TaxTMI 
TaxTMI 
2021 (5) TMI 280
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....ent records of the assessee and on perusal of the same, he observed that, prima facie, assessment order passed u/s 143(3) dated 27-03-2014 is erroneous and prejudicial to the interests of revenue as the Assessing Officer while passing the impugned order allowing the deduction u/s 80IA(4)(iii), has not verified all relevant facts in respect of satisfaction or otherwise of all conditions regarding its claim for deduction u/s 80IA(4). He further observed that while completing the assessment, the Assessing Officer treated the lease rentals received from industrial park as business income and allowed deduction u/s 80IA(4) amounting to Rs. 13,67,23,850/- by relying on the decision of the Hon'ble ITAT, Hyderabad in the case of M/s Janapriya Properties Pvt. Ltd. Also he observed that assessment orders for the A.Ys 2006-07, 2007-08 and 2009-10 had been reviewed by the CIT-2, Hyderabad and orders u/s 263 were passed on 28-03-2014 wherein the CIT-2, Hyderabad held that the income from lease rentals is income from business but not income from house property and also held in respect of AY 2009-10 that the assessee is not entitled for deduction u/s 80IA for A.Y 2009-10 as it did not fulfill ....
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.... the Industrial Park Scheme, 2002 (IPS, 2002). The Ministry of Commerce and Industry (MCI) vide order dated 24 November 2004 (A copy of the same is at pages 27-30 of the paper book), accorded it's approval to the appellant company for setting up an Industrial Park, in terms of the IPS 2002. Thereafter, the Central Board of Direct Taxes (CBDT), acting on behalf of the Ministry of Finance, vide notification dated 22 August 2006 notified the appellant as an Industrial Park eligible for deduction u/s 80-IA(4)(iii) of the Act (a copy of the said notification is available at pages 31-35 of the paper book). 4. As per this approval and the notification, the date of commencement of the Industrial Park was prescribed as 31.01.2006 and in case of delay by more than a year, i.e to say after 31.01.2007, the Appellant company ought to approach the Ministry of Commerce and Industry for a fresh approval. One more note worthy point mentioned in the MCI approval as well as the CSDT notification was that the benefit of deduction u/s 80-IA(4)(iii) of the Act would only be available after 30 units would be located in the Industrial Park. The appellant had, though, commenced the operation of the I....
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....nterest of revenue and sought to revise u/s 263 of the Act. The Ld. PCIT further mentioned that in the proceedings u/s 263 of the Act for A Y. 2009-10, it was seen that the appellant had not fulfilled the eligibility conditions for claiming deduction u/s 80-IA of the Act. , 9. Thereafter, submissions along with documentary evidences were made before the Ld. PCIT. However, the Ld. PCIT rejected all the submissions made by the appellant and vide his order dated 30.03.2016 withdrew the claim of deduction u/s 80-IA of the Act. The observations as well as the decision of the Ld. PCIT will be dealt more elaborately by the appellant in subsequent paragraphs. Broadly, the Ld. PCIT held as under: a. The appellant has not commenced the Industrial park before the cut off date, which is 31-01-2007 as per the approval from the MCI as well as notification of the CBDT. Thus, the appellant has violated the terms of approval. b. As per the Industrial Park Scheme 2008, a Park can be said to have commenced when completion certificate in respect of the building has been obtained from the local authority. In the case of the appellant, since full Occupation Certificates in respect of 4 out of 8 bu....
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....ition was complied with. We submit our detailed arguments in respect of each of the propositions as under; I: When deduction u/s 80-IA(4) of the Income-tax Act; 1961 has been granted in first year of claim. the same cannot be declined in subsequent years 11. Under the provisions of section 80-IA of the Act, an eligible industrial undertaking is entitled to claim a 100% deduction of the profits and gains arising out of the eligible business. The said deduction is available for 10 consecutive years from the initial year. 12. In case of the appellant, it is pertinent to note that the initial year i.e. the first year in which the deduction u/s 80-IA(4) of the Act was claimed is A.Y. 2009-10. Accordingly, the impugned A.Y. is the third year of claim. Thus, the humble point which the appellant is making here is that the examination of the eligibility of deduction u/s 80-IA(4) of the Act should have been made by the department in AY 2009-10 itself. It cannot, in the third year of the claim. turn back and say that the deduction was erroneously allowed in year 1 and thus in year 3 also, deduction should be disallowed. 13. It is relevant to note that the condition regarding commenc....
