AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 1454
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.... Noida. It had applied for claim of deduction u/s 80 IA with the Ministry of Commerce and Industry in September, 2005. The said Ministry had granted approval to the assessee company vide notification dated 17.11.2006, whereby it was granted 100% tax exemption. Further it has received approvals in terms of 'Industrial Park Scheme 2002' in view of provision of section 80 IA (4) (iii). Since assessee company had fulfilled all the terms and conditions as laid down in the approval granted by the Government of India for setting up of an Industrial park, therefore, it started claiming deduction 80 IA from the assessment years 2008-09 onwards and no such deduction was claim in the assessment years 2005-06 to 2007-08. The assessments u/s 143 (3) were completed right from the assessment year 2008-09 to 2013-14, whereby assessee's claim for deduction u/s 80 IA was duly accepted after detail scrutiny and verification by the respective Assessing Officers. For the year under consideration also, assessee company has made a claim of deduction u/s 80 IA of Rs. 161,37,41,713/- u/s 80 IA which has been allowed by the Assessing Officer, vide order dated 10.08.2015, however, after disallowing deduct....
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..../s 80IA or not in the instant case AO has not at all initiated the requisite enquiry with regards to deduction claimed u/s 80IA. It was incumbent on the AO to have noticed the distinguishing feature vis-a-vis the preceding year to the effect that while during preceding year the assessee received only rental/maintenance receipts, during the year under reference the whole infrastructure facility has been sold off for a substantial consideration and profit is claimed exempt. It was the duty of the AO to minutely examine the eligibility of claim and true eligible quantum of exemption to be allowed. AO completely failed in examining this aspect and in bringing any evidence on record in this behalf. Assessee has made specified domestic transaction of Rs. 208,47,12,830/- with Noida Towers Ltd. and assessee himself admitted that transactions were made much higher price then prevailing circle rate. In this regard, Assessing Officer failed to conduct requisite enquiry/investigation to find out the -arm's length price of the transaction and failed to make reference to TPO which was he was supposed to make as per the CBDT guidelines instruction no 3/2003 and subsequent directions of CBDT. Cond....
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....essment history in the case of the assessee, right from the assessment years 2008-09 to 2012-13, wherein the claim of deduction u/s 80 IA has been allowed. The details of such assessment given by him are as under: - Detail of past assessments of deduction claimed and allowed u/s 80IA. No. Asst. Year Income as per ITR Claimed u/s 80 IA Exemption Allowed U/s 80 IA Mode of Assessment & date of order 1 2008-09 4,28,81,519/- 4,28,59,132/- 4,28,59,132/- U/s 143 (1) dated 03.09.09 2 2009-10 9,67,17,690/- 9,67,07,521/- 9,67,07,521/- U/s 143 (3) dated 20.12.11 3 2010-11 13,56,83,504/- 13,42,94,655/- 13,42,94,655/- U/s 143 (3) dated 20.03.13 4 2011-12 10,96,07,770/- 10,66,71,593/- 10,66,71,593/- U/s 143 (3) dated 20.11.13 5 2012-13 4,97,68,662/- 4,92,42,252/- 4,92,42,252/- U/s 143 (3) dated 02.07.14 6 2013-14 1,61,37,41,713/ 161,36,85,293/ 161,36,293/- U/s 143 (3) dated 10.08.15 8. After referring to the aforesaid history, he submitted that in all the assessment years, the assessee's claim for deduction u/s 80 IA has been scrutinized after due verification an....
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....Officer has not only carried out thorough enquiry but has also applied his mind before allowing the substantial amount of the claim. Thus, it cannot be held that no enquiry as was required by him has been conducted by him or there is no application of mind. 10. On the issue of claim of deduction u/s 14A, Ld. Counsel submitted that during the course of assessment proceedings, the assessee has filed the details of investments in mutual funds and also demonstrated before the Assessing Officer that money received from sale consideration from sale of industrial park were invested in Mutual Funds, which was evident from bank statements filed during the course of assessment proceedings. The Ld. Assessing Officer had even discussed the matter with the various representatives of the assessee regarding the relation of expenditure incurred with reference to the investment. It was duly clarified before the Assessing Officer that interest on bank loan amounting to Rs. 1,79,46,655/- was already paid back before making the investments as the bank loan was fully paid from the sale consideration of industrial park and only the balance amount was invested in mutual funds, therefore, there was no ....
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....(iii) cannot be allowed on sale of entire undertaking which has been claimed as exemption, he submitted that, first of all, there is no bar in claiming deduction on the profit from the sale of undertaking eligible u/s 80 IA in view of proviso below clause (iii) of sub section (4) of section 80 IA; and in any case this issue now stands squarely covered by the judgment of Hon'ble Supreme Court in the case of PCIT Vs. Nila Baurat Engineering Limited (2018) 256 Taxman 291, wherein the judgment of Hon'ble Gujarat High Court (399 ITR 242) has been confirmed. In this case exactly similar issues were involved and it was held by the Hon'ble High Court that developer would not be denied of deduction u/s 80 IA on the profit earned by a form activity developing the infrastructure facility and proviso does not deprive developer even after the facility is transferred to some other. Thus, on this point also, the view taken by Ld. CIT is unsustainable. 13. Coming to the issue of reference to the TPO for specified domestic transaction in line of CBDT guidelines which has been referred to by the Ld. CIT, he submitted that, first of all, the CBDT laid down the guideline for reference by the Assess....
