/s 80IB(10) has been allowed in the assessment order dated 24.12.2009. No doubt, Explanation 2(c) below Sec. 147 of the Act brings out that ev .....

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r.w. s. 153C of the I. T. Act 1961, on 24.12.2009, assessing the total income of ₹ 10,59,17,950/- after allowing the deduction u/s 801B(10) of ₹ 71,99,25,721/-. The assessee has claimed deduction of ₹ 71,99,25,721/- u/s 80IB(10) of the Income Tax Act 1961 in the return. The assessee had income of ₹ 68,18,56,583/- under the head Business and Profession. Therefore the assessee has claimed and has been allowed deduction in excess of its business income. The amount of the exc .....

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tion intends to provide deduction in respect of income from such building and construction activities. In view of the aforesaid, it is reason to believe that the income to the extent of excess grant of deduction u/s 80IB(10) of the I.T. Act 1961, has escaped assessment within the meaning of section 147 of the I.T. Act 1961. Such escapement and under assessment of income is squarely attributed to the act on the part, of assessee to claim deduction in excess of income offered under the head busine .....

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