TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 1122
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....essee. Subsequently, a search & seizure operation u/s 132 of the Income-tax Act, 1961 was carried out at the residential premises of the main person of the group and survey u/s 133A was carried out at assessee's business premises on 16-10-2008. Consequent to search, notices 153A of the Act were issued calling for return of income for the assessment years 2003-04 to 2008-09. The assessee has filed returns of income in response to notices u/s 153A of the Act. Thereafter, the AO completed the assessments u/s 143(3) r.w.s. 153A of the Income-tax Act, 1961 for all the six assessment years under consideration by making certain additions. The assessee preferred appeals before the CIT(A) against the additions made by the AO. 3. The assessee is in the business of builders and developers. The assessee has developed a housing project called, 'Madhav Srushti', Phase-I. The assessee did not claim any deduction u/s 80IB(10) for all these assessment years either in the original returns of income filed u/s 139(1) or in the returns filed in pursuance to notice u/s 153A of the Income-tax Act, 1961. The assessee did not raise a claim for deduction u/s 80IB(10) before the AO either during the origina....
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....o as to prove the eligibility of the assessee for deduction claimed u/s 80IB(10) of the Act. The AO, after considering the details furnished by the assessee and also taking into account the directions given by the ITAT in the light of decision of Hon'ble Bombay High Court in the case of M/s Brahma Associates allowed the deduction claimed u/s 80IB(10) of the Income-tax Act, 1961 for the assessment years 2003-04 to 2008-09. 6. Subsequent to that, the Principal CIT-3, Thane issued a show cause notice dated 16-02-2016 and asked to explain as to why the assessment ordes passed by the AO u/s 143(3) r.w.s. 254 of the Income-tax Act, 1961 shall not be revised under the provisions of section 263 of the Act. The Principal CIT proposed to revise the assessment orders for the reason that on examination of assessment records it was noticed that the AO has allowed deduction claimed u/s 80IB(10) even though the assessee has not made any claim in the original returns filed u/s 139(1) or in the revised returns filed in pursuance to notice u/s 153A of the Act, 1961. The Principal CIT further observed that as per the provisions of section 80A(5) of the Income-tax Act, 1961, where the assessee fails ....
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....of CIT vs Sheth Developers Pvt Ltd 254 CTR 127 (Bom) to argue that there was no error in the assessment orders passed by the AO in allowing the claim of deduction u/s 80IB(10) without considering the provisions of section 80A(5) of the Income-tax Act, 1961. 8. The Principal CIT, after considering the submissions of the assessee held that the assessment order passed by the AO U/S 143(3) r.w.s. 254 of the Act is erroneous and prejudicial to the interest of the revenue as the AO has not considered the provisions of section 80A(5) before allowing the claim of deduction u/s 80IB(10). The AO was duty bound to take into account the provisions of section 80A(5) while considering the provisions of seciton 80IB(10). The AO allowed the claim of the assessee even though the same was not claimed in the return of income by misinterpreting the order of the ITAT. The ITAT has not given any finding as to the allowability of deduction claimed u/s 80IB(10), but only restored the matter to the file of the AO for further enquiries with reference to the provisions of section 80IB(10). The deduction provided in section 80IB(10) is allowable only when such claim is made in the return of income. In this c....
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....sidered the issue and after taking into account the facts of the case and also the provisions of section 80A(5) has directed the AO to examine the issue of deduction claimed u/s 80IB(10). Therefore, the Principal CIT cannot revise the assessment orders on this issue. In support of his arguments, he relied upon certain judicial precedents including the decision of Hon'ble High Court of Madras in the case of CIT vs Abhinita Foundation Pvt Ltd in TCA No. 811 of 2016 dated 06-06-2017. 10. On the other hand, the Ld.DR strongly submitted that the orders passed by the AO are erroneous insofar as they are prejudicial to the interest of the revenue because the AO has not conducted required enquiry before allowing the deduction claimed u/s 80IB(10) of the Act which caused prejudice to the interest of the revenue. The Ld.DR further submitted that the provisions of section 80A(5) makes it mandatory for the assessee to claim the deduction in the return itself to be eligible for any deduction claimed. However, the AO allowed the claim even though no such claim has been made either in the original return filed or revised return filed in pursuance to notice u/s 153A of the Act. The order passed b....
