2022 (9) TMI 820 - AT - Income Tax

Appeal allowed for Salarpuria Softzone project; deduction approved, Touchstone project disallowed.

M/s SPPL Property Management Pvt. Ltd. Versus JCIT, Range-3, Kolkata

The ITAT Kolkata partially allowed the appeal, directing the Assessing Officer to withdraw/disallow the deduction for the Salarpuria Touchstone project ... Deduction u/s.80IA(4)(ii) - eligible for deduction u/s 80IA(4)(iii) on the project namely ‘Salarpuria Touchstone’ - HELD THAT:- As examination of facts and law that the assessee is eligible for deduction in respect of project namely “Salarpuria Softzone” in the light of the decision of the Hon’ble Gujarat High Court n the case of Creative Infocity Ltd. [2012 (4) TMI 117 - GUJARAT HIGH COURT] and also case of erstwhile “Salarpuria Softzone” [2016 (2) TMI 1293 - ITAT KOLKATA] Assessee is not eligible to claim deduction u/s 80IA(4)(iii) in respect of his project namely “Salarpuria Touchstone” for want of notification/approval by the Government. Therefore, the order of the PCIT is modified by directing the Assessing Officer to withdraw/disallow the deduction in respect of Salapuria Touchstone project only. If at a later stage, Government approves/notifies the said project then the assessee will be entitled to move on an application to the AO to allow the deduction and the AO will examine whether such an approval is applicable to the said project and if so found eligible, the Assessing Officer will accordingly allow the deduction modifying the assessment order. In respect of the other project i.e. “Salarpuria softzone”, it is held that the assessee is eligible for deduction on the said project. Appeal of the assessee is treated as partly Issues:1. Eligibility of deduction u/s 80IA(4)(iii) for operation and maintenance of industrial parks.2. Disallowance of deduction for projects lacking approval by the competent authority.3. Jurisdiction of PCIT to revise assessment order under section 263 of the Income Tax Act.4. Applicability of High Court and Tribunal decisions on deduction eligibility.Issue 1: Eligibility of deduction u/s 80IA(4)(iii) for operation and maintenance of industrial parks:The appellant, engaged in maintenance of properties and industrial parks, claimed a deduction of Rs.15,15,36,967 u/s 80IA(4)(iii) for six industrial parks. The PCIT observed that a project, Salarpuria Touchstone, included in the deduction, lacked approval by the competent authority, rendering it ineligible for deduction. The PCIT noted the failure of the Assessing Officer to apply the provisions of sec.80IA(4)(iii) and under-assessment of income amounting to Rs.1,62,44,959.Issue 2: Disallowance of deduction for projects lacking approval by the competent authority:The PCIT found that the project Salarpuria Touchstone did not have approval from the competent authority, leading to the disallowance of the deduction claimed by the assessee. Additionally, the PCIT highlighted discrepancies in the allowance of deductions for another project, Salarpuria Softzone, which was later converted into a company. The PCIT directed the Assessing Officer to withdraw/disallow the deduction for Salarpuria Touchstone due to the lack of approval.Issue 3: Jurisdiction of PCIT to revise assessment order under section 263 of the Income Tax Act:The PCIT exercised powers under section 263 to revise the assessment order, deeming it erroneous and prejudicial to the Revenue's interest. The appellant challenged this revision, arguing that the PCIT based the decision on third-party records instead of the assessee's records. However, the appellant conceded that the project Salarpuria Touchstone was not eligible for deduction without government approval.Issue 4: Applicability of High Court and Tribunal decisions on deduction eligibility:The appellant sought eligibility for deduction on the Salarpuria Softzone project, citing decisions by the Tribunal and the Gujarat High Court. The Tribunal's decision emphasized that delay in CBDT issuing notifications should not deny the deduction u/s 80IA(4)(iii). The appellant's counsel contended that the appellant should be eligible for deduction on Salarpuria Softzone based on legal precedents.In conclusion, the ITAT Kolkata partially allowed the appeal, modifying the PCIT's order. The Assessing Officer was directed to withdraw/disallow the deduction for the Salarpuria Touchstone project due to lack of approval. However, the appellant was deemed eligible for deduction on the Salarpuria Softzone project. The decision was made in accordance with legal submissions and consent of the appellant's counsel, with no other grounds being pressed.