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.... appellant is to be taxed as income from business and ii) since the minimum of 30 units have not been located in the Industrial Park, a pre-condition of claiming the deduction, the appellant is not eligible for deduction u/s 80IA(4) of the Act. d. This order was then challenged before the Hon'ble Hyderabad bench of the IT AT. The Hon'ble Bench vide common order dated 7 November 2014 for AY. 2006-07, 2007-08 and 2009-10 decided the appeal in favour of the appellant. A copy of the order has been enclosed in the paper book at pages 120-147. 17. Aggrieved by the order of the Hon'ble Tribunal, the department has preferred an appeal before the Hon'ble High Court which is pending as on date. However, the ground raised by the department before the Hon'ble High Court does not dwell with the 30 units criteria which as per the CIT, the Appellant had breached. Thus, the issue of completion of the building was not raised by any authority in the first year i.e. AY. 2009-10. Further, the deduction u/s 80lA (4), although sought to be denied by CIT, albeit on a different ground, has been restored by the Hon'ble Tribunal. Appellant's own case in A Y 2010-11 18. Wi....
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....ct. The Coordinate Bench of this Tribunal in the cases of ACIT vs. Annapuma Builders and Janapriya Properties P. Ltd., vs. DCIT (cited supra), has held that as long as the approval given by the Central Government is valid and not withdrawn by it, the assessee would be entitled to deduction under section 80lA(4)(iii) of the Act. Further, various High Courts such as Gujrat High Court, Bombay High Court and Delhi High Court in the cases relied upon by the Ld. Counsel for the assessee (cited supra) have held that where deduction has been allowed under sections BOHH and BOJ in the earlier year, there ;s no provision for withdrawal of such deduction for the subsequent years for breach of certain conditions. 20. In the case before us, the assessee has been allowed deduction in the first year and it is the bounden duty of the A. 0. to examine the eligibility of the assessee to claim the deduction under section 801A(4) of the Act at the time of allowing such deduction. Since the claim has been allowed, it is to be presumed that the A.D. is satisfied about the allowability of the claim. This being the second year, unless there are distinguishing facts and circumstances for taking a differe....
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....g and operating an industrial park notified by the Central Government in accordance with that scheme shall be eligible for deduction u/s 80-IA(4)(iii) of the Act. The same is as per para 2(h) of the IPS 2002. 22. Further, para 5 and para 7 of the IPS 2002 deal with the mode of getting approval in the said scheme. Para 5 deals with Automatic Approval and para 7 deals with Non-Automatic Mode. There are conditions attached to these modes. Para 9 deals with the General Conditions. The same has been reproduced below for the sake of convenience; "9. General Conditions- (1) In case the commencing of the Industrial Model Town or Industrial Park or Growth Centre gets delayed by more than 1 year from the date indicated in the application, fresh approval may have to be obtained to get the benefits under the Act. This condition also applies to the existing approvals under the Industrial Park Scheme, which envisages commissioning of the Parks, latest by March 31, 2002. (2) The tax benefits under the Act can be availed only after the number of units indicated in the application, are located in the Industrial Park. (3) The undertaking applying for approval shall undertake to continue to....