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....rroneous in so far as prejudicial to the interest of the revenue, if the order passed by the Assessing Officer is without making enquiries or verification which should have been made. Here in this case the Assessing Officer should have referred the entire specified domestic transaction to the TPO so as to examine the correct arms length price of the same. Thus, non-reference of specified domestic transaction by the Assessing Officer to the TPO shows that proper enquiry as required has not been done. She thus strongly relied on the order of the Ld. CIT. 16. After the hearing was concluded and at the stage of draft order, it was felt by us that certain clarification is required with respect to CBDT guidelines for referring the matter to the TPOs in case of specified domestic transaction. Accordingly, the case was refixed for hearing. 17. In the second round of hearing, learned counsel for the assessee submitted that on the issue of transfer pricing of specified domestic transaction, the assessee had duly disclosed the transaction falling under section 92BA and it was duly reported in Form No.3CEB furnished before the Assessing Officer along with Valuer's Report to substantiate ....
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....A, where the case has been selected on non TP parameter and the domestic transaction has been reported in form no.3CEB, the Assessing Officer is not required to refer the issue to the TPO for determining the Arm's Length Price. Hence, in these circumstances, it is evident that at the time of passing of the assessment order there was no CBDT instruction with reference to specified domestic transaction u/s.92BA, and therefore, Assessing Officer was not obliged to refer the matter to the TPO. In any case without prejudice, he submitted that even under CBDT Instruction No.3/2016 dated 10th March, 2016 also, the conditions provided for making a reference to the TPO was not satisfied, because here in this case, assessee has filed an accountant's report and has declared all the transaction undertaken, and therefore, once all these transactions have been reported along with transfer pricing document, then it is not necessary that Assessing Officer should have compulsorily made reference to the TPO. Thus, there has been no violation of whatsoever of any instruction of CBDT and accordingly, the observation of the ld. CIT is wholly erroneous. 18. In counter submission, Ld. CIT-DR submitted....
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....r has not filed the Accountant's report under Section 92E of the Act but the international transactions or specified domestic transactions undertaken by it come to the notice of the AO;  where the taxpayer has not declared one or more international transaction or specified domestic transaction in the Accountant's report filed under Section 92E of the Act and the said transaction or transactions come to the notice of the AO; and  where the taxpayer has declared the international transactions or specified domestic transactions in the Accountant's report filed under Section 92E of the Act but has made certain qualifying remarks to the effect that the said transactions are not international transactions or specified domestic transactions or they do not impact the income of the taxpayer.  a case involving a transfer pricing adjustment in an earlier assessment year that has been fully or partially set-aside by the IT AT, High Court or Supreme Court on the issue of the said adjustment shall invariably be referred to the TPO for determination of the ALP. An Important caveat 3.7 For administering the transfer pricing regime in an e....
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....he light of the settled principles we have to see, whether the Ld. CIT was correct in law and in facts in cancelling the assessment order on the points raised by him in impugned order. As discussed above the issues raised by the Ld. CIT for canceling the assessment order and passing a fresh assessment are as under: - i. The Assessing Officer has not conducted substantial enquiry or investigation while allowing the claim of deduction of Rs. 161,37,41,713/- u/s 80 IA, as he has failed to conduct enquiry of exact amount of profit earned on sale of Industrial park and subsequently allowability of deduction u/s 80 IA. ii. Assessing Officer has failed to examine that assessee has shown specified domestic transaction of Rs. 208,47,12,830/- with its subsidiary, Noida Towers Limited and the transaction was at higher price than the prevailing circle rate. iii. Assessing Officer has failed to conduct requisite enquiry / investigation to determine the arm's length price of the transaction by not making reference to the TPO, which he was supposed to make as per the CBDT guidelines. iv. Assessing Officer has also filed to examine applicability or otherwise of section 80 IA (8). v.....
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.... mostly under scrutiny u/s 143 (3) after detailed examination and verification. The status of all the assessment has already been incorporated above. From the perusal of the records filed during the course of assessment proceedings, it is seen that, Ld. Assessing Officer from time to time has raised several queries to examine the claim/ deduction u/s 80 IA, which is evident from the fact that assessee had placed copy of audit report in Form No. 10 CCB in support of deduction u/s 80 IA alongwith past assessment history and orders for the earlier assessment years, wherein this issue has been discussed and allowed by the respective Assessing Officers. A detailed justification for deduction claimed u/s 80 IA which gives the entire history and background alongwith all the notification and approval granted by various governmental authorities. All these documents were placed before the Assessing Officer in response to queries raised by him. With regard to sale of undertaking to subsidiary of the assessee namely, M/s. Noida Towers Private Limited, assessee has filed the 'business transfer agreement' entered for sale of undertaking dated 12.03.2012 alongwith the 'Valuation Report' of the Go....
