TaxTMI 
TaxTMI 
2015 (3) TMI 363
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....rt "the Act"). 3. In the appeal of the assessee, the concise Grounds of Appeal raised read as under :- "1] The learned CIT(A) erred in confirming the disallowance of Rs. 5,61,48,006/- made on account of alleged bogus purchases from six parties without appreciating that the said purchases were genuine and hence, the said disallowance was not justified. 2] The learned CIT(A) erred in confirming the disallowance of deduction u/s 80IA(4) of Rs. 33,59,56,749/- in respect of the profits derived from the Industrial Park 'Giga Space' without appreciating that the disallowance of deduction was not justified on facts of the case. 3] The learned CIT(A) erred in holding that the assessee had made unrecorded payments of Rs. 99 lacs to various parties on the basis of certain seized papers without appreciating that the assessee had not made any such payments and hence, no addition was warranted on facts of the case." 4. The assessee before us is a company incorporated under the provisions of the Companies Act, 1956 and is, inter-alia, engaged in the business of builders and developers. A search action u/s 132(1) of the Act was carried out at the premises of the assessee on ....
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....td.; (iii) M/s Praky Metals Pvt. Ltd.; (iv) M/s Meghana Enterprises; (v) M/s Narendrakumar & Co.; and, (vi) M/s R.D. Jain & Co. were recorded u/s 131 of the Act wherein the parties deposed that they had not made any actual sales/ supplies of steel to the assessee-company but only accommodation bills were issued by them. It was stated by such parties that the bills raised by them were settled by cheque payments, which were returned back by way of cash after deducting 1% on M/s Kolte Patil Developers Ltd. account of commission. It is also emerging from the assessment order that statement of one of the Transporter, namely, M/s New ARC Transport was also recorded by the Department who also deposed that he had issued bogus lorry receipts to one of the suppliers in respect of the sales made to the assessee and that he had actually not made any delivery of goods to the assessee-company. In the assessment order, the statements recorded of such persons have been exhaustively referred to. The Assessing Officer referred to the statement of one Shri Krishnakumar Gupta, Director of three of the aforesaid companies, namely, M/s Fresho Metal Pvt. Ltd.; M/s Unique Ferro Metal Pvt. Ltd; and, M/s Pr....
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....rse of search u/s 132(4) of the Act dated 30.09.2008 and by reproducing the relevant portion of the statement recorded, Assessing Officer observed that assessee was not able to substantiate the genuineness of the purchase of steel effected from the above six parties. 8. Apart from the above six parties, Assessing Officer has observed that steel purchases made from the following five parties, namely, (i) Vora Mercantile Pvt. Ltd.; (ii) M/s Mayoora Metal Trade Corporation; (iii) Yash Trading & Co.; (iv) M/s Shri Surya Steel; and, (v) M/s Satyam Steel were also not supported by delivery challans, GRNs, etc. and therefore he held that purchases effected from the above parties were also not genuine. 9. The Assessing Officer had required the assessee to show-cause as to why the purchases from the aforesaid 11 parties be not be considered as bogus purchases. The assessment order reveals that the claim of the assessee was that the purchases were genuine and one of the reasons canvassed was that the consumption of steel stood established. According to the assessee, if the steel has been consumed, it is fair to conclude that the purchases of steel would have been effected. With respect....
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.... Assessing Officer referred to the statement of Shri Rajesh Patil recorded on 30.09.2008 wherein he was allowed an opportunity to cross-examine the six parties. It has been observed by the Assessing Officer that Shri Rajesh Patil did not opt for crossexamination on the ground that the CFO of assessee-company, Shri Lakhe was out of station. The Assessing Officer notes in the assessment order that another opportunity of cross-examination was allowed to the assessee in the course of assessment proceedings on 29.11.2010 but none of the parties appeared on that date. Considering the aforesaid, the Assessing Officer contended that the assessee was indeed allowed an opportunity to crossexamine the parties but since it was refused by the assessee at the time of search, it cannot be said that proper opportunity has not been allowed to the assessee. Sixthly, the working submitted by the assessee showing consumption of steel to justify that purchases in-effect were made, was also rejected by the Assessing Officer. As per the Assessing Officer, the said working does not give a clear picture because multiple projects were going on, which were spread over a number of years. Therefore, the analys....