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....cation as well as those included in the Industrial Park Scheme, 2002 should be adhered to during the period for which benefits under this scheme are to be availed. The Central Government may withdraw the above approval in case Mis. K Raheja IT Park (Hyderabad) Private Limited, fails to comply with any of the conditions. " (Emphasis supplied) 26. It shall be pertinent to note that after receiving the accord from the Central Government through the Ministry of Commerce and Industry, the appellant was required to file bi-annual returns in IPS-II containing various particulars. It shall be pertinent to note that the appellant has been adhering with such a requirement across all the years when the deduction u/s 80-IA(4)(iii) was claimed. The Central Government has never found any inconsistencies with regard to fulfilment of conditions and never pointed out any breach of condition. Thus, the approval was effective and subsisting for the entire period of 10 years. 27. Since the power to examine the compliance with the conditions are vested with the Ministry of Commerce and Industry, it is not open for the Ld. PCIT to hold that the condition of the approval has been violated. The said a....
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....decision of the coordinate bench of this Tribunal in the case of Annapurna Builders (supra). The Id. DR neither controverted this fact nor brought any contrary decision in this regard. Therefore, we uphold the order of the CIT(A) in allowing the assessee's claim of deduction u/sBDIA(4)(iii) as his decision is in consonance with the decision of the coordinate bench. " 30. We would like to place reliance on the decision of the Hon'ble Gujarat High Court in the case of Creative Infocity Ltd v. Under secretary [Special civil application no. 9247 of 2011] (a copy of the same has been enclosed as Annexure 3). The relevant extract of the decision has been reproduced below: "7. Therefore, we find substance in the contention of Mr. Shah, the learned counsel appearing on behalf of the petitioner, that once approval is given by the Commerce Ministry to the petitioner in terms of sub-rule [2] of Rule 1BC, the Board is duty bound to notify the industrial parks for benefits under Section BD-IA without any further investigation as to whether the petitioner has complied with the terms and conditions envisaged in the scheme. Since the power of grant of approval has been conferred upon t....
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....ecision making process. Even counsel for the Revenue could not dispute that many of these requirements prescribed under rule 18DA are to be examined by the prescribed authority. If once the prescribed authority examines such conditions and upon being satisfied that the conditions are fulfilled, grants approval, can the Assessing Officer take a different view? The answer obviously has to be negative.}} (Emphasis supplied) 32. Further, kind attention is also invited to the corresponding order of the Hon'ble Tribunal in the case of PClT v. B.A. Research Ltd [I.T.A No 1915/AHD/2012 and I.T.A No. 1623/AHD/2014] wherein the Hon'ble Tribunal held that the department cannot decline the deduction claimed by the assessee by simply burnishing aside the approvals of the concerned authorities (a copy of the ITAT Order has been enclosed as Annexure 5). The relevant extract of the order has been reproduced as under for the sake of ready reference: "The Revenue fails to point out any distinction on law and facts to the contrary. We draw support therefrom and hold that once the DSIR which is an expert body exercises power to grant approval for the purpose of the impugned deduction u/s. ....
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....ion BOIA(4)(iii) of the Act." 36. Thus, the above proposition stands considered and accepted by the Hon'ble Tribunal in the case of the appellant in the immediately preceding year and hence the issue is fully covered in favour of the appellant. Therefore, we humbly submit that the Industrial Park of the appellant has been approved by the Ministry of Commerce and Industry as an eligible undertaking vide it's approval dated 24.11.2004 which was subsequently notified by the CBDT vide it's notification dated 22.08.2006. The approval granted to the appellant is valid and not withdrawn by the Central Government, thus subsequently it cannot be re-examined by the tax authorities. Contention 11I- Without prejudice to the above, the approval has been granted to the appellant under the Industrial Park Scheme, 2002 (IPS 2002) wherein there is no requirement to obtain building OC to mark the commencement of the Industrial Park. The requirement under the Industrial Park Scheme 2008 can not be applied to the appellant. 37. As mentioned in the preceding paragraphs of this submission, the appellant company, through Form No. IPS-1 dated 20.10.2004, had made an application under the....
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....for the sake of ready reference: "11. A copy of the Industrial Park Scheme which was published in the Gazette of India vide SO 354 (e ) states that in exercise of the powers conferred by Section 80lA 4(iii) of the IT Act, 1961, the Central Government hereby frames the said scheme for industrial parks. In the scheme, infrastructure development was defined to include roads (including approach roads), water supply and sewerage, common effluent treatment facility, telecom net work, generation and distribution of power, air conditioning and such other facilities as are for common use for industrial activity which are identifiable and are provided on commercial terms. Clause (ix) of the industrial park scheme specifies the general conditions stating that in case the commencement of the industrial model town or industrial park or growth centre gets delayed by more than one year from the date of commencement indicated in the application, fresh approval has to be obtained. The prescribed Form for setting up industrial park in Form IPS 1 defines that 'expected/actual date of commencement of industrial model town/industrial park/growth center denotes the date when all the infrastructura....
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....beyond any doubt, the reliance is placed upon para 6 of 2008 scheme (page 69 of the paper book) according to which Industrial Park approved by 2002 scheme will continue to be governed by the 2002 scheme. 45. Therefore, it is submitted that the action of the Ld. PCIT in imposing one of the condition of 2008 scheme in the case of the appellant is patently illegal and his conclusion based thereon needs to be set aside. Contention IV: Without prejudice to the above, all the buildings were ready before the cut-off date of 31.01.2007 and hence the condition was complied with. 46. The appellant had constructed eight buildings as part of Industrial Park. The Ld. PCIT, has in his order, pointed out that there were discrepancies with respect to the OC and Fire NOC with respect to the following four buildings out the total eight buildings: Sr.No. Building No. Date of OC Date of Fire NOC Remarks of Ld. PCIT, if any 1 1A 31/01/07 23/03/07 1. OC obtained on 31/01/07 was partial OC and not final OC 2. NOC from fire department was received after 31/01/2007. 2 1B 31/01/07 29/01/07 1. OC obtained on 31/01/07 was partial OC and not final OC 3 2B 31/01/07 06/02....
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.... in respect of this building NO.1 A is dated 23.03.2007. This certificate was issued with reference to the Multi Storeyed Building (MSB) Inspection Committee Report dated 12.03.2007 in LR RC No. 7256/E4/04 and it states that occupancy certificate may be issued to party for the said multi storeyed building" 52. With respect to the said observation of the Ld. PC IT, the appellant vehemently submits that though the report of the Inspection Committee for building No. 1A is on 12.03.2007; i.e after 31.01.2007, the Ld. PCIT did not give an opportunity to the appellant to explain as to why the report is post the cut-off date. Had the Ld. PCIT given an opportunity to the appellant, he would have learned that the application to the fire safety department was made prior to the cut-off date of 31.01.2007. In any case the relevant date in this kind of situation is the date of application made to the concerned authority and not the date of certificate. This is duly supported by several decisions referred to herein below. The Ld. PC IT, having not inquired and having not brought on record the relevant date, has erred in arriving at incorrect conclusion. 53. In respect of the building no. 28 ....
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....ir side, it cannot be said that such certificate would alone decide the date of completion of the project. The relevant extract of the order has been reproduced as under: " Unfortunately, Sub-section (10) and the explanation do not give any importance to the issuance of such Completion Certificate by the concerned architect. It gives importance only to the certificate of Municipal authority. It is common knowledge that an application for Completion Certificate submitted to the Municipal Authorities is accompanied by a Completion Certificate issued by the concerned architect. No doubt, the Municipal authorities then cause inspection of the site and verify the claim. Thereafter, they issue Completion Certificate. But, if a project is really complete before 31.03.2008 and an application is moved quite in time, for seeking Completion Certificate from the Municipal authorities, and if they do not take steps urgently and delay the issuance of Completion Certificate from their side, can it be said that such certificate would alone decide the date of completion of the project? The answer is in negative." In view of the above contentions, the ld. AR prayed for allowing deduction u/s 80I....