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.... in the statute only by Finance Act, 2012. Hence, we agree with the learned counsel that holding the assessment order erroneous for the reason that, Assessing Officer should have made a reference to the TPO in accordance with CBDT Instruction no. 3/2003 is wholly misconceived and misinterpretation. Once, there was no CBDT instruction or guidelines for reference to the issue involving specified domestic instruction to the TPO at the time of passing the assessment order, then where is the question of any non-compliance of CBDT Instruction by the Assessing Officer. Till the passing of the assessment order on 10.08.2015, only CBDT Instruction No.3/2003 dated 20.05.2003 was applicable. Further, another instruction was issued by the CBDT being Instruction No.15/2015 dated 16.10.2015, superseding the old Instruction No. 3/2003 (which too was after the passing of the assessment order), there also the guidelines were only with respect to international transaction u/s 92B and not specified domestic transaction. In fact, in paragraph 7 with regard to the applicability of the said instruction, CBDT has made following remarks: - The above guidance is applicable only to transfer pricing....
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.... of the assessment order, because earlier, as stated above CBDT in its Instruction of 2015, itself has clarified there was no such guidelines for making a reference to the TPO was specified domestic transaction. The contention of the Ld. CIT-DR that such an instruction should be read into retrospectively, i.e., prior to the issue of such instruction, cannot be upheld for the reason that, the Assessing Officer at the time of passing the assessment has to see the instructions available at the relevant time and he cannot visualize that in future some kind of guideline or instruction would come on the basis of which he has make the assessment. If such a plea is accepted then in wake of each and every subsequent instruction, all the assessment orders can be held to be erroneous and prejudicial to the interest of the revenue, which cannot be permitted under law and equity. 26. Otherwise also, even under the CBDT guidelines issued vide Instruction No.3/2016 dated 10.03.2016, which has been harped upon by the Ld. CIT DR, will not change the complexion of the case. For sake of ready reference, the relevant guidelines are reproduced hereunder: - 3.1 "The power to determine the Arm's....
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....al; and (c) where search and seizure or survey operations have been carried out under the provisions of the Income-tax Act and findings regarding transfer pricing issues in respect of international transactions or specified domestic transactions or both have been recorded by the Investigation Wing or the AO. 3.4 For cases to be referred by the AO to the TPO in accordance with paragraphs 3.2 and 3.3 above, in respect of transactions having the following situations, the AO must, as a jurisdictional requirement, record his satisfaction that there is an income or a potential of an income arising and/or being affected on determination of the ALP of an international transaction or specified domestic transaction before seeking approval of the PCIT or CIT to refer the matter to the TPO for determination of the ALP: * where the taxpayer has not filed the Accountant's report under Section 92E of the Act but the international transactions or specified domestic transactions undertaken by it come to the notice of the AO; * where the taxpayer has not declared one or more international transaction or specified domestic transaction in the Accountant's report filed under Section 92....
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....ircumstances mentioned therein are found by the AO, then also same has to be referred to TPO. But under both the conditions the AO as jurisdictional requirement must record his satisfaction and seek approval in respect of transactions having the following conditions, which are: - • firstly, where the taxpayer has not filed audit report u/s 92 E and such transaction comes to the notice of the Assessing Officer; • secondly, taxpayer has not declared the said transaction in the accountant's report u/s 92 E; • thirdly, by the taxpayer declared the transaction in the report but there are qualifying remarks by the accountant that they do not impact the income of the taxpayer; and • lastly, if transfer pricing adjustments have been made in the earlier assessment years which has been fully or partially set aside by the courts. It is only under the circumstances mentioned in the CBDT guidelines, the Assessing Officer can make a reference to the TPO and not otherwise. If such conditions are found to exist then only, Assessing Officer after providing opportunity to the assessee and after recording satisfaction can refer the matter to the ....
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....is applicable where the deduction is allowed to any enterprise or to any undertaking which develops, develops and operates or maintains and operates an industrial park notified by the Central Government. The proviso below clause (iii) of sub section (4) of section 80 IA reads as under: - "Provided in that case where an undertaking develops an industrial park on or after the 1st day of April, 1999 or a special economic zone on or after the 1st day of April, 2001 and transfers the operation and maintenance of such industrial park or such special economic zone, as the case may be, to another undertaking ( hereafter in this section referred to as the transferee undertaking), the deduction under sub - section (1) shall be allowed to such transferee undertaking for the remaining period in the ten consecutive assessment years as if the operation and maintenance were not so transferred to the transferee under taking:" 29. The aforesaid proviso is an enabling provision by deeming fiction upon transfer of any industrial park for operation and maintenance, whereby the transferee can claim the deduction for the remaining period, that is, the transferee steps into the shoes of the transfe....