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....he revenue are co-exist. 13. In this factual background, let us examine whether the assessment order passed by the AO is erroneous. The Principal CIT was of the opinion that the assessment order passed by the AO is erroneous as the AO ought to have conducted certain enquiries before allowing deduction u/s 80IB(10) which he did not do with reference to the provisions of section 80A(5) and 80IB(10) of the Act. We do not find any merit in the findings of the Principal CIT for the reason that the AO has passed the assessment orders by giving effect to the order of ITAT, and has passed the orders on the issue of additional ground raised by the assessee making a fresh claim of deduction u/s 80IB(10) which was admitted and adjudicated in the light of decision of Hon'ble jurisdictional High Court in the case of CIT vs Brahma Associates (supra) wherein the Hon'ble High Court held that as far as deduction u/s 80IB(10) in respect of housing project which has been approved by the appropriate authority before 01-04-2005, the limit of 5% of the total built up area or 2000 sq.ft. whichever is less, is not applicable and irrespective of the commercial area of housing project assessee was entitled....
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....iew that the order passed by the AO is not erroneous within the meaning of section 263 of the Act. 15. Having said so, let us examine whether the order passed by the AO is prejudicial to the interest of the revenue. The Principal CIT was of the opinion that the assessment order passed by the AO is prejudicial to the interest of the revenue as the AO has allowed deduction claimed u/s 80IB(10) even though such claim was not made u/s 139 or in the revised returns filed u/s 153A of the Act. The Principal CIT further was of the opinion that any deduction claimed u/s 80IB(10) is only allowed when such claim is made in the return of income as per the provisions of section 80A(5) of the Act. In this background, let us examine whether the assessee is eligible for deduction u/s 80IB(10) or not. There is no dispute with regard to the entitlement of deduction u/s 80IB(10) as the assessee has satisfied all the conditions prescribed u/s 80IB(10) except making a claim in the return of income. Therefore, one has to examine whether deduction u/s 80IB(10) can be allowed even though such claim is not made in the return of income. No doubt, the provisions of section 80IB(10) r.w.s. 80A(5) makes it ma....
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.... Now it is pertinent to discuss the case laws relied upon by the assessee. The assessee relied upon the decision of Hon'ble High Court of Madras in the case of CIT vs M/s Abhinita Foundation Pvt Ltd in TCA No.811 of 2016 dated 06-06-2017. The Hon'ble High Court of Madras under similar circumstances, while answering the question raised by the revenue with regard to the claim made u/s 80IB even though the assessee did not make any such claim in the return of income after considering the judgements rendered by the Supreme Court in Goetz India Ltd's case and National Thermal Power Co Ltd's case held that the assessee is eligible for deduction u/s 80IB(10) even if the claim made by the assessee does not form part of the original return or even in the revised return. It could still be considered if the relevant material was available on record either by the appellate authority. The relevant portion of the order is extracted below:- "W have heard the learned counsel for the parties and perused e record. 9. According to us, what clearly emerges upon perusal of the cord and, in particular, the impugned judgment and order of the triibunal, is as follows: I. That, in the original return as....
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....ore the Tribunal. The decision does not in any way relate to the power of the AG to entertain a claim for deduction otherwise than by fling a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Tribunal under s.254 of the IT Act, 1961. There shall be no order as to costs." (Emphasis is ours) 12 . To be noted, the Supreme Court, while rendering its judgment in the case of Goetze, had noticed its own judgment in National Termal Co. Ltd. Vs CIT, ( 1998 ) 229 ITR 383 ( SC). In the said case, the Supreme Court was called upon to adjudicate as to whether a claim made by way of a letter before the Tribunal for the first time could have been entertained by the Tribunal. Briefly, the facts which obtained in the said case are as follows: 12.1.The assessee, in that case, had available with it surplus funds, which it chose to deposit with banks on a short term basis. Qu the said short term deposits, the assessee earned interest during th relevant previous year amounting to Rs. 22,84,994/-. The said interest was offered f....
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....ling with the powers of the Appellate Assistant Commissioner observed that an appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations. if any, prescribed by the statutory provisions. In the absence of any statutory provision the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer. This court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. The Appellate Assistant Commissioner must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The Appellate Assistant Commissioner should exercise his discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reason. The sam....
