2014 (8) TMI 973 - AT - Income Tax

Tax Appeal Dismissed, Reassessment Ordered for Deduction Eligibility

PV. Hemalatha Versus The ACIT, Cir. 1 (1) Kozhikode

PV. Hemalatha Versus The ACIT, Cir. 1 (1) Kozhikode - [2014] 34 ITR (Trib) 8 (ITAT [Coc]) Issues Involved:1. Validity of the Administrative Commissioner's order under section 263 of the Income-tax Act.2. Entitlement of the assessee to deduction under section 80-IB(10) of the Income-tax Act.3. Requirement for the Assessing Officer to provide reasons in the assessment order.Detailed Analysis:1. Validity of the Administrative Commissioner's Order under Section 263 of the Income-tax Act:The appeal was directed against the Administrative Commissioner's order dated March 11, 2014, under section 263 of the Income-tax Act for the assessment year 2009-10. The Administrative Commissioner found that the assessee's project did not meet the requirement of being developed on a minimum of one acre of land, as mandated by section 80-IB(10). The Commissioner noted that out of the total area of 117.5 cents, 46.93 cents were set apart for the second phase of development, leaving only 70.57 cents for the project in question. This finding led to the conclusion that the project did not qualify for the deduction under section 80-IB(10).2. Entitlement of the Assessee to Deduction under Section 80-IB(10) of the Income-tax Act:The assessee contended that the deduction under section 80-IB(10) should be allowed even if part of the land was reserved for a second phase, citing the Bombay High Court's judgment in CIT v. Vandana Properties [2013] 353 ITR 36 (Bom). The argument was that section 80-IB(10) allows deduction for housing projects on plots of land with a minimum area of one acre, regardless of the existence of other housing projects. The assessee maintained that the Assessing Officer had called for details and allowed the claim after due consideration.3. Requirement for the Assessing Officer to Provide Reasons in the Assessment Order:The Departmental representative argued that the Assessing Officer allowed the deduction without any discussion or reasoning in the assessment order. The Tribunal emphasized that the assessment order, being a judicial proceeding under section 136 of the Income-tax Act, must reflect the application of mind and contain reasons for the conclusions reached. The Tribunal referenced several judicial precedents, including the Punjab and Haryana High Court in CIT v. Sunil Kumar Goel [2005] 274 ITR 53 (P&H) and the Supreme Court in S. N. Mukherjee v. Union of India AIR 1990 SC 1984, which underscored the necessity of recording reasons to ensure clarity, fairness, and to facilitate appellate or supervisory review.The Tribunal also cited the Supreme Court's observation in Toyota Motor Corporation v. CIT [2008] 306 ITR 52 (SC), where it was held that the Assessing Officer must pass a reasoned order, taking into account all relevant aspects and materials presented by the assessee.Conclusion:The Tribunal concluded that the Assessing Officer must re-examine the matter and provide a reasoned order, either allowing or disallowing the claim under section 80-IB(10). The re-examination should consider the Bombay High Court's judgment in Vandana Properties and any other relevant materials. The Tribunal directed that the matter be reconsidered afresh, without being influenced by the observations of the Administrative Commissioner or the Tribunal, and after providing a reasonable opportunity of hearing to the assessee.Final Decision:The appeal of the assessee was dismissed, and the order was pronounced in the open court on August 1, 2014.