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.... apply to the transferee enterprise as if it were the enterprise to which this clause applies and the deduction from profits and gains would be available to such transferee enterprise for the unexpired period during which the transferor enterprise would be entitled to the deduction, had the transfer not taken place. 6. The proviso to sub-section (4) thus makes an enabling provision providing a deeming fiction whereby upon transfer of any infrastructure facility for the purpose of operating and maintaining, the transferee could claim the deduction for the remainder of the period. The crucial words here are "the transfer of infrastructure for the purpose of operating and maintaining' and thus the transferee who would now step in the shoes of the transferor for the limited purpose of operation and maintenance, could claim deduction on the profit element arising out of such activity. We may recall, under sub-section (4) of Section 80IA of the Act, an enterprise carrying on the business of developing, or operating and maintaining, or developing, operating and maintaining infrastructure facility would be eligible for deduction. Thus this provision itself envisages that in a giv....
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....d and no adverse comment has been given by Ld. CIT, then such a profit arising from sale of industrial park ostensibly falls within section 80 IA (4). Hence, there was no legal infirmity by Assessing Officer in allowing the claim of deduction on the profits earned from the sale of industrial park. 33. In so far as the Ld. CIT observing that Assessing Officer has failed to examine applicability of section 80 IA(8) it is seen that it is not in dispute that the Assessing Officer during the course of assessment proceedings has examined the Approved Valuer's Report who has given a detailed report of the market value of the transfer of industrial park and also transfer pricing report by the accountant has also been furnished by the assessee. Thus, when transfer price is consonance with the fair market price then conditions of this section gets satisfied. Hence applicability of section 80IA (8) has been examined by the Assessing Officer 34. Now, coming to the issue of applicability of provision of section 14A, the assessee before the Assessing Officer has filed all the relevant details for investment made in mutual funds on which assessee has earned dividend income of Rs. 77,65,278/....
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....ave examine the applicability of 14A without any specific finding or examination of facts and material on record, Ld. CIT cannot set aside the assessment. 35. The revisionary jurisdiction u/s 263 cannot be exercised simply to make roving and fishing enquiry. It is a well settled law decided by the various Courts in the judgments relied upon by the Ld. Counsel that, the revisionary authority first of all should give a finding as to how the assessment order is erroneous and prejudicial to the interest of the revenue. If such an authority is of the view that the Assessing Officer did not make any enquiry, then it is incumbent upon CIT to specify as to what kind of inquiry or verification has not been done and even Ld. CIT can also conduct some prima-facie enquiry himself or through AO to reach to a conclusion or inference that the assessment order passed by the Assessing Officer is erroneous in so far as prejudicial to the interest of the revenue. Such an enquiry or exercise by the Ld. CIT is completely lacking in the present case. If the Assessing Officer has carried out detailed enquiry and has examined all the records called upon by him after raising queries, then Ld. CIT withou....
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....ssment order as completed by the Assessing Officer after due process of law and only after taking into consideration the entire supporting evidence produced, filed and placed upon records by the appellant company during assessment proceedings. 4. That the orders passed u/s 263 of the Act for the A.Y. 2013-14 is not tenable merely because of having difference of opinion between the Ld. Pr. CIT and the Assessing officer while allowing the claim of deduction to the appellant company u/s 80-IA to the tune of Rs. 161,36,85,296/-, without appreciating that the same has already been considered and allowed in the preceding years. Also after thorough examination and verification of the material adduced. 5. That the orders passed u/s 263 of the Act is further wrong because the Ld. Pr. CIT has not lawfully drawn his satisfaction on the basis of evidence if any be collected or placed upon records prior to hold that the orders passed were erroneous in so far as it is prejudicial to the interest of revenue. 6. That while holding so, that the orders passed are erroneous and prejudicial to the interest of revenue, the same has not been corroborated with any evidence material on the basis ....
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....icer on 10.08.2015 may please be restored back. 1. That the other relief which this Hon'ble course may please be deems fit and proper on the facts and in the circumstances of the case." (37.1.1) The facts of the case, and the submissions made by the two sides have been narrated by the esteemed Judicial Member in foregoing paragraphs 2 to 20. There is no need to repeat them. (37.1.2) For ready reference, the Assessment Order dated 10.08.2015 of the Assessing Officer ("AO', for short), passed U/s 143(3) of IT Act, is reproduced as under: "Return of income declaring an income of Rs. Nil was filed on 28-09-2013 and has also filed revised return declaring an income Rs. Nil on 07-01-2014. The return was processed u/s 143(1) at the returned income. Subsequently, the case was selected for scrutiny. Statutory notices u/s 143(2) & 142(1) were issued alongwith a detail questionnaire. In response to notices, Shri Vinod Sahni, FCA and Shri Vaibhav Gupta, CA, Authorized Representative of the assessee Company attended and furnished the details as called for books of account produced which were put to test check. The total income of the assessee constitutes income from business a....
