TaxTMI 
TaxTMI 
2021 (5) TMI 280
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.... 263 of the Act, the Pr. CIT called for assessment records of the assessee and on perusal of the same, he observed that, prima facie, assessment order passed u/s 143(3) dated 27-03-2014 is erroneous and prejudicial to the interests of revenue as the Assessing Officer while passing the impugned order allowing the deduction u/s 80IA(4)(iii), has not verified all relevant facts in respect of satisfaction or otherwise of all conditions regarding its claim for deduction u/s 80IA(4). He further observed that while completing the assessment, the Assessing Officer treated the lease rentals received from industrial park as business income and allowed deduction u/s 80IA(4) amounting to Rs. 13,67,23,850/- by relying on the decision of the Hon'ble ITAT, Hyderabad in the case of M/s Janapriya Properties Pvt. Ltd. Also he observed that assessment orders for the A.Ys 2006-07, 2007-08 and 2009-10 had been reviewed by the CIT-2, Hyderabad and orders u/s 263 were passed on 28-03-2014 wherein the CIT-2, Hyderabad held that the income from lease rentals is income from business but not income from house property and also held in respect of AY 2009-10 that the assessee is not entitled for deduction ....
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....ny, through Form No. IPS-1 dated 20.10.2004, had made an application under the Industrial Park Scheme, 2002 (IPS, 2002). The Ministry of Commerce and Industry (MCI) vide order dated 24 November 2004 (A copy of the same is at pages 27-30 of the paper book), accorded it's approval to the appellant company for setting up an Industrial Park, in terms of the IPS 2002. Thereafter, the Central Board of Direct Taxes (CBDT), acting on behalf of the Ministry of Finance, vide notification dated 22 August 2006 notified the appellant as an Industrial Park eligible for deduction u/s 80-IA(4)(iii) of the Act (a copy of the said notification is available at pages 31-35 of the paper book). 4. As per this approval and the notification, the date of commencement of the Industrial Park was prescribed as 31.01.2006 and in case of delay by more than a year, i.e to say after 31.01.2007, the Appellant company ought to approach the Ministry of Commerce and Industry for a fresh approval. One more note worthy point mentioned in the MCI approval as well as the CSDT notification was that the benefit of deduction u/s 80-IA(4)(iii) of the Act would only be available after 30 units would be located in....
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....07, 2007-08 and 2009-10, proposed to hold the assessment order passed for AY. 201112 u/s 143(3) of the Act as prejudicial to the interest of revenue and sought to revise u/s 263 of the Act. The Ld. PCIT further mentioned that in the proceedings u/s 263 of the Act for A Y. 2009-10, it was seen that the appellant had not fulfilled the eligibility conditions for claiming deduction u/s 80-IA of the Act. , 9. Thereafter, submissions along with documentary evidences were made before the Ld. PCIT. However, the Ld. PCIT rejected all the submissions made by the appellant and vide his order dated 30.03.2016 withdrew the claim of deduction u/s 80-IA of the Act. The observations as well as the decision of the Ld. PCIT will be dealt more elaborately by the appellant in subsequent paragraphs. Broadly, the Ld. PCIT held as under: a. The appellant has not commenced the Industrial park before the cut off date, which is 31-01-2007 as per the approval from the MCI as well as notification of the CBDT. Thus, the appellant has violated the terms of approval. b. As per the Industrial Park Scheme 2008, a Park can be said to have commenced when completion certificate in respect o....
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.... the commencement of the Industrial Park. The requirement under the Industrial Park Scheme 2008 can not be applied to the appellant; d. Without prejudice to the above, all the buildings were ready before the cut-off date of 31.01.2007 and hence the condition was complied with. We submit our detailed arguments in respect of each of the propositions as under; I: When deduction u/s 80-IA(4) of the Income-tax Act; 1961 has been granted in first year of claim. the same cannot be declined in subsequent years 11. Under the provisions of section 80-IA of the Act, an eligible industrial undertaking is entitled to claim a 100% deduction of the profits and gains arising out of the eligible business. The said deduction is available for 10 consecutive years from the initial year. 12. In case of the appellant, it is pertinent to note that the initial year i.e. the first year in which the deduction u/s 80-IA(4) of the Act was claimed is A.Y. 2009-10. Accordingly, the impugned A.Y. is the third year of claim. Thus, the humble point which the appellant is making here is that the examination of the eligibility of deduction u/s 80-IA(4) of the Act should h....