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.... because there was clear evidence on record that the conditions were not met and the AO did not examine the matter and granted deduction in an ineligible case. Explanation to Sec.263 squarely applies to the present case. 5. It is submitted that it is trite law that Res Judicata does not apply to Income Tax proceedings as was held by Hon'ble Supreme Court in the case of Raja Bahadur Visheshwara Singh[(1961)41 ITR 685(SC)J. As on 23.01.2015 on which a show-cause notice was issued for the present year, time would not have been available to initiate revisionary proceedings for earlier year. Merely because there is failure to take action for earlier years, the assessee cannot claim deduction in the present year. It is humbly submitted that principle of consistency applies only to such cases wherein the entire gamut of facts were examined in prior year and a considerate decision was taken. In the present case, no such considered decision exists for earlier years. 6. On the merits, it is submitted that the Pr.CIT examined the issue at length and pointed out the discrepancies in the occupancy certificates. The findings of Pr.CIT are not based upon surmises as alleged by the assesse....
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....t case, unless fire safety clearance is available, the routine occupancy certificates are of no use and the assessee would not be eligible to claim deduction u/s 80IA(4). In light of the above, the appeal of the assessee may kindly be dismissed." 6.1 A rejoinder was also filed by the AR of the assessee in reply of the arguments advanced by the Ld. CIT DR wherein in respect of the argument of the ld. DR in paragraph no. 3 of the above synopsis of arguments regarding additional evidence filed by the assessee, the ld. DR submitted that the additional evidence was filed to demonstrate that, in any case, the applications for building OCI fire NOC were made before the cut off date. Since this was in the nature of alternate/without prejudice argument, the additional evidence was not referred to during the course of the hearing as well as in the written submission dated 24.03.2021. 7. We have considered the rival submissions & their written submissions quoted supra and the material on record as well as gone through the orders of the revenue authorities. It is observed that while filing the return of income for the year under consideration, the appellant had offered income from leasing of....
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.... this is the second year of the claim of deduction under section 80lA of the I. T. Act. The Coordinate Bench of this Tribunal in the cases of ACIT vs. Annapuma Builders and Janapriya Properties P. Ltd., vs. DCIT (cited supra), has held that as long as the approval given by the Central Government is valid and not withdrawn by it, the assessee would be entitled to deduction under section 80lA(4)(iii) of the Act. Further, various High Courts such as Gujrat High Court, Bombay High Court and Delhi High Court in the cases relied upon by the Ld. Counsel for the assessee (cited supra) have held that where deduction has been allowed under sections BOHH and BOJ in the earlier year, there ;s no provision for withdrawal of such deduction for the subsequent years for breach of certain conditions. 20. In the case before us, the assessee has been allowed deduction in the first year and it is the bounden duty of the A. 0. to examine the eligibility of the assessee to claim the deduction under section 801A(4) of the Act at the time of allowing such deduction. Since the claim has been allowed, it is to be presumed that the A.D. is satisfied about the allowability of the claim. This being the secon....
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....ted out which were not existing in the earlier years. 7.5 Ld. AR of the assessee in support of assessee's case relied on various case law quoted supra. He has placed reliance on the decision of the Hon'ble Karnataka High Court in the case of Softzone Tech Park Ltd v. CIT [421 ITR 398]. While adjudicating the matter, the Hon'ble Karnataka High Court held that the assessee had applied for the Occupancy Certificate before the stipulated time and thus, it will not obliterate the assessee to avail the benefits u/s 80IA(4) of the Act. The relevant portion of the decision has been reproduced as under: "13. It is not in dispute that the petitioner had applied for the Occupancy Certificate along with Architect's Certificate before the BDA on 29.12.2006 well within the stipulated period of one year as enumerated in condition NO.5 (ii) of the approval under the Scheme 2002 and the said occupancy certificate was issued on 23.6.2007. The delay caused by the Authority in issuing the Occupancy Certificate would not obliterate the rights of the petitioner to avail the benefit under Section 801A(4) of the Act vitiating the very purpose of the approval granted by the respondent NO.2. ....