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....IT", for short) passed U/s 263 of IT Act is also reproduced as under: "Revision order u/s 263 of the IT Act 1961- in respect of the assessment orders passed u/s 143(3 ) of the IT Act 1961 dated 10.08.2015 for A.Y. 2013-14 The assessee had filed its return of income on 28.09.2013 declaring NIL income and has also filed revised return declaring an income of Rs. NIL on 07.01.2014. Assessment u/s 143(3) of the l.T. Act was completed on 10.08.2015, by the Assessing Officer, Central Circle-16, New Delhi at an income of Rs. 56,420/- (taxed on book profit of Rs. 44.35,247/- u/s 115JB). 2. On examination of the assessment records, it was observed that the assessment order passed by the A.O. u/s 153C/143(3) of the Income Tax Act, on 10.08.2015 for the year under consideration is erroneous, as well as prejudicial to the interests of the revenue to the extent that assessment was completed without proper examination/verification. The assessing officer completed the assessment without proper examination/verification of allowabilty of deduction u/s 80IA and transfer pricing issue. A show cause notice as per the provisions of section 263 of the IT Act was issued to the assessee on 11.10.2....
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.... in the show-cause notice. On 07.11.2017, CA/AR of the assessee Sh. Vinod Sahni filed Power of Attorney and requested for adjournment for I month. Therefore, the case was adjourned to 29.11.2017 at 11:00 AM. Again on 29.11.2017, CA/AR of the assessee Sh. Vinod Sahni filed letter in which he requested for adjournment, the case was adjourned to 11.12.2017. On 11.12.2017, Sh. Vinod Sahni, CA & AR & Sh. Dinesh Kumar on behalf of the assessee company appeared and submitted that Assessing officer had asked the assessee company to submit a detailed note and supporting documents for claiming deduction us/ 801A. In reply to that the assessee company submitted a letter dated 23.07.2015 providing detailed note alongwith five annexure which include notification by CBDT notifying the assessee company as industrial Park eligible for deduction u/s 801A and audit report u/s 801A in Form No. 10CCB in support of claim of deduction u/s80IA. A full set of documents submitted at the time of assessment proceedings are attached as annexure. Further Ld. AO asked information about the claim of deduction in earlier years also, in support of which the assessee company submitted assessment order of those year....
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....company appeared and submitted the reply in support of deduction u/s 80-IA, exempt income earned etc. 4. I have perused the assessment records and submissions made by the assessee in this case. During the year under consideration, the assessee has claimed deduction of Rs. 161,37,41,713/- u/s 80IA for which no substantial enquiry/investigation was conducted by; the AO. Assessing Officer failed to conduct enquiry/investigation of exact amount of profit earned on sale of industrial park and subsequently allowabilty of deduction u/s 80IA. Every assessment year is a separate assessment and Assessing Officer examined the condition for allowabilty' deduction u/s 80IA independently irrespective of the fact that assessee has previously claimed deduction u/s 80IA or not. In the instant case AO has not at all initiated the requisite enquiry with regards to deduction claimed u/s 80tA. It was incumbent on the AO to have noticed the distinguishing feature vis-a-vis the preceding year to the effect that while during preceding year the assessee received only rental/maintenance receipts, during the year under reference the whole infrastructure facility has been sold off for a substantial ....
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....the interest of the Revenue. The expression "prejudicial to the interest of the Revenue" is of wide import and is not confined to merely loss of tax. The term "erroneous" means a wrong/incorrect decision deviating from law. This expression postulates an error which makes an order unsustainable in law. 11. The Assessing Officer is both an investigator and an adjudicator. If the Assessing Officer as an adjudicator decides a question or aspect and makes a wrong assessment which is unsustainable in law, it can be corrected by the Commissioner in exercise of revisionary power. As an investigator, it is incumbent upon the Assessing Officer to investigate the facts required to be examined and verified to compute the taxable income. If the Assessing Officer fails to conduct the said investigation, he commits an error and the word "erroneous" includes failure to make the enquiry. In such cases, the order becomes erroneous because enquiry or verification has not been made and not because a wrong order has been passed on merits. 12. Delhi High Court in Gee Vee Enterprises v. Additional Commission of Income-Tax, Delhi-1, (1975) 99 HR 375, has observed as under: - ....
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.... is directed to restrict himself while framing fresh assessment to the issues discussed above and consider the same as per law after giving due opportunity of being heard to the assessee." (37.2) This appeal is against the aforesaid revision order dated 31.03.2018 Under Section ('U/s' for short) 263 of IT Act passed by the Ld. Commissioner of Income Tax, Central-II, New Delhi. In his impugned revision order dated 31.03.2018; Ld. CIT has held the Assessment Order dated 10.08.2015 of the AO passed U/s 143(3) of IT Act, to be erroneous and prejudicial to the interests of Revenue, on two issues. The first issue pertains to the assessee's claim for deduction U/s 80IA of IT Act. The second issue pertains to applicability of the provisions of section 14A of IT Act, read with Rule 8D of Income Tax Rules, 1962 ('IT Rules', for short). On both the issues, the Ld. CIT has not specifically indentified the exact error in the order of the AO; and he has also not clearly specified the exact prejudice caused to Revenue- except that he opined that the AO did not conduct enquiry / investigation adequately. The opinion of the Ld. CIT that the order of the AO was erroneous and prejudicial to the in....