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.... Thereafter, the Hon'ble Commissioner of Income Tax-II (CIT), issued a notice u/s 263 of the Act dated 27 January 2014 stating that the order passed on 30 December 2011 is erroneous and prejudicial to the interest of revenue and thus needs to be revised. Subsequently, the order u/s 263 of the Act was passed holding that i) the income of the appellant is to be taxed as income from business and ii) since the minimum of 30 units have not been located in the Industrial Park, a pre-condition of claiming the deduction, the appellant is not eligible for deduction u/s 80IA(4) of the Act. d. This order was then challenged before the Hon'ble Hyderabad bench of the IT AT. The Hon'ble Bench vide common order dated 7 November 2014 for AY. 2006-07, 2007-08 and 2009-10 decided the appeal in favour of the appellant. A copy of the order has been enclosed in the paper book at pages 120-147. 17. Aggrieved by the order of the Hon'ble Tribunal, the department has preferred an appeal before the Hon'ble High Court which is pending as on date. However, the ground raised by the department before the Hon'ble High Court does not dwell with the 30 units criteria which....
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....-IA(4)(iii) of the Act has been granted in AY. 2009-10, it is not open for the department to dispute it in the second year, being AY. 2010-11. The relevant extracts of the decision are reproduced below for the sake of ready reference; Page No. 16 of the ITAT order, Page No. 329 of the Paperbook: "19. Further, we also find that this is the second year of the claim of deduction under section 80lA of the I. T. Act. The Coordinate Bench of this Tribunal in the cases of ACIT vs. Annapuma Builders and Janapriya Properties P. Ltd., vs. DCIT (cited supra), has held that as long as the approval given by the Central Government is valid and not withdrawn by it, the assessee would be entitled to deduction under section 80lA(4)(iii) of the Act. Further, various High Courts such as Gujrat High Court, Bombay High Court and Delhi High Court in the cases relied upon by the Ld. Counsel for the assessee (cited supra) have held that where deduction has been allowed under sections BOHH and BOJ in the earlier year, there ;s no provision for withdrawal of such deduction for the subsequent years for breach of certain conditions. 20. In the case before us, the assessee has been a....
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....ce to the above, the Ld. PCIT has no jurisdiction to adjudicate on the compliance to the conditions of approval granted by the Ministry of Commerce and Industry 21. At the outset, we would like to draw Your Honours' attention to the IPS 2002. A copy of the same is enclosed in the Paper book at Page No.1. The said scheme was introduced by the MCI (DIPP) on behalf of the Central Government. As per the scheme, undertakings engaged in the business of developing, developing and operating or maintaining and operating an industrial park notified by the Central Government in accordance with that scheme shall be eligible for deduction u/s 80-IA(4)(iii) of the Act. The same is as per para 2(h) of the IPS 2002. 22. Further, para 5 and para 7 of the IPS 2002 deal with the mode of getting approval in the said scheme. Para 5 deals with Automatic Approval and para 7 deals with Non-Automatic Mode. There are conditions attached to these modes. Para 9 deals with the General Conditions. The same has been reproduced below for the sake of convenience; "9. General Conditions- (1) In case the commencing of the Industrial Model Town or Industrial Park or Growth Cent....
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....the period when benefits under this Scheme are to be availed. The Government may withdraw the above approval in case of failure to comply with any of the conditions" (Emphasis supplied) 25. Thereafter this approval has been notified by the Ministry of Finance through the CBDT vide notification dated 22 August 2006 which has been enclosed at pages 31-35 of the paper book. In that notification as well, it is mentioned that the approval may be withdrawn by the Central Government. The relevant extract of the notification has been reproduced below: "11. The conditions mentioned in this notification as well as those included in the Industrial Park Scheme, 2002 should be adhered to during the period for which benefits under this scheme are to be availed. The Central Government may withdraw the above approval in case Mis. K Raheja IT Park (Hyderabad) Private Limited, fails to comply with any of the conditions. " (Emphasis supplied) 26. It shall be pertinent to note that after receiving the accord from the Central Government through the Ministry of Commerce and Industry, the appellant was required to file bi-annual returns in IPS-II containing various particulars.....
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....d be entitled to the benefit of deduction u/s. 80lA (4)(iii). II (Emphasis supplied) 29. Further, we would like to draw Your Honours' attention to the decision of the Hon'ble Tribunal in the case of DCIT v. Janapriya Properties Pvt Ltd [ITA No. 1746/Hyd/2016] (a copy of the decision has been enclosed as Annexure 2). While adjudicating the matter, the Hon'ble Tribunal relied on the decision of the Annapurna Builders. The relevant extract of the decision has been reproduced as under: "11. Considered the rival submissions and perused the material facts on record. The issue under consideration is squarely covered by the decision of the coordinate bench of this Tribunal in the case of Annapurna Builders (supra). The Id. DR neither controverted this fact nor brought any contrary decision in this regard. Therefore, we uphold the order of the CIT(A) in allowing the assessee's claim of deduction u/sBDIA(4)(iii) as his decision is in consonance with the decision of the coordinate bench. " 30. We would like to place reliance on the decision of the Hon'ble Gujarat High Court in the case of Creative Infocity Ltd v. Under secretary [Special civil ap....
