9911796707
TMI Blog2021 (6) TMI 1030X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order passed u/s 153A r.w.s. 143(3) in this year. 3. The appellant craves for leave to add, amend any/all the ground of appeal before or during the course of hearing of the appeal. 2. Briefly stated facts of the case relevant to dispute before us are that the assessee, a company, was engaged in the development of Special Economic Zone (SEZ) for Information Technology (IT)/Information Technology enabled services (ITes) in Noida (Uttar Pradesh). For the year under consideration, the assessee filed return of income on 30/09/2011 declaring nil income. A search and seizure action under section 132 of the Income-tax Act, 1961 (in short 'the Act') was carried out at the premises of the assessee on 29/10/2013. A notice under section 153A of the Act was issued on 11/11/2014 for filing return of income consequent to search action. The assessee requested to treat the original return of income filed on 30/09/2011 as return filed in response to notice under section 153A of the Act. In the return of income, the assessee declared net profit of Rs. 155,13,39,200/-, which was claimed as deduction under section 80IAB of the Act. The Assessing Officer noticed that assessee sold SEZ build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orded both during and post search proceeding. The Ld. CIT(A) in his detailed factual finding held that in the assessment order for making addition there was only reference of the statement of valuer Sh. B.P. Singh, which was recorded in post search proceedings and therefore addition was not based on any incriminating material found during the course of the search. The relevant discussion in the impugned order on the issue whether the disallowance of deduction under section 80 IAB is based on incriminating material or not, is reproduced as under: "4.7 The AO has referred to the appraisal report and stated that the perusal of the appraisal report shows that the case is based on core documents being documents and statements recorded both during and post search proceedings. The appraisal report is a confidential document and cannot be confronted to the appellant. Therefore, mere reference to the appraisal report does not establish the case of the AO. It is undisputed that the incriminating material would be used for the assessment (otherwise, it cannot be said to be incriminating). In the report dated 12.09.2018, the AO has not stated which seized documents have actually been used fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in response to notice u/s 153A. Subsequently, the AO has reduced the deduction claimed u/s 80IAB because of the dispute on valuation of sold/transfer land. Therefore, there it cannot be under dispute that the fact of transfer/sale of SEZ to Aachvis IT SEZ Infra Pvt. Ltd. and Standard IT Web Solution Pvt. Ltd. was recorded in books of accounts and corresponding return was filed and intimation u/s 143(1) was received before the date of search. A perusal of balance sheet of M/s Aachivis Softtech Pvt. Ltd. for the year ending 31.03.2011 shows that as per sub-paras i), ii) and iii) of para 3 of Schedule 12 (Significant accounting policies and notes annexed to and forming part of Balance Sheet as at 31st March, 2011 and the Profit and Loss Account for the year ended on that date), it is mentioned that there was lease deed dt. 31.09.2007 with NOIDA Authority and later on sub-lease agreements were executed namely i) Co-Development agreement dt. 30.11.2009 read with supplementary Co-Development agreement dt. 30.10.2010 with M/s Aachivis IT SEZ Infra Pvt. Ltd. and ii) Co-Development agreement dt. 30.11.2010 with M/s Standard IT Web Solution Pvt. Ltd. A copy of relevant portions of the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il) The Company has further executed another Co-Development agreement dated 30th November 2010 with M/S. Standard IT Web Solutions Pvt. Ltd,, ("Sublessee") for appointment of Sub-lessee as the co-developer to undertake- to - develop, operate and mamtain.fee TT.SEZ project along with the Company of the said IT .SEZ on 5,322 sq. metres as separately earmarked out of a total area of 1,00,498 sq, metres of fee said Plot, which was duly approved by fee BOA, vide approval letter dated 19-04-2010 and accordingly on 31st December, 2010, a Tripartite Sub-Lease Deed was executed between the Noida Authority, the Company and the Sub-Lessee. 4.11 A perusal of audit report u/s 80IAB (Form No. 10CCB) in case of M/s Aachivis Softtech Pvt. Ltd. for AY 2011-12 (ref. column no. 28) shows that there were reporting of transactions between M/s Aachivis Softtech Pvt. Ltd. and i) M/s Aachvis IT SEZ Infra Pvt. Ltd. and ii) M/s Standard IT Web Solution Pvt. Ltd. A copy of relevant portions of the said Schedule 12 are reproduced below: 4.12 Therefore, the above mentioned reference in the notice dated 14.10.2015 that "Perusal of the documents found during and post search shows that you has transferred/sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.14 Regarding, statement of Sh. BP Singh (valuer), recorded post search (date of recording of this statement is not mentioned) referred to in para 3.2 of the assessment order, it is mentioned that, "During the post search proceedings, statement of Sh. BP Singh, the valuer who had valued the land @Rs. 50,000/- per sqm was recorded. It was stated by him that the land rate was taken as Rs. 50000/- per sq. metre of the