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..... and R.D. Jain & Co., wherein it was averred that the purchases effected from the said concerns were genuine. The CIT(A) admitted such additional evidence, however, he did not find any merit in the same. The CIT(A) has made a detailed discussion in this regard in para 4.9 of his order. As per the CIT(A), the affidavit furnished by the said Shri Narendrakumar Timbodia was an afterthought and that it did not invalidate his earlier deposition made, where he had categorically admitted of having provided accommodation entries to the assessee-company. In sum and substance, in respect of purchases effected from such six parties, the CIT(A) confirmed the addition on the ground that the said parties had denied of having supplied material to the assessee and also for the reason that assessee was not able to substantiate the purchases on the basis of any supporting evidences. 13. As regards, the balance five parties, where no statements were recorded u/s 131 of the Act, the CIT(A) accepted the plea of the assessee and deleted the addition. As per the CIT(A), the search did not reveal any corroborative evidence to suggest that the purchases from the said parties were in-genuine. The CIT(A)....
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.... CFO of the assessee-company was not in station and therefore no effective cross-examination could have been carried out, as Shri Rajesh Patil, CMD of the assessee-company, was not aware of the day-to-day activities of purchase from the said parties which was only known to Shri Lakhe. It was therefore contended that the statements of the six suppliers, whose cross-examination has not been allowed to the assessee, cannot be used against the assessee to hold the purchase as bogus. 15. With regard to the non-maintenance of transport receipts, GRNs, delivery challans, stock register, etc. the Ld. Representative submitted that at the relevant point of time, assessee's accounting system were not perfect and therefore it could not locate and produce such documents at the time of assessment proceedings. In this case, it was pointed out that so far as the other five parties are concerned, assessee had duly located such supporting documents like GRNs, challans, transport receipts, etc., and therefore on that basis, the CIT(A) allowed appropriate relief. But in any case for the other six parties in question, the absence of the aforesaid documents would not mean that the purchases were bogu....
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....on cannot be undertaken in the absence of steel consumption. The Ld. Representative submitted that the aforesaid plea of the assessee has been merely overlooked by the lower authorities without contradicting the same. In this case, assessee has relied upon various case laws for the proposition that in case where certain purchase bills are held to be bogus, the assessee could not have constructed the projects as per the engineer's certificate, and therefore it shows that assessee had indeed effected such purchase. In this case, reliance was placed on the following decisions : (i) Balaji Textile Industries (P) Ltd. vs. ITO, (1994) 49 ITD 177 (Bom); (ii) J.R. Solvent Industries (P) Ltd. vs. ACIT, 68 ITD 65 (TM) as also the decision of ITAT, Pune Bench in the case of ACIT vs. Kogta Import Export Pvt. Ltd. vide ITA No.708/PN/2011 and Others dated 29.09.2006. 19. In the end, an alternate plea has also been raised that in case the impugned purchases are held to be bogus, the entire amount of purchase cannot be added to total income, instead the addition should be limited only to the element of gross profit therein. In this context, reliance has been placed on the following decisions : (i)....
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....he assessee has defended the same. In this context, the Ld. Representative also pointed out that the primary onus cast on the assessee for all the 11 parties stood discharged as it had furnished complete details of purchase, bills of purchase as also the fact that the payments were made by cheques. With regard to the chart and certificate of Chartered Engineer relied upon before the lower authorities to substantiate that the purchases were indeed effected, the Ld. Representative pointed out that neither the Assessing Officer and nor the CIT(A) have controverted the same. Apart from the aforesaid, Ld. Representative vehemently pointed out that in so far as the five parties are concerned, there was no evidence to say that the purchase were bogus as no specific enquiries were carried out by the Revenue. 23. We have carefully considered the rival submissions. In sum and substance, the dispute is with regard to the purchases claimed to have been effected by the assessee from the aforesaid 11 parties. The case setup by the Assessing Officer is that the purchase of steel, etc. made from the said 11 parties was in-genuine and therefore an amount of Rs. 7,75,34,092/- representing purchas....
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.... Be that as it may, in our considered opinion, cross-examination of the suppliers would become material only when the assessee is able to demonstrate with certain primary evidence that the statements given by the suppliers are wrong or that they do not reflect the correct state of affairs. In this context, assessee has merely referred to the purchase bills issued by the suppliers and the cheque payments made. So however, there is no other evidence, namely, GRNs, octroi receipts, delivery challans, etc. which would show that the supplies were indeed made. Therefore, in such a situation, can the absence of cross-examination be fatal to the addition in question ?, especially when at the initial stage, an opportunity of cross-examination was indeed allowed, which could not be availed for the reasons we have already stated above. In our view, the right of cross-examination is not automatic, but it would be incumbent only in a situation where the assessee is able to primafacie demonstrate that the onus cast on him to establish his version of affairs is based on primary evidence. In this case, the assessee had failed to lead any primary evidence, viz. GRNs, octroi receipts, delivery chall....