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....AO are summarized as under: i) Vide letter dated 22.09.2014: a) Original Power of Attorney b) Copy of Acknowledgement and Computation of taxable income for the AY 2013-14 c) Copy of audited Balance sheet along with all Schedules for the year ended 31.03.2013. d) Copy of Tax Audit Report for the year ended 31.03.2013. e) Copy of Form-3CB, Form-29B and 10CCB with acknowledges for the year ended 31.03.2013. ii) Vide letter dated 23.06.2015: a) Copy of ITR, Balance Sheet etc. b) Details and history of Business activities. c) Copy of Memorandum of Association. d) Details of Share Capital pending for allotment. e) Details of Secured and Unsecured Loans. f) Detail of addition to Fixed Assets. iii) Vide letter dated 01.07.2015: a) Details of Sundry Creditors above Rs. 1 Lac. b) Details of Sundry Debtors above Rs. 1 Lac. c) Details of Statutory Liabilities. d) Details of other liabilities. e) Party wise Sale and Purchase and Manufacturing expenses. iv) Vide letter dated 20.07.2015: a) Details of Financial Expenses. b) D....
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..../s 80IA. A full set of documents submitted at the time of assessment proceedings are attached as Annexure. There were detailed discussions on documents submitted and claim of deduction between Ld. Assessing Officer and the AR of the assessee company during various assessment proceedings. Further Ld. Assessing Officer asked information about the claim of deduction in earlier years also, in support of which the assessee company submitted assessment order of those years. These facts are also stated in the assessment order U/s 143(3) of the Income Tax Act for the Assessment year under reference and while passing the order the Ld. Assessing Officer has also disallowed part of the deduction claimed by the assessee company which indicates the depth in which Ld. Assessing Officer went into the claim of deduction u/s 80IA. From the Above facts it is evident that the Ld. Assessing Officer was fully aware of the claim of the assessee company and has enquired fully before passing the assessment order. The assessee company has developed the industrial park at plot no. 15 & 16, Sector 16-A, Noida, District- Noida, Uttar Pradesh-201301 and had applied under industrial park scheme 2002 to claim....
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....nsideration and has claimed the deduction as allowed in Sub -Section 4(iii) of section 80IA. The above facts were made to the knowledge of Ld. Assessing Officer during various discussions and the same was cross verified by him from the Income Tax Act and only thereafter the Ld. Assessing Officer has accepted the claim of the assessee company. Therefore, it is evident that the assessee company had claimed the deduction U/s 80IA 4(iii) for developing and operating the industrial park and not only for operating and maintaining as contemplated in the SCN. Hence while allowing the deduction u/s 80IA4(iii) the Ld A.O. has applied his mind and fully verified the facts before passing the order. The Ld. Assessing Officer has allowed the deduction as per the provisions of this section only and order u/s 143(3) was not an erroneous order. 2) Reply to Point No. 2 (b): During the assessment year under reference the assessee company has earned dividend income amounting to Rs. 77,65,278/-. The dividend was earned from mutual fund investments made during the year. During the assessment proceedings the assesse company filed details of investments in mutual fund along with income earned the....
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....ich the assesse company had submitted various documents and statements during the assessment proceedings for the year under reference. After verifying various documents and evidences submitted by the assesse company the books of accounts were produced before the Assessing Officer and was test checked by him. These facts are also mentioned in the first paragraph of the assessment order passed by the Ld. Assessing Officer. Reproducing verbatim for your reference - 'In response to notices, Shri Vinod Sahni, FCA and Shrl Vaibhav Gupta, FCA Authorized Representative of the assesse company attended and furnished the details as called for books of account produced which were put to test check.' Hence the question of passing the order in haste does not arise at all and fact that assessment order is erroneous and is prejudice to the interest of revenue is unfound. 4) Reply to Point No. 2 (d): The assesse company is engaged in the business of real estate development and has earned rental income on industrial park building during the year under reference. There was difference of Rs. 42,13,138/- in the amount of rent received as shown in the service tax return compared to as shown in ....
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....e company has suffered losses on sale of current investment of Rs. 29,41,25,518/- during the year under reference. The AR has filed script wise profit & loss details of the above loses during the assessment proceedings. The losses were on account of purchase and sale of equity shares through SEBI registered broker M/s Religare Securities Limited at recognized stock exchanges. The assesse company also paid Securities Transaction Tax (STT) on all the share transactions. These facts were explained to the Ld. Assessing Officer and original bills/contract notes/ ledger accounts of broker were produced during test check of books of accounts which were duly verified by the Ld. Assessing Officer. He accepted the loss claimed by the assessee after being satisfied from the supporting produced before him and had passed the order thereafter only. From the above facts it is evident that the Ld. Assessing Officer has duly verified the claim of loss by the assesse company and question of erroneous order does not arise. 7) Reply to Point No. 2(g): The assesse company transferred the shares of wholly owned subsidiary company M/s Valley Computech Ltd. to its another wholly owned subsidiary ....