developed and working SEZ project where all the facilities were available for this project as per existing market rate in the nearby locality and considering the FAR. He was asked as to whether he was aware that the land was lease hold land for 90 years and he was also asked to explain as to how the valuation of land changes due to this reason. To this it was stated by him that in such a case the valuation should have been done at Rs. 25,000/- if this sale lease hold land." 4.15 It has been argued by the AR that the fact of land being leasehold has been mentioned in the valuation report prepared by Sh. B.P. Singh as on 31.12.2010 (submitted as Annexure-VIII, page no. 86 to 94 of the paper book submitted on 11.04.2018). The AR, therefore, argued that the fact of land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich emanated from the search. However, this onus has not been discharged." 2.2 Thereafter, the Ld. CIT(A) following the judicial precedents on the issue in dispute quashed the impugned reassessment order of the Assessing Officer, observing as under : "5.3 It is held that the AO was not within the jurisdiction bestowed on him by law to make the impugned addition and, therefore, ground (nos. 7 and 8) are allowed the re-assessemnt order under reference is accordingly quashed." 2.3 Aggrieved, the Revenue is in appeal before the Income Tax Appellate Tribunal (in short 'the Tribunal') challenging the finding of the Ld. CIT(A). 3. We have heard representative of both the parties, who appeared through videoconferencing facility. 3.1 The Learned DR relied on the order of the Assessing Officer and referred to para 5(f) of the impugned order, which is reproduction of the remand report of the Assessing Officer. The Learned DR submitted that in the remand report, the Assessing Officer has mentioned that disallowance of section 80IAB is based on the documents and statement recorded both during the search and post search proceedings, and therefore the Ld. CIT(A) is not justified in quashing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . For ready reference , the relevant paragraph are reproduced as under: "3.6 On consideration of replies of the assessee and facts of the case, it is evident that the assessee has transferred its assets and liabilities to its subsidiary companies and ip the process generated profits on account of revaluation of land, which has been leased out to its subsidiaries. This land was shown as work in progress in the books of assessee. Thus, the profits are related to the assets of the approved SEZ and therefore, the profits have to be treated as generated from the operation and maintenance of the SEZ, which is the condition provided in the Sec. 80IAB for availing deduction. However, the contention of the assessee as mentioned w.r.t differential valuation of land is not correct. It is stated by the valuer that in the case of lease hold land, the value is taken at 50% of its valued The valuer had also provided a copy of the relevant rules which were furnished to the assessee on its request. In these rules, under the head of "adjustment for unearned increase in the value of land, it is stated as under: "Where the property is constructed on land obtained on lease from the Government, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub section (7) to (12) of section 80IA shall apply to the special economic zones for the purpose of allowing deductions under sub section (1). Further, sub section (8) & (10) of section 80IA provide as under: a) Section 80IA(8).:- "Where any goods [or services] held for the purposes of the eligible business are transferred to any other business carried on by the assessee, or where any goods [or services] held for the purposes of any other business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods [or services] as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods [or services] as on that date." b) Section 80IA(10): "Where it appears to the Assessing Officer that, owing to the close connection between the assessee carrying on the eligible business to which this section applies and any other person, or for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reason. To this it was stated by him that in such a case the valuation should have been done at Rs. 25,000/- if this was lease hold land." 3.6 Evidently, the statement of the BP Singh was not recorded during search proceeding and therefore, there is no question of considering the same as part of the incriminating material found during the course of the search. 3.7 The learned DR has further referred to the remand report of the Assessing Officer, wherein it is mentioned that disallowance in question was based on documents and statement recorded both during and post search proceeding. The learned DR was given opportunity to produce any such search material related to part disallowance under section 80IAB, which is in the nature of the incriminating, but he failed to produce any such incriminating material. The Ld. CIT(A) has already rejected the contention of the Assessing Officer in remand proceeding which were based on the appraisal report. Merely, if it is mentioned in the appraisal report that certain documents are found during the course of the search, which are incriminating in nature, it cannot be presumed that such material was found. The onus is on the Revenue to substan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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