TaxTMI 
TaxTMI 
2016 (3) TMI 867
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....on 80IA(4)(iii) of the Income Tax Act, 1961 and without going into the merits of the case. 2. The learned CIT (A) erred in confirming the order of the Assessing Officer wherein he disallowed deduction claimed under Section 80IA(4)(iii) stating that the industrial park on which such deduction was claimed was existing even before notification was issued by DIPP and CBDT and therefore not eligible for claiming deduction under Section 80IA (4) (iii). 3. The learned CIT (A) erred in confirming the order of the Assessing Officer wherein he ought to have seen that Section 80IA (4) (iii) does not prohibit issue of notification as an industrial park under Section 80IA (4) (iii) for an existing property. 4. The learned CIT (A) erred in not considering the claim of the Assessee that there was no prerequisite of seeking approval for property that was completed in the year 1999, as it is not provided for under Section 80lA (4) (iii) . 5. The learned CIT (A) failed to appreciate the fact that the year of construction of the property is irrelevant for claiming deduction under Section 80IA (4) (iii). 6. The learned CIT (A) failed to note that on a prope....
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.... 2005. The mother of Assessee, Smt. Gavva Laxmi Devi, also filed an application before the DIPP in similar fashion and the total investment proposed by her was to the tune of Rs. 8.27 Crores. 3.2. Assessee got approval to set up the Industrial Park on the basis of the above-mentioned proposal from the DIPP on 05-12-2006 w.e.f. 01-04-2005. It was stated in the letter of approval that any failure to comply with any of the conditions or misinformation of the facts may result in withdrawal of the said approval. Later, CBDT, vide its notification dated 23-02-2007, notified the said Industrial Park u/s 80IA(4)(iii) of the Act for availing of tax benefits. Assessee started claiming deduction u/s 80IA(4)(iii) of the Act on the income beimg received by him from AY. 2007-08 onwards. 3.3. The AO denied exemption u/s 80IA(4)(iii) of the Act to Assessee on the ground that the building-in-question had been constructed prior to 15-09-1999 and that Assessee had been already deriving rental income from it. According to the AO, assessee had sought approval of setting up of the Industrial Park on an already existing infrastructure. He further added that the Industrial Park was not developed/con....
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....teriors, furniture and fixtures, electrical fittings, air conditioners etc. was considered. However, actually, as a tenant wanted the area on bare-shell basis expenses on above were not incurred". The fact however, is that even this amount of Rs. 2.56 crores was not invested in pursuance to the proposal. It represented the investment in already existing building. As per the Tax Audit Report, the cost of old building (Rs.2.56 crores) as on 31.3.2006 had been adopted as the cost of the Industrial Park as on 1.4.2006. A similar treatment was done in the case of the mother also. Thus, neither the Assessee nor his mother spent a single paisa towards the "setting up of the Industrial Park" as per the proposal submitted before the DIPP. The building which had been constructed in 1999 and had been yielding rental income since then was only presented in the garb of the 'Industrial Park 'in the accounts of the Assessee. 07.2 The Assessee has also claimed that section 80IA(4)(iii) of tae Act does not prohibit notification for an existing property and that once a notification has been issued by the Competent Authority i.e. DIPP and the CBDT, it cannot be disallowed by....
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....vital fact that the building had been constructed in 1999 was withheld from the authorities and the investment proposed in the application was never made. 07.4 The Assessee represented before the D1PP that the investment could not be made because the tenants wanted the bare premises. But he conveniently suppressed the fact, that out of the proposed investment of Rs. 10.48 crores, investment of Rs. 6 crores had been proposed for the built up area i.e. the bare premises only. Since that investment itself was not made, the question of there being a tenant for such premises and the question of any investment being made in furniture, fixtures and air conditioners etc. does not arise. This shows clearly that the Assessee never intended to make the proposed investment and he made a false representation before the Competent Authority that a part of the sum (Rs.2.56 crores) had actually been invested and the balance (Rs.7.92 crores) was not required to be invested due to the demands of the tenants. This conclusion is also supported by the legal opinion (supra) which shows clearly that the intention from the very beginning was to claim deduction in respect of existing rental income ....
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....long term basis much prior to the application but by misrepresentation, obtained the approvals which will become automatically invalid. He also referred to the orders of the CIT(A) to submit that the approvals taken by Assessee are not for the building in which Assessee was supposed to invest moneys. Therefore, Assessee is not entitled to claim deductions. 7. We have perused the rival contentions and the documents placed on record in the form of Paper Book. Assessee has placed the copies of DIPP application, approval, application to CBDT and approval order. As seen from the facts of the case, Assessee did indeed develop a building as a co-owner on the plot at # 8-2-681/3 & 3A at Road No. 12, Banjara Hills, Hyderabad. Assessee's address is 8-2-682 in Laxmi Cyber Centre. As seen from the records, these two properties seems to be adjacent and we are not sure whether there is only one building or two buildings in the above said two addresses. Before adverting to the issues raised by Assessee and Revenue, we are of the opinion that the facts of the case are to be placed on record. According to Assessee, he has proposed to set up/construct the Industrial Park on the land at # 8-2-681/....
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....sq. ft., as can be seen from the Column 13 in the application to CBDT vide letter dt. 24-01-2007. 9. Be that as it may, the issue before us is whether AO is correct in denying the benefit when the same was approved by the CBDT. If there is any misrepresentation or misinformation as alleged by the AO, the proper course would be to make full enquiry and report to the authorities concerned for taking necessary steps to withdraw the permissions so granted. Without doing so, AO or for that matter even the CIT(A), who are subordinate authorities to the CBDT, cannot come to a conclusion and say that the approval granted by the CBDT is invalid. As informed, no steps have been taken so far by either the AO or by any other authority to withdraw the approval so granted by the CBDT on the so called allegations of misrepresentation/misinformation. In view of this, we cannot appreciate the action of the AO and CIT(A) in denying the benefit to the Industrial Park. To that extent, the orders of AO and CIT(A) cannot be approved and has to be set aside. 10. On Assessee's grounds so raised, the issue has to be decided in favour of Assessee. But what we noticed from the order of the CIT(A) is th....