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....on 80IA(1)- "Where the gross income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with the subject to the provisions of this section, be 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 year.]" * Further, the sub section (2) of section 80-IA states that "the deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him 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 service or develops an industrial park .........." * Further 80-IA(4)(iii) states that: ''any undertaking which develops, develops and operates or maintains and operates an industrial park [or special economic zone] notified by the Central Government in accordance with the scheme ....
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....as for allowed industrial use only in the year under consideration as evident from the half yearly return filed. 2. Proposed condition : Investment required was minimum of Rs. 43 crores Actual : Rs. 46.13 crores were invested by the assessee company as evident from the balance sheet. 3. Proposed Condition : Commencement of IT Park shall be made on or before April 2005 Actual : Much before April 2005 4. Proposed Condition: Under taking shall provide all infrastructure facility for common use such as roads, water supply and sewerage, generation and distribution of power, air conditioning etc. Actual : The companies is providing all these facilities at the IT Park and can be cross verified from the balance sheet & profit & loss account of the company. 5. Proposed Condition: Minimum number of industrial unit shall not be less than four. Actual: Ten * The assessee company has fulfilled all those terms and conditions on which the approval of the Government of India has accorded for setting up of an industrial park. The company has leased out its premises for approved industrial activities to six tenants (occupying more than 90% of Industrial activity area) and ....
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....08.02.2018 Further to our submission dated 11/12/2017 and as required by your good self, we are submitting following information and documents: 1) Reconciliation of Income with Service Tax Return: - A sheet showing Reconciliation of Income with Service Tax Return, Copy of Service tax return and copy of ledger account is attached herewith as Annexure I. 2) Sale of Industrial Park to its Subsidiary and Subsequent to IL.FS:- As submitted earlier the assessee company has sold an industrial park located at Plot No. 15 & 16 at Sector 16A Noida to its wholly owned subsidiary M/s Noida Towers Pvt. Ltd. and subsequently the ownership of that subsidiary was transferred to IL & FS group. All these transactions are supported by valuation report of industrial park and various agreements between the parties. The transaction was made at Arm's Length Price as evident from the valuation report and other supporting documents which are described hereunder and attached as Annexure-II. - In support of transaction was made at Arm's Length Price a copy of Valuation report along with transfer pricing study & report and Agreement for sale of Business undertaking between ETT Li....
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....veloper of an Industrial park situated in Noida and has operated and maintained the same for some years and later on sold it and has earned business income on which it has claimed deduction u/s 80IA under sub clause (iii) of clause 4. Your good self has raised certain points and asked for the clarification with regard to allowability of deduction u/s 80-IA (4) (iii) to the developer of the an Industrial Park. In support of our claim of deduction we are producing herewith following documents and information for your reference : a) Amendment in Finance Act 1999 and Circular No. 779 dated 14-09-1999 issued by CBDT on finance act 1999 : There was an amendment in finance act 1999 in Section 80 IA which has resulted in* enhancement of its scope for the infrastructure activities eligible for exemption. Prior to this amendment section 80-IA (4D) states and we quote "this section applies to any undertaking which begins to operate an industrial park notified by the Central Government in accordance with the scheme framed and notified by that Government for the period beginning on the 1st day of April, 1997 and ending on 31st day of March, 2002". The finance act 1999 has amended the s....
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.... to claim deduction under section 80-IA irrespective of fulfilling the condition of operating and maintaining or developing, maintaining and operating, which ultimately culminated into Amendment under section 80IA, in Finance Act 2001. To avoid misuse of the aforesaid amendment, an Explanation was inserted in section 80-IA, in the Finance Act-2007 and 2009, to clarify that mere works contract would not be eligible for deductions under section 80-IA(4). But, certainly, the Explanation cannot be read to debar the eligibility of the developer. Thus, the aforesaid Explanation was inserted, certainly, to deny the tax holiday to the entities who does only works contract or sub-contract as distinct from the developer. The explanatory memorandum to the Finance Act, 2003 states that the purpose of the tax benefit has all along been to encourage investment in development of infrastructure sector and not for the persons who merely execute the civil construction work as a contractor. It categorically states that the deduction under section 80-IA is available to developers who undertake entrepreneurial and investment risk and not for the contractors, who undertakes only business risk. After ....
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.... categories of profits contemplated as eligible for the benefit of the deduction under Section 80-IA(4)(ii.i), 1. Profits made by an assessee who builds / constructs / a industrial Park and immediately sells, it ("develops") 2. Profits made an assessee who builds / constructs an ("develops and operates") 3. Profits made by an assessee who, without having constructed it, merely maintains and operates an Industrial Park ("maintain and operates") In the instant case, the asseesee company, as mentioned in point no. 2 above, has developed and operated an industrial park and has sold the same during the year under consideration and has claimed the deduction as allowed in Sub - Section 4(iii) of section 80IA. Therefore it is evident that the assessee company had claimed the deduction U/s 80IA 4(iii) for developing and operating the industrial park and not only for operating and maintaining as mentioned in the show cause notice. 2) Expenses in relation to earn exempt income of Rs. 77,65,278/- The assessee company has earned Exempt income by way of dividend on mutual funds which was invested from the money received on sale of industrial park and all the loans were repai....
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....edings u/s 263 of the Income tax Act, for the Assessment Year 2013-14 against the assesse company." (39) It is not clear from perusal of records as to what was the cause of action for initiation of proceedings U/s 263 of IT Act; such as, whether there was any audit objection, or whether any other new information from outside the assessment records were received by the Ld. CIT. Be that as it may, numerous hearings were fixed by the Ld. CIT, including on 07.11.2017, 29.11.2017, 11.12.2017, 10.01.2018, 08.02.2018 and 23.02.2018. Eventually the aforesaid impugned order dated 31.03.2018 was passed by the Ld. CIT on 31.03.2018. Thus, it is seen that although the revision proceedings U/s 263 of IT Act prolonged for a few months, the impugned order was passed by the Ld. CIT on the last day of limitation period, i.e. on 31.03.2018. A perusal of the aforesaid impugned revision order dt. 31.03.2018 passed U/s 263 of IT Act shows that although submissions made by the assessee vide aforesaid written submissions dated 08.02.2018 and 23.02.2018 have been mentioned; the contents of these submissions have not at all been discussed by the Ld. CIT. Even as far as aforesaid written submissions date....
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.... varying in severity and description, are, however, contrary to materials on record. In paragraph (38) of this order, a list of various details filed by the assessee during assessment proceedings, has been summarized. In paragraph (38.1) of this order, the partial disallowance made by the AO out of assessee's claim for deduction U/s 80-IA of IT Act has been mentioned. In paragraphs (38.1.1), (38.1.1.1) and (38.1.1.2) of this order, a gist of the submissions made by the assessee and the materials brought by the assessee for the consideration of the Ld. CIT during proceedings U/s 263 of IT Act, have been included wherein the assessee has elaborately explained the enquiries / investigations conducted by the AO and how the AO examined this aspect and brought evidences on record in this behalf. In paragraphs 22, 23 and 24 of the order of esteemed Judicial Member, he has elaborately explained the enquiries / investigations conducted by the AO and how the AO examined this aspect and brought evidences on record in this behalf. In view of the foregoing, it is readily inferred that the allegations and conclusions of fact expressed by the Ld. CIT as per foregoing paragraph (37.2)(i) are su....
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....brought on record before the Assessing Officer that entire money invested in the mutual funds were out of sales consideration received from the sale of industrial park and this was shown from the bank statements filed during the course of assessment proceedings. Before the Assessing Officer this issue was discussed thread bare and it was specifically pointed out that interest on bank loan amounting to Rs. 1,79,46,655/- related to the period prior to making of the investment and the bank loan was fully paid from the sale consideration of the industrial park, i.e, bank loan was fully paid before making the investment in the mutual funds. In such a situation ostensibly, no interest could have been disallowed. The closing balance of current investment was' nil' and non-current investment was only Rs. 83,509/- at the end of year. It was also stated before the Assessing Officer that no direct or indirect expenditure was incurred to earned the dividend income. After verifying these facts Assessing officer accepted the assessee's plea and no disallowance were made." The esteemed Judicial Member, again in paragraph 34 of his order, has observed: "....There is no whisper by the Ld. CIT as to....
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....asonable that no person acting judicially and property instructed on law could have arrived at it." In the case of CIT v. Nova Promoters and Finlease (P) Ltd. 342 ITR 169 (Delhi), Hon'ble High Court held that findings of facts, based on irrelevant material or by ignoring the relevant material, cannot be upheld. It was also held by the Hon'ble High Court, relying on DIT v. Bharat Diamond Bourse 259 ITR 280 (SC), that perverse findings of fact of the lower authority, or if the findings are such that no person acting judicially and property instructed as to the relevant law could have come to the determination under appeal, are not binding on the appellate authority. In the case of Santosh Hazri v. Purushottam Tiwari 251 ITR 84 (SC), Hon'ble Supreme Court held: "....if the appraisal of the evidence by the trial court suffers from a material irregularity or is based on inadmissible evidence or on conjectures and surmises, the appellate court is entitled to interfere with the finding of fact." In the case of DIT v. Bharat Diamond Bourse 259 ITR 280 (SC), Hon'ble Apex Court held that perverse findings of fact can be disturbed and interfered with. In the case of Mehta Parikh and Co. v.....