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....ssee with regard to the quantum of addition on this count. In this context, assessee pointed out that if the entire amount of purchase debited in the Profit & Loss Account with respect to the six parties is disallowed, it would mean that the corresponding consumption of steel has not taken place in quantitative terms. Before the lower authorities, assessee had furnished a working, which was confirmed by a structural engineer regarding the minimum requirement of steel in the projects undertaken by the assessee. As per the said working, if the aforesaid disputed quantity of steel purchase was excluded, it would show that the consumed quantity of steel was lower than the minimum required to undertake construction. Therefore, according to the assessee, the only presumption that can be withdrawn is that assessee had indeed effected the purchases. It was pointed out that on the failure of the assessee to substantiate the purchases, at best, the addition can be made with respect to the gross profit element corresponding to the amount of purchases but not the entire amount of purchase bills. The reliance has also been placed on certain decisions in this regard, which we have noted in earli....
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....ere not subject to any enquiry or verification by the Assessing Officer but have been merely disbelieved. The Assessing Officer, in our view, was influenced by the outcome of enquiries made with respect to the other six parties. However, in the absence of any material on record to negate the position canvassed by the assessee with respect to the said five parties, the explanation of the assessee could not be disbelieved. Under these circumstances, in our view, the CIT(A) made no mistake in deleting the addition with respect to the aforesaid five parties. As a consequence, on this aspect Revenue fails. 29. In the result, whereas the Ground of Appeal No.1 in the appeal of the assessee is dismissed the Ground of Appeal No.1 in cross-appeal of the Department also stands dismissed. 30. In assessment year 2007-08, the second Ground of Appeal raised by the assessee is relating to the denial of deduction u/s 80-IA(4)(iii) of the Act in respect of profits and gains derived from an Industrial Park - Giga Space. In this context, brief facts are that assessee had claimed deduction u/s 80-IA(4)(iii) of the Act of Rs. 33,59,56,749/- in respect of the Industrial Park by the name of 'Giga Sp....
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....r erred in rejecting the claim of the assessee on grounds which are not relevant. The assessee explained that the construction of Industrial Park was completed within the period prescribed in section 80-IA(4)(iii) of the Act and in compliance with the requirements of IPS, 2008 also. However, the CIT(A) has not differed with the Assessing Officer and according to him the claim of the assessee was correctly denied. The CIT(A) observed that the Industrial Park of the assessee had not commenced as on 31.03.2007 and therefore it could not be said to have been completed during the year under consideration. Hence, according to him, in assessment year 2007-08, the claim for deduction u/s 80-IA(4)(iii) of the Act was not tenable. With regard to the second objection of the Assessing Officer regarding the location of minimum thirty units in the park, the CIT(A) held that in the absence of thirty industrial units being located in the Industrial Park as on 31.03.2007 it could not be said that the Industrial Park was actually developed. The CIT(A) noted that during the previous year under consideration, only 21 units were located in the Industrial Park and therefore it could not be said that the....
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....explained that the construction of the said Industrial Park began in October, 2004 onwards and the construction has been spread over a few years. The assessee completed construction of buildings stage-wise and part of the constructed units were also sold in the period under consideration and the final completion certificate on 09.05.2007 was received only when the last of the units was completed. The Ld. Representative pointed out that as when the units were sold by the assessee, the income therefrom was recognized and the profits earned from the Industrial Park were offered to tax over the years. 33. With regard to the objections of the CIT(A) that deduction is available only when assessee develops an Industrial Park and since in this case the development was not complete till 31.03.2007, the Ld. Representative vehemently pointed out that having regard to the fact-situation in the present case, it cannot be said that assessee has not developed the Industrial Park. At this point, the Ld. Representative pointed out that in the subsequent assessment years, the Assessing Officer has allowed the deduction u/s 80- IA(4)(iii) of the Act in respect of the profits of the Industrial Park....
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....ower authorities on the 'date of commencement' mentioned in the IPS, 2008 is relevant only to decide whether the Industrial Park of the assessee is within the scope of IPS, 2008. It was contended that one of the grounds for approval of the Industrial Park is that it should commence after first day of April, 2006 and not later than 31st March, 2009. It was pointed out that the said condition has been complied with by the assessee as the date of commencement is 09.05.2007. In sum and substance, the stand of the assessee is that the lower authorities have misdirected themselves in denying the claim of the assessee for deduction u/s 80-IA(4) of the Act. 36. On the other hand, the Ld. Departmental Representative has reiterated the two objections raised by the income-tax authorities in support of the case of the Revenue. The Ld. CIT-DR has also reiterated the reliance placed by the lower authorities on the decision of the Third Member of the Tribunal in the case of Marigold Premises Pvt. Ltd. (supra). As per the Ld. CIT-DR, the analogy of section 80-IB(10) of the Act relied upon by the assessee is not relevant in the present case since the wordings of the sections are different. The L....
