TaxTMI 
TaxTMI 
2016 (10) TMI 327
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.... Assessing Officer passed the order of assessment on 11.11.2005 in which he accepted the petitioner's returned income. The Assessing Officer thus granted deduction claimed by the petitioner in its entirety. In order to reopen such assessment, the Assessing Officer issued the impugned notice which, as can be seen, was done beyond a period of four years from the end of relevant assessment year. For issuing the notice, the Assessing Officer had recorded the following reasons : "The assessee has filed the return of income for AY 20032004 on 31.10.2003 showing total income of Rs. 8,36,790/- after claiming deduction of Rs. 84,51,542/u/ s.80IB(10) of the Incometax Act, 1961. In this case assessment u/s 143(3) of the IT Act was passed on 11.11.2005. However, on verification of the details, it is noticed that the assessee is mealy a work contractor and not taken any developing of housing project approved by the Local Authority and hence, the claim of the assessee for deduction u/s80IB(10) of the IT Act, is not in accordance with law. Finance Act 2009 has amended the section 80IB(10) by way of the Explanation with retrospective effect from 01.04.2001. After the introductio....
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....ecord, we notice that the main business activity of the petitioner being development of housing project, the deduction under section 80IB( 10) of the Act, was the main claim in the return filed for the assessment year in question. This claim came up for scrutiny before the Assessing Officer during which he raised the below queries : "1. Details of construction work executed during the year. 2. Details of loans outstanding on 1st day of previous year, taken during the year and squared up during the year, along with copy of accounts confirmation and proof of credit worthiness. 3. Details of sundry creditor along with age analysis and their present position. 4. Details of sundry debtors. 5. Copy of accounts of interest expenses, if any, and their linkage to the need of business. 6. Details of additions made, if any, to the fixed assets along with copy of bills/delivery note. 7. Please furnish complete details of Booking amounts collected from the members of the society along with units allotted to them. 8. Copy of development agreement made with society, if any. 9. Copy of Form No. 7/12 of the land on which projec....
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....BBB of I T Rules 1962 regarding eligibility of deduction u/s 80 IB(10) of the I. T Act 1961. The working of the deduction u/s. 80 IB (10) have also been furnished as per AnnexureB of the above report. During the course of the assessment proceedings the assessee was asked to furnish his explanation regarding interest paid not related to 80 IB (10) amounting to Rs. 5,04,844/. It has been submitted that the firm has paid interest of Rs. 5,08,544/- on loan taken for the financial activities. On the, similar way he has received interest income of Rs. 5,75, 974/- from advances made and the same has been shown as income and hence net result will be income from interest. However for accounting purpose the income from interest has been credited in Profit and Loss account and payment of interest have been debited from the Profit. Moreover, it has been further submitted that the assessee firm have sufficient interest free fund to carry out the project Pruthvi which is eligible for deduction u/s. 80 IB (10) of the IT Act 1961 i. e. outstanding opening balance of Rs. 1,79,10,447/- from the society and maximum outstanding balance from society of Rs. 4,59,01,465/- on which no in....
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....proceedings or proceedings by way of appeal or revision or reference, Explanation 8 would have certainly operated. However, on the question whether the assessee had failed to disclose fully and truly all material facts necessary for assessment, it is obvious that when the assessee had filed its return in 1983 it could not have assumed that such a legislative amendment was going to be made in the year 1986 with retrospective effect from the year 1974. In the facts of the present case, it could never be said by any stretch of imagination that in the year 1983 when the assessee filed return claiming investment allowance on the capitalization of interest paid after the date on which the machinery was first installed and put to use, the assessee had failed to disclose all material facts. On the contrary, the assessee would have got the benefit of the entire interest amount for the post installation period as revenue expenditure which would have been much higher than the amount of investment allowance and depreciation allowance taken together." 12. In case of Sadbhav Engineering Ltd.(supra), also similar view was taken. It was observed as under : "From the reasons recorded it....