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....4. A long line of authorities establish clearly that an assessee is entitled to raise additional grounds not merely in terms of legal submissions, but also additional claims not made in the return filed by it. It is necessary for us to refer to some of these decisions only to deal with two submissions on behalf of the department. The first is with respect to an observation of the Supreme Court in Jute Corporation of India Limited v. Commissioner of Income Tax, 1991 Supp (2) SCC 744 = (1991) 187 ITR 688. The second submission is based on a judgment of the Supreme court in Goetze (India) Limited v. Commissioner of Income Tax, (2006) 157 Taxman 1. (A). In Jute Corporation of India Limited v. CIT, for the assessment year 1974-75 the appellant did not claim any deduction of its liability towards purchase tax under the provisions of the Bengal Raw Jute Taxation Act, 1941, as it entertained a belief that it was not liable to pay purchase tax under that Act. Subsequently, the appellant was assessed to purchase tax and the order of assessment was received by it on 23rd November, 1973. The appellant challenged the same and obtained a stay order. The appellant also filed an appeal from the a....
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.... Act does not place any restriction or limitation on the exercise of appellate power. Even otherwise an Appellate Authority, while hearing appeal against the order of a subordinate authority has all the powers which the original authority may have in deciding question before it subject to the restrictions or limitations, if any prescribed by the statutory provisions. In the absence of any statutory provision the Appellate Authority is vested with all the plenary powers which the subordinate authority may have in the matter. There appears to be no good reason and none was placed before us to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income Tax Officer." [emphasis supplied]" B) It is clear, therefore, that an assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims before them. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdi....
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....on to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional. grounds which were available when the return was filed. The first part viz. "if the ground so raised could not have been raised at that particular stage when the return was filed or when the assessment order was made..." clearly relate to cases where the ground was available when the return was filed and the assessment order was made but "could not have been raised" at that stage. The words are "could not have been raised" and not 'were not in existence". Grounds which were not in existence when the return was filed or when the assessment order was made fall with if the second category viz, where "the ground became available on account of change of circumstances or law." (Emphasis is ours) 12.5. 5 . A reading of the aforesaid observations would ck establish that the arguments advanced by Mr. Ravi that the asse company could only raise an additional ground and not make a claim or additional claim is not sustainable. As indicated by us hereinabove, this power of entertaining the claim vests with the appellate authorities based on the facts and....
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.... entertaining the claim made under Section 8OG of the Act and thereupon, issuing a consequent direction to the ITO to examine the same on merits. 16 . 1 ,As would he evident from the narration of facts set out above, in the present case, the Tribunal has noted that relevant material was placed by the assessee company before the Assessing Officer during the course of the assessment proceedings. Therefore, in our view, the said judgment is also distinguishable. 1 7 . A similar situation arose in the case of A C I T v s . Gurjargravures P. Ltd. In this case as well, it was noticed that neither was any claim made before the ITO nor was any supporting material placed on record. It is in this background that no relief was granted. The Supreme Court, in this case, disagreed with the High Court, inasmuch as it sustained the direction of the Tribunal issued to the ITO to grant appropriate relief qua claim made under Section 84 of the Act. 18 . In sum, what emerges from a perusal of the ratio of the judgments cited above, in particular, the judgments rendered by the Supreme Court in GOETZL-'s case and National Thermal Power Co. Ltd's case, and those, rendered by the Division Bench of ....
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....he return was filed. The assessee did not claim any deduction of its liability to pay purchase tax as "it entertained a belief that it was not liable to pay purchase tax under the Bengal Raw Jute Taxation Act, 1941 ". Thus, the ground existed when the return was filed. The assessment order was even made, and received by the assessee. It is only after the appeal was filed that the assessee claimed a deduction in respect of the amount paid towards the purchase tax under the said Act. The Supreme Court upheld the decision of the Appellate Assistant Commissioner in allowing the deduction. (para 7, 10, 11 & 14) It is indeed a question of exercise of discretion whether or not to allow an assessee to raise a clam; which was not raised when the return was filed or the assessment order was made. As held by the Supreme Court there may be several factors justifying the raising of a new plea in appeal and each case must be considered on its own facts. However such cases include those, where the ground though available when the return was filed or the assessment order was made, u' is not taken or raised for reasons which the appellate authorities may consider valid. In other words, the j....