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....terprise from any business referred to in sub-section (4), there shall been allowed in computing the total income of the assessee a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years in accordance with and subject to the provisions of the section. Sub-section (2) of section 80-IA prescribes that the deduction specified in sub-section (1) may, at the option of the assessee, be claimed for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facility or starts providing telecommunication services or develops an industrial park or develops a special economic zone or generates power or commences transmission or distribution of power or undertakes substantial renovation and modernization of the existing transmission or distribution lines. Shorn of other details, we may now come to sub-section (4) of section 80-IA, which enumerates the various businesses to which the provisions of section 80-IA of the Act are applicable, such business being referred to as the 'eligible business'. Fo....
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....efines 'infrastructure facility' as under :- "2(i) "infrastructure facility" means facilities required for development operation and maintenance of the industrial park and include roads (including approach roads), water supply, sewerage and effluent treatment facilities, solid waste management facilities, telecom network, generation and distribution of power, air conditioning." 42. Clause 2(f) of the Scheme defines the term 'date of commencement' as under :- "2(f) "date of commencement" means the date of obtaining the completion certificate or occupation certificate, as the case may be, from the relevant local authority, certifying thereby that all the required development activities for the project have been completed." 43. Clause 3 of the Scheme provides for the procedure for approval, which reads as under :- "(1) Any undertaking which develops, develops and operates or maintains and operates an industrial park may make an application for notification under clause (iii) of sub-section (4) of section 80-IA of the Act, in the prescribed form, IPS-I, to the Secretary (ITA-I section), Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, North Bloc....
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....rial park, for any person. (5) The undertaking must keep separate books of account for the industrial park and must file its income-tax returns by the due date to the Income-tax Department. (6) An industrial park approved under Industrial Park Scheme, 2002 will continue to be governed by the provisions of that Scheme to the extent it is not in contravention with the provisions of Act, as amended from time to time. (7) The undertaking shall electronically furnish an annual report to the Central Board of Direct Taxes in Form IPS-II. Withdrawal approval. 6. The Central Government may withdraw the approval given to an undertaking under this Scheme if the undertaking fails to comply with any of the conditions listed in paragraphs 4 and 5 of this Scheme : Provided that before withdrawal of approval, the undertaking shall be given an opportunity of being heard by the Central Government." 46. Having taken note of the provisions of the scheme, we may also refer to rule 18C of the Income Tax Rules, 1962 (in short "the Rules") which deals with the eligibility of an Industrial Park for benefits of section 80-IA(4)(iii) of the Act. Rule 18C of the Rules, as applicable for the ass....
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....prescribed in clause 5 of the Scheme have been fulfilled by the assessee and in-fact there is no case made out by the Revenue that the Central Government has invoked clause 6 of the Scheme, which permits the Central Government to withdraw the approval given to the undertaking under the Scheme if it fails to comply with any of the conditions listed in clauses 4 and 5 of the Scheme. Be that as it may, it would be appropriate to infer that so far as the compliance of assessee's undertaking to the requirements of the Scheme are concerned, there is no dispute. 49. Now, the claim of the assessee is that it started the process of development of the Industrial Park somewhere in October, 2004 and the construction was spread over a number of years. As and when the individual units were being completed, assessee sold it to the clients. The assessee was offering and recognizing income on such sales in the respective years, and the income under consideration this year is from the sale of units. During the year under consideration, Assessing Officer has noted that only 21 units were located in the Industrial Park. In other words, only 21 units were operational and not the complete 30 units, i....
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.... At this point, we may also refer to rule 18C of the Rules which prescribes the eligibility of an Industrial Park for benefits of section 80-IA(4)(iii) of the Act. The provisions of the rule as applicable for the year under consideration have been reproduced by us in the earlier paragraphs. Sub-rule (1) of rule 18C of the Rules says that the undertaking ought to begin to develop, develop and operate or maintain and operate an Industrial Park at any time during the period beginning on 01.04.2006 and ending on 31.03.2009. Sub-rule (2) of rule 18C of the Rules says that the undertaking of an Industrial Park shall be notified by the Central Government under the IPS, 2008. Sub-rule (3) of rule 18C of the Rules says that the undertaking shall continue to fulfill the conditions envisaged the IPS, 2008. Notably, there is no dispute that the undertaking of the assessee i.e. Industrial Park - Giga Space is duly notified by the Central Government under the IPS, 2008 and it continues to fulfill the conditions envisaged in the IPS, 2008 inasmuch as there is no withdrawal of approval by the Central Government, as provided for in clause 6 of the Scheme. Therefore, to say on the strength of clause....
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....ity' does not emerge from the reading of section 80-IA(4)(iii) of the Act r.w. rule 18C of the Rules, as it stands for the period under consideration. 53. At this stage, we may also refer to the stand of the Revenue based on the clause 5 of Scheme. As per the condition (2) of clause 5, it is prescribed that the tax benefits under the Act will be available to the undertaking only after minimum number of thirty units are located in the Industrial Park. On the strength of this, it is pointed out that as on 31.03.2007 i.e. before the close of the previous year relevant to the assessment year under consideration, the minimum number of thirty units are not located in the Industrial Park; and, thus as per the Revenue assessee is not entitled to the claim of deduction in this assessment year. The aforesaid condition contained in clause 5(2) of the Scheme have to be understood in the context of condition (3) of clause 4 of the Scheme. The condition (3) of clause 4 of the Scheme prescribes that for obtaining approval, the Industrial Park should have a minimum of thirty industrial units located in it. The General condition contained in clause 5(2) only echoes the criteria for approval pres....
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....hat the minimum thirty units have been located in the Industrial Park before the date specified in the Scheme as well as the Act and therefore the said condition has been fulfilled. 55. We find enough merit in the interpretation put-forth by the assessee. Ostensibly, the conditions in the Scheme have been inserted with an objective that once an undertaking is considered for notification u/s 80-IA(4)(iii) of the Act, there is a mechanism available to check as to whether the conditions prescribed in the Scheme have been complied with. In other words, in the context of the present controversy vis-à-vis clause 5(2) of the Scheme the objective is to ensure that the assessee does not claim deduction without putting the park to use for minimum 30 industrial units in accordance with the Scheme approved but it does not envisage that the location of minimum 30 industrial units be seen for every assessment year for which the claim is lodged, moreso, when the profits are declared by an assessee based on its normal method of income recognition. It may be pointed out that the provisions of section 80-IA(4)(iii) of the Act itself envisages deduction in case of an undertaking which devel....
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....g the deduction claimed by the assessee u/s 80-IA(4)(iii) of the Act merely because the minimum number of thirty units are not located in the Industrial Park before 31.03.2007 when otherwise it is factually true that the minimum number of units have been located in Industrial Park in compliance with period stipulated and approved in the Scheme. Therefore, on this aspect, we find no reason to uphold the objection of the Revenue. 57. In-fact, the controversy before us in relation to the claim of deduction u/s 80-IA(4)(iii) of the Act pertaining to the instant assessment year is similar to what was considered by the Mumbai Bench of the Tribunal in the case of Ferani Hotels Pvt. Ltd. vs. DCIT, vide ITA Nos.1828 & 1829/Mum/2009 dated 24.02.2012 pertaining to assessment years 2004-05 and 2005-06. The aforesaid decision was relied upon by the assessee in the course of hearing. In the case before the Mumbai Bench of the Tribunal, assessee had claimed deduction u/s 80-IA(4)(iii) of the Act in respect of profits from development of an Industrial Park. The claim was disputed by the Revenue for assessment years 2004-05 and 2005-06. The objection of the Revenue was that the notification issu....
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....accounting is such that the Assessee can never get the benefit even in a later year. It is no doubt true that the satisfaction of the conditions for grant of deduction as on the last date of the previous year is necessary. If due to subsequent events that take place after the last date of the previous year, conditions for grant of deduction are satisfied, then the Assessing Officer can take cognizance of the same. The CBDT in Instruction No.4/2009 dt. 30.06.2009 clarified the position with regard to allowing deduction u/s.80-18(10) of the Act. U/s.80-IB(10) of the Act, deduction of 100% profits derived from developing and building housing projects is allowed. One of the conditions to be satisfied for claiming such deduction was that the housing project should have commenced construction on or after 1.10.1998 and completed the construction within 4 years from the financial year in which the housing project is approved by the local authority. The question arose whether the deduction can be claimed by Assessees who follow percentage completion method of accounting by showing part of the profits or the deduction would be available only in the year of completion of the project u/s.80-IB....
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....er, assessee has declared income from the sale of units on a progressive basis i.e. in the year in which the particular industrial units have been sold. This has lead to a conflict between the assessee and the Revenue with regard to the assessee's claim for deduction u/s 80-IA(4)(iii) of the Act. The moot question is - can the method of accounting followed by the assessee be determinative of assessee's claim for deduction u/s 80-IA(4)(iii) of the Act especially in a situation where assessee is otherwise said to have complied with the requirements of section 80-IA(4)(iii) of the Act read along with the provisions of the IPS, 2008 under which the Industrial Park of the assessee has been notified. In-fact, if the stand of the Revenue is to be accepted, what would happen is that assessee's claim for deduction u/s 80-IA(4)(iii) of the Act shall be denied in the instant year and in the subsequent years also assessee would not be able to claim the benefit because the impugned profits would not have been accounted for by the assessee in the subsequent years. That would mean that the assessee would never get the benefit of section 80- IA(4)(iii) of the Act qua the impugned profits derived f....
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....d the benefit of deduction to an undertaking which has to merely commence its activity, without completing minimum stipulated phase, it was specified in the relevant provisions. For example, in section 80IC(2) it was stated that if an undertaking begins to manufacture or produce any article or thing it becomes an eligible undertaking. On the contrary, section 80IA of the Act specifies that an assessee shall be eligible to claim deduction "in accordance with and subject to the provisions of this section". As stated earlier, sub-clause (2) thereof used the expression "develops" instead of the expression "to develop". Section 80IA (4) (iii) (which was referred to in section 80IA(2)4 specifies that an undertaking which develops an industrial park notified by the Central Government in accordance with the scheme framed and notified by the Government is eligible for deduction. It is relevant to notice here that in section 80(4) (iii) legislature has not used the expression such as "an undertaking which begins to develop". Rule 18C of the I.T. Rules prescribes the procedure to be followed by an industrial park to avail the benefits under section 80IA(4)(iii) of the Act. Rule 18C, as it exi....
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....lated condition of not only construction of specified units but also allocation of floor area to different entrepreneurs as per the scheme. Rule 18C was amended w.e.f. 8.1.2008 whereby an undertaking which begins to develop an industrial park any time during the period beginning on the 1st day of April, 2006 and ending on 31st day of March, 2011 was made eligible to claim deduction. Admittedly, it is not the assessee's case that it has commenced the process of development after 1st day of April, 2006 and thus subsequent rule has not application to the instant case." 60. The aforesaid discussion would show that the Hon'ble Third Member was guided by the then relevant provisions of rule 18C of the Rules which have since been amended qua the assessment year before us. In the previously worded rule 18C of the Rules, the wordings were that the "undertaking shall begin to operate an Industrial Park .......". However, the rule 18C(1) of the Rules, which has since been amended and which is relevant for the year under consideration reads to say that "undertaking shall begin to develop, develop and operate or maintain and operate an Industrial Park.........". This distinction has been not....
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....e CIT(A) and direct the Assessing Officer to allow the deduction made u/s 80-IA(4)(iii) of the Act of Rs. 33,59,56,749/-. Thus, on this aspect assessee succeeds. 63. The last Ground of Appeal in assessment year 2007-08 raised by the assessee is with regard to an addition of Rs. 99,00,000/- made by the Assessing Officer u/s 69C of the Act. In this context, brief facts are that the aforesaid addition was based on certain loose papers found during the course of search which showed that assessee had made payments for acquisition of lands at Jambhe which were not recorded in the relevant purchase deed and were also not accounted for in the account books. Such amount of payments as reflected by the seized documents was computed at Rs. 99,00,000/- which was added to the returned income u/s 69C of the Act. The CIT(A) has also affirmed the addition but has directed the Assessing Officer not to make a separate addition on this count as the aforesaid amount was subsumed in the addition of Rs. 5,61,48,006/- sustained by him on account of bogus steel purchase. 64. In the above manner, assessee in its appeal is contesting the action of the CIT(A) in sustaining the addition of Rs. 99,00,000/- ....
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....sallowance of Rs. 18,08,186/- made on account of alleged bogus purchases from M/s. Fresho Metals Pvt. Ltd. without appreciating that the said purchases were genuine and hence, the said disallowance was not justified. 2] The learned CIT(A) erred in confirming the disallowance of deduction u/s 80IA(4) of Rs. 19,80,90,000/- in respect of the profits derived from the Industrial Park 'E Space' without appreciating that the disallowance of deduction was not justified on facts of the case. 3] The learned CIT(A) erred in confirming the disallowance of Rs. 5,44,375/- in respect of brokerage paid to M/s. Regenesis Project Management Company Pvt. Ltd. on sale of land at Jambhe, Pune without appreciating the said payment was an allowable business deduction and hence, the disallowance was not justified." 70. In the appeal of the assessee, the first issue relates to addition sustained by the CIT(A) of Rs. 18,08,186/- on account of bogus purchase of steel from one of the six parties with whom enquiries were conducted at the time of search proceedings against the assessee. The facts and circumstances in relation to the aforesaid dispute are similar to those considered by us in the....