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....any other revenue authority to go behind such approval certificate and reexamine for himself, the fulfillment of the conditions contained in sub-rule(1) of rule 18DA. These conditions are prescribed in terms of clause no. (iv) of Subsection(8A) of section 80lB of the Act. The Commissioner was therefore, completely in error in observing that even though the assessee company had valid approval issued by the prescribed authority, the Assessing Officer still had to examine whether such company had fulfilled the conditions referred to in clause(iv), as such other conditions as may be prescribed, reference to which we find in rule 18DA. Any other view would create conflict of decision making process. Even counsel for the Revenue could not dispute that many of these requirements prescribed under rule 18DA are to be examined by the prescribed authority. If once the prescribed authority examines such conditions and upon being satisfied that the conditions are fulfilled, grants approval, can the Assessing Officer take a different view? The answer obviously has to be negative.}} (Emphasis supplied) 32. Further, kind attention is also invited to the corresponding order of the....
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....nt to IPS 2002. The Central Government is the only authority to grant the approval and withdraw it in the event of non-compliance to the conditions of the approval. 35. Further, in the appellant's own case for A.Y. 2010-11, the Hon'ble ITAT at paragraph 19 of the order (Page No. 329 of the Paper book) has held as under: "19. Further, we also find that this is the second year of the claim of deduction under section 80-IA of the I.T. Act. The Coordinate Bench of this Tribunal in the case of ACIT Vs Annapurna Builders and Janapriya Properties P Ltd Vs DCIT (cited Supra), has held that as long as the approval given by the Central Government is valid and not withdrawn by it, the assessee would be entitled to deduction under section BOIA(4)(iii) of the Act." 36. Thus, the above proposition stands considered and accepted by the Hon'ble Tribunal in the case of the appellant in the immediately preceding year and hence the issue is fully covered in favour of the appellant. Therefore, we humbly submit that the Industrial Park of the appellant has been approved by the Ministry of Commerce and Industry as an eligible undertaking vide it's approval date....
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....date of commencement. It is only the Form IPS-I which defines the expected/actual date of commencement to be: "The 'Expected/Actual date of commencement of Industrial Model Town/ Industrial Park/ Growth Centre' denotes the date of when all infrastructural facilities for the proposed number of industrial units have been provided. If the Park is proposed to be developed in Phases, the detailed information on the same may be also suitably mentioned along with the application." 41. Upon perusal of the above paras, it becomes clear that the appellant was governed by IPS 2002. It is nobody's case that the appellant has not satisfied the condition of the commencement within the meaning of IPS 2002. Now attention is drawn to the order of Ld. PClT, para 11, which is reproduced below for the sake of ready reference: "11. A copy of the Industrial Park Scheme which was published in the Gazette of India vide SO 354 (e ) states that in exercise of the powers conferred by Section 80lA 4(iii) of the IT Act, 1961, the Central Government hereby frames the said scheme for industrial parks. In the scheme, infrastructure development was defined to include roads (i....
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....he assessee and the assessee could not have visualized the scheme of 2008 in the year 2002. The relevant portion of the decision has been reproduced as under for the sake of ready reference: "9. .. .. In the absence of any definition of date of commencement in the Scheme 2002, the definition clause of Scheme 2008 cannot be borrowed/adopted to deny the benefit of Scheme 2002. The arguments of the learned counsel for the revenue that issue of Occupation Certificate by the competent Authority is the relevant date for the date of commencement cannot be countenanced, there being no such reference made in the Scheme 2002. In the year 2002 the petitioner would not have visualized the Scheme of 2008 coming with specific definition clause." 44. To put the argument of the appellant - that its case is not governed by 2008 scheme - beyond any doubt, the reliance is placed upon para 6 of 2008 scheme (page 69 of the paper book) according to which Industrial Park approved by 2002 scheme will continue to be governed by the 2002 scheme. 45. Therefore, it is submitted that the action of the Ld. PCIT in imposing one of the condition of 2008 scheme in the case of the appella....
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....ancy Certificate-issued-reg'. The body of the covering letter also states 'With reference to the above, I enclose herewith Final Occupancy Certificate in respect of Building NO.1A'. Further, the OC itself contains heading 'Final Occupancy Certificate'. Also, the body of the OC states 'This building has been completed under the supervision of the Structural Engineers Mis Potential Services Consultants (License No. 240/SEITP10 /MCH/04) and Architect Sri Bihari Lund) CA 80/5547.' 51. All the above highlighted portions clