2023 (2) TMI 916 - AT - Income Tax

Tribunal rules in favor of assessee on deduction under section 80-IA

The Tribunal held that the rectification order dated 27/03/2018 under section 154 of the Income Tax Act was barred by limitation as it exceeded the ... Rectification of mistake u/s 154 - period of limitation - claim of deduction u/s.80IA of the Act was denied to the assessee by applying the provisions of Section 80IA(12A) - HELD THAT:- The subject matter of first rectification proceedings was granting further credit of TDS and rectification of excess interest charged u/s.234C and the subject matter of impugned section 154 proceedings dated 27/03/2018 was denial of deduction u/s.80IA of the Act. No hesitation to hold that the second rectification order passed u/s.154 of the Act dated 27/03/2018 wherein the claim of deduction u/s.80IA of the Act was denied to the assessee by applying the provisions of Section 80IA(12A) of the Act, is clearly barred by limitation. Accordingly, the issue framed hereinabove in question ‘a’ above is decided in favour of the assessee. Even on merits, AR placed on record the copy of decision of Ultratech Cement Ltd. [2022 (1) TMI 923 - ITAT MUMBAI] wherein this Tribunal had passed an elaborate order after due consideration of provisions of Section 80IA(12A) of the Act and granted deduction u/s.80IA of the Act to the successor company. For the sake of brevity, the elaborate observations made by this Tribunal on merits is not reproduced hereunder. Hence, even on merits, the assessee is entitled for deduction u/s.80IA of the Act in the facts and circumstances of the instant case. Accordingly, the ground Nos. 1-4 raised by the assessee are allowed. TDS credit - This issue requires factual verification by the ld. AO. Hence, the ld. AO is hereby directed to decide the issue in accordance with law. Issues Involved:1. Whether the order dated 27/03/2018 passed under section 154 of the Income Tax Act is barred by limitation.2. Whether the withdrawal of the deduction under section 80-IA for Thermal Power Plants raises a debatable issue and can be regarded as a mistake apparent from the record.3. Whether the assessee is entitled to TDS credit based on certificates produced.Detailed Analysis:1. Limitation of the Order under Section 154:The primary issue is the validity of the assessment framed by the Assessing Officer (AO) under section 154 of the Income Tax Act, considering the limitation period. The original assessment was completed on 26/03/2013, and any rectification order under section 154 should be passed within four years from the end of the financial year in which the assessment was completed, i.e., by 31/03/2017. The AO's order dated 27/03/2018 is beyond this period. The AO had passed a rectification order on 10/03/2014 to grant further TDS credit and rectify excess interest charged under section 234C. This order did not discuss the deduction under section 80-IA. The Tribunal held that the rectification order dated 10/03/2014 does not extend the limitation period for rectifying the original assessment order of 26/03/2013. The rectification order relates back to the original assessment date, and the time limit should be reckoned from the original assessment order. Therefore, the rectification order dated 27/03/2018 is barred by limitation.2. Withdrawal of Deduction under Section 80-IA:The AO withdrew the deduction under section 80-IA for Thermal Power Plants by applying the provisions of section 80IA(12A). The Tribunal found that the eligibility of the deduction was not an issue in the rectification proceedings of 10/03/2014. The original assessment granted the deduction, and any attempt to rectify this should have been within the limitation period. Moreover, the Tribunal referenced the Supreme Court's decision in CIT vs. Alagendran Finance Ltd, which held that for ascertaining the period of limitation under section 263(2), the date of the original assessment order is relevant, not the re-assessment order. Similarly, the Tribunal concluded that the time limit for rectification should be from the original assessment order date. The decision of the Hon'ble Madras High Court in S. Arthanari vs. First Income Tax Officer and Vedantham Raghaviah vs. Third Additional Income Tax Officer supported this view.The Tribunal also noted that the withdrawal of the deduction under section 80-IA raises a debatable issue, which cannot be regarded as a mistake apparent from the record. The decision in Ultratech Cement Ltd. vs. DCIT for earlier assessment years allowed the deduction under section 80-IA, supporting the assessee's claim.3. Entitlement to TDS Credit:The assessee's claim for TDS credit requires factual verification by the AO. The Tribunal directed the AO to decide the issue in accordance with the law, allowing the ground for statistical purposes.Conclusion:The Tribunal concluded that the rectification order dated 27/03/2018 is barred by limitation and even on merits, the assessee is entitled to the deduction under section 80-IA. The issue of TDS credit requires factual verification and is allowed for statistical purposes. The appeal of the assessee is allowed for statistical purposes.