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....that when the date of completion was extended by Finance Act, 2006 to 31.03.2009, the IPS, 2002 was not extended. But a new Industrial Park Scheme, 2008 was introduced only on 08.01.2008. It was pointed out that prior to the amendment made by the Finance Act, 2006, the scheme in operation was Industrial Park Scheme, 2002. The claim of the assessee is that its project should be considered for approval under Industrial Park Scheme, 2002 which was in force when the assessee made the application to the Ministry of Commerce & Industry, Department of Industrial Policy and Promotion (Govt. of India) on 08.08.2007. In this connection, our attention has been drawn to page 204 of the Paper Book wherein is placed a copy of the said application filed with the Govt. of India. The Ld. Counsel further submitted that it was only subsequently on 05.01.2009 that the Ministry of Commerce & Industry indicated to the assessee that since the date of commencement of Industrial Park developed by the assessee was after 31.03.2006, assessee was not eligible to be approved under the Industrial Park Scheme, 2002. The Ld. Representative pointed out that the Industrial Park of the assessee was completed on 25.0....
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....8 is concerned, the assessee has not made any application and therefore there would not be any notification by the Central Government in this regard. 76. The case setup by the assessee is that it had made an application seeking notification of its project under the Industrial Park Scheme, 2002 on 08.08.2007 after completion of its project on 25.04.2007. It has been contended that the assessee's eligibility for the claim has to be considered under the Industrial Park Scheme, 2002 only. Quite clearly, the aforesaid contention of the assessee is untenable because the Industrial Park Scheme, 2002 was applicable only upto March 31, 2006. Factually speaking, in the present case, the construction of Industrial Park E - Space was completed after 31.03.2006 and therefore the provisions of Industrial Park Scheme, 2002 are not applicable to the instant project. Assessee also raised a plea before us to the effect that during the period from April 01, 2006 till January 08, 2008 no scheme was in operation as the Industrial Park Scheme, 2002 had culminated and the new scheme i.e. Industrial Park Scheme, 2008 was not notified. The Ld. Representative submitted that since Industrial Park Scheme, ....
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....e 25.04.2007. Therefore, in our considered opinion, assessee cannot claim the benefit of the Industrial Park Scheme, 2002. In the absence of the notification mandated by section 80-IA(4)(iii) of the Act, the claim of the assessee for deduction u/s 80-IA of the Act in relation to its project E - Space has been rightly denied by the incometax authorities. The aforesaid action of the lower authorities is hereby affirmed and assessee fails on this Ground. Thus, Ground of Appeal No.2 of the assessee is dismissed. 78. The last Ground in assessee's appeal for assessment year 2008-09 is with regard to an amount of Rs. 5,44,375/- representing brokerage paid to M/s Regencies Project Management Company Pvt. Ltd. (in short "M/s Regencies PMCPL"), which has been disallowed by the lower authorities. 79. Brief facts in this context are that assessee-company had paid brokerage to M/s Regencies PMCPL. It was noticed that the brokerage was paid for the transaction of Jambhe land. In the course of assessment proceedings, the Assessing Officer found that the brokerage was paid to M/s Regencies PMCPL which was subsidiary of the assessee-company. On being asked to explain, assessee furnished certain ....
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....the Tribunal dated 30.06.2014 (supra) reads as under :- "13.1 We find the AO in the instant case disallowed the claim of brokerage paid to Regenesis PMCPL on the ground that Regenesis PMCPL is a subsidiary of KPDL whose controlling management is in the hands of Shri Rajesh Patil and Milind Patil. Since the assessee is also a director of KPDL there was no need for payment of any brokerage and the transaction was carried out for reducing the tax liability. We find the Ld.CIT(A) upheld the action of the AO on the ground that the brokerage payment to Regenesis is prima-facie not linked to the transfer of the land but to the identification of suitable investment partner in order to develop the lands into a special township. The transfer of land is not incidental to the entire arrangement. The assessee has not received anything more than the prevailing market price and the transaction is nothing but a colourable device. According to her, the real beneficiaries in the whole process are not only the assessee and the other members who sold the land and claimed brokerage but also Regenesis PMCPL who offered NIL to nominal income are also get entitled to a share of the residual profit of t....
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.... were able to convince ICICI Ventures to make payment for sale of land at higher price and this was because of the efforts put in by Regenesis finds some merit. 13.4 So far as the claim of the revenue that Regenesis PMCPL has offered NIL to nominal income and payment of brokerage is a colourable device to reduce the tax we find the same is also not correct. From the various details furnished by the assessee in the paper book we find Regenesis has earned substantial profit of Rs. 6.53 lakhs in A.Y. 2006-07 (paper book page 39) Rs. 11.63 lakhs in A.Y. 2007-08 (paper book page 65) and Rs. 25.42 lakhs in A.Y. 2008-09 (paper book page 98). Apart from the above, the assessee has also paid service tax on the brokerage paid and such service tax is @ 12.24% (paper book page 255). Therefore, if the action of the assessee is to reduce the tax liability by paying brokerage to Regenesis PMCPL then such company would not have paid tax on the huge income declared nor the assessee would have paid service tax to the Government Account. Therefore, the allegation of the revenue that Regenesis PMCPL has offered NIL to nominal income and the assessee claimed the brokerage to reduce the capital gain ....
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....ssessment year 2007-08 (supra). As a consequence, our decision in the appeal of the Revenue for assessment year 2007-08 would apply mutatis-mutandis herein also and as a consequence, the order of the CIT(A) deleting an addition of Rs. 1,68,41,376/-, we hereby affirm. Thus, Revenue fails in its appeal. 85. In the result, for assessment year 2008-09 whereas the appeal of the assessee is partly allowed that of the Revenue is dismissed. 86. Now, we may take-up the cross-appeal of the assessee and the Revenue for assessment year 2009-10 vide ITA Nos.1415 & 1483/PN/2013 respectively. Both the appeals are directed against the order of the Commissioner of Income Tax (Appeals)-II, Pune dated 28.03.2013 which, in turn, has arisen from an order dated 31.12.2010 passed by the Assessing Officer u/s 143(3) of the Act. 87. In the appeal of the assessee for assessment year 2009-10, the concise Grounds of Appeal raised read as under :- "1] The learned CIT(A) erred in confirming the disallowance of deduction u/s 80IA(4) of Rs. 3,16,31,476/- in respect of the profits derived from the Industrial Park 'E Space' without appreciating that the disallowance of deduction was not justifie....
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....the purchases were found to be genuine by the CIT(A) in assessment year 2007-08 also. In assessment year 2007-08, Revenue had contested the stand of the CIT(A) by way of Ground of Appeal No.1 in ITA No.1481/PN/2013 which has been dealt with by us in the earlier part of this order. The facts and circumstances in relation to the said addition are similar to those considered by us while dealing with the Ground of Appeal No.1 in the Revenue's appeal for assessment year 2007-08 (supra). As a consequence, our decision in the appeal of the Revenue for assessment year 2007-08 would apply mutatis-mutandis herein also and as a consequence, the order of the CIT(A) deleting an addition of Rs. 52,36,454/-, we hereby affirm. Thus, Revenue fails in its appeal. 92. Now, we may take-up the appeal of the assessee for assessment year 2003-04 vide ITA No.1411/PN/2013, which is directed against the order of the Commissioner of Income Tax (Appeals)-II, Pune dated 28.03.2013 which, in turn, has arisen from an order dated 31.12.2010 passed by the Assessing Officer u/s 143(3) r.w.s. 153A of the Act. 93. In this appeal, concise Ground of Appeal raised by the assessee reads as under :- "1] The learn....
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....ance was not justified." 100. The aforesaid Ground is similar to the Ground of Appeal No.1 in assessee's appeal for assessment year 2003-04 wherein purchases made from the impugned party has been held to be a bogus transaction. Following the reasoning contained in our order for assessment year 2003-04 of this issue herein also. The action of the income-tax authorities in making an addition of Rs. 13,40,168/- on account of bogus purchases from M/s R.D. Jain & Co. is hereby affirmed. Thus, appeal of the assessee for assessment year 2005-06 is dismissed. 101. Now, we may take-up the appeal of the Revenue for assessment year 2005-06 vide ITA No.1479/PN/2013, which is directed against the order of the Commissioner of Income Tax (Appeals)-II, Pune dated 28.03.2013 which, in turn, has arisen from an order dated 31.12.2010 passed by the Assessing Officer u/s 143(3) r.w.s. 153A of the Act. 102. It was a common point between the parties that so far as the dispute in this appeal is concerned with regard to the disallowance of Rs. 52,92,674/- on account of bogus purchases, it is similar to the issue which has been dealt with by us in the Department's appeal for assessment year 2008-09....