TMI Blog2018 (6) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... ent years, there is no justifiable reason to reject assessee’s claim in the impugned assessment years. Thus, in our considered opinion, the assessee is entitled to avail deduction under section 80IAB of the Act - ITA no.1167/Mum/2013 And ITA no.1171/Mum/2013 - - - Dated:- 31-5-2018 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI N.K PRADHAN, ACCOUNTANT MEMBER For The Assessee : Shri H.P. Mahajania/w Shri Prasad Bapat For The Revenue : Smt. Arju Garodia ORDER PER SAKTIJIT DEY, J.M. Aforesaid appeals by the assessee are against orders dated27th November 2012, passed by the learned Commissioner (Appeals) 12, Mumbai, for the assessment years 2006 07 and 2007 08. 2. The first common ground in both the appeals relate to the validity of re opening of assessment under section 147 of the Income Tax Act, 1961 (for short the Act ). 3. Facts relating to this issue which are more or less common in both the appeals are stated herein after briefly. The assessee a company is stated to be engaged in the business of real estate development and allied activities. For the assessment year 2006 07, the assessee filed its return of income on 29th November 2006, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see challenged the disallowance of deduction claimed under section 80IAB of the Act for both the assessment years by preferring appeals before the first appellate authority both on the validity of re opening of assessment under section 147 of the Act as well as on the merits of the disallowance made under section 80IAB of the Act. 4. As regards validity of re opening of assessment, the learned Commissioner (Appeals) after considering the submissions of the assessee in the context of facts and material on record, upheld the exercise of power under section 147 of the Act by holding that there is no change of opinion while re opening the assessment. He observed, assessee s claim of deduction under section 80IAB of the Act was allowed in the original assessment without examining the issue whether the claim of deduction is allowable or not. Therefore, no opinion with regard to the issue on which assessment was reopened was formed in original assessment. He observed, while re opening the assessment, the Assessing Officer has recorded reason to believe that income chargeable to tax has escaped assessment year. Therefore, the re opening of assessment after such recording of reason canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he subsequent approval granted to the assessee as co developer in the year 2006 cannot be equated to the initial sanction / approval for establishment of SEZ. Thus, he submitted, in the original assessment proceedings, the Assessing Officer having not examined and applied his mind to the issue, it cannot be said that any opinion was formed with regard to assessee s claim under section 80IAB of the Act so that the re opening of assessment will amount to be on a change of opinion.Learned Departmental Representative submitted, on the basis of material on record if the Assessing Officer is prima facie of the belief that income has escaped assessment,he can proceed to re open the assessment after recording reasons. He submitted, sufficiency of reason to believe cannot be challenged as the assessee gets an opportunity during the re assessment proceedings to argue its case that there is no escapement of income. Thus, he submitted, the contention of the assessee that re opening of assessment is invalid should not be accepted. In support of his submission learned Departmental Representative relied upon the decision of the Hon'ble Jurisdictional High Court in Eleganza Jewellery Ltd. v/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther observation / noting of the Assessing Officer with regard to the submissions made by the assessee is not there. Though, he has also observed that the assessee has filed voluminous details running into more than 100 pages. Further, it was stated by him that he was not sure whether the issue of claim of deduction under section 80IAB of the Act was examined by the Assessing Officer during the original assessment proceedings or not. Thus, the facts which clearly emerge from the material on record are, the Assessing Officer in course of original assessment proceedings did enquire into assessee s claim of deduction under section 80IAB of the Act in both the assessment years. Merely because there is no discussion in the body of the assessment order with regard to acceptability of assessee s claim of deduction under section 80IAB of the Act, it cannot be said that the Assessing Officer has not enquired into and applied his mind to the material on record before allowing assessee s claim of deduction under section 80IABof the Act. In other words, it cannot be said that the Assessing Officer has not formed any opinion with regard to assessee s claim of deduction under section 80IAB of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent in the appeals before us. Materials on record clearly indicate that during the original assessment proceedings the Assessing Officer did raise queries with regard to the assessee s claim of deduction under section 80IAB of the Act. Thus, in view of the aforesaid difference in facts, the ratio laid down in the decision relied upon by the learned Departmental Representative will not apply to the facts of the present case. On the contrary, the ratio laid down in the decisions relied upon by the learned Authorised Representative squarely apply to the facts of the present case. In view of the above, we hold that the re opening of assessment under section 147 of the Act in both the assessment years under appeal having been made on a mere change of opinion in the absence of tangible material is legally invalid. Consequently, the assessment orders passed in pursuance thereto have to be declared as invalid and deserves to be quashed. 7. The common issue on merits as raised in ground no.2 of both the appeals relates to disallowance of deduction claimed under section 80IAB of the Act. Though, in view of our decision in ground no.1, this issue is of mere academic nature, however, consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act as if the operation and maintenance were not transferred. Thus, ultimately, the learned Commissioner (Appeals) observed, the approval given to the assessee as a co developer is not for a new SEZ project but in continuation to a project already approved on 8th September 2004. Therefore, the assessee being a co developer would be entitled to the same benefit as were being given to the original developer Mahindra industrial Park Ltd. He held that in view of the fact that the original developer is not entitled to the benefit of section 80IAB of the Act since the SEZ project was approved prior to 1st April 2005, the assessee would also not be entitled to any benefit under section 80IAB of the Act. Thus, he upheld the disallowance in both the assessment years. 9. The learned Authorised Representative submitted, the only reason on which the Departmental Authorities have denied assessee s claim of deduction under section 80IAB of the Act is, the approval for the SEZ was granted by the Ministry of Commerce to Mahindra Industrial Park Ltd. on 8th September 2004. In this context, he drew our attention to a copy of the said letter of approval placed at Page 32 of the paper book. Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AB of the Act for both the assessment years under appeal. He submitted, in the subsequent assessment years i.e., assessment year 2010 11 and 2011 12, assessee s claim of deduction under section 80IAB of the Act have been accepted by the Assessing Officer in assessments completed under section 143(3) of the Act. In this context, he drew our attention to the copies of the assessment orders placed in the paper book. Thus, the learned Authorised Representative submitted, assessee s claim of deduction under section 80IAB of the Act is allowable on merits also. 11. The learned Departmental Representative strongly relied upon the finding of the learned Commissioner (Appeals). 12. We have considered rival submissions and perused materials on record. It is evident from the impugned order of the learned Commissioner (Appeals) that he has upheld the disallowance claimed under section 80IAB of the Act primarily on the following two reasonings: i) The approval granted to the SEZ on 8th September 2004 being not on after 1st April 2005, as provided under section 80IAB of the Act, the SEZ is not entitled to benefit under section 80IAB of the Act. ii) The approval granted to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t relates to assessee s claim of deduction under section 80IAB of the Act. That being the case, we have to examine whether the approval granted to the assessee by the Board of Approval and followed by the letter of approval from Ministry of Commerce, Government of India, will have to be considered independent of the earlier approval granted on September 2004 to Mahindra Industrial Park Ltd or the approval granted to the assessee is to be treated in continuation of the earlier approval, as held by the learned Commissioner (Appeals). Before deciding this issue it is necessary to deal with the statutory provisions concerning the benefits to be given to SEZ. As could be seen, with an intention to boost the infrastructure development in India, the Government of India legislated the SEZ Act. The SEZ Act was brought under the aegis of the Ministry of Commerce and Industries, Govt. of India and the implementation of SEZ Act along with corresponding rules were entrusted under the SEZ Act to a Board of Approval (BOA). Section 27 of the SEZ Act provides for applicability of the provisions of Income Tax Act, 1961 in relation to a developer entrepreneur for carrying on the authorised operations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king proposal to establish SEZ and grant of approval. As per section 3(10) of the SEZ Act, the Central Government on receipt of an application for establishment of SEZ shall issue a letter of approval on such terms conditions and obligation and entitlement as may be approved by the Board. Section 3(11) of the SEZ Act provides that any person or a State Government intending to providing any infrastructure facilities in the SEZ after entering into an agreement with the Developer make a proposal to the Board for its approval. Section 3(12) of the SEZ Act provides that if such proposal is approved by the Board and a letter of approval is granted by the Central Govt., such person or State Government shall be considered as a co developer of the Special Economic Zone. Thus, the provisions contained under section 2(g) r/w section 3(11) and (12) of the SEZ Act and Explanation 1 to section 80IAB of the Income Tax Act, 1961, make it clear that the co developer has been given the status of developer of SEZ if such co developer has entered into an agreement with the developer and his proposal for co developer has been approved by the Board of Approval and Central Government. 15. Keeping in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the developer has not transferred the operation and maintenance of the SEZ to the assessee. On the contrary, the assessee by virtue of the co developer agreement has developed infrastructure facility. In view of the aforesaid, the assessee having granted approval after 1st April 2005 for development of infrastructure facility which is akin to development of SEZ as per section 3(11) and (12) of the SEZ Act, is eligible for deduction under section 80IAB of the Act. It is relevant to observe, section 51 of the SEZ Act provides that the SEZ Act will have overriding effect over all other Acts and law if there is any inconsistency in those Acts and laws. It is also pertinent to observe, in course of hearing it was submitted by the learned Authorised Representative, in assessment year 2010 11 and 2011 12 assessing officer has allowed assessee s claim of deduction under section 80IAB of the Act in scrutiny assessments. On perusal of material placed on record we find the aforesaid submissions of the assessee to be correct. Therefore, when under similar facts and circumstances assessee s claim of deduction under section 80IAB have been allowed in subsequent years, there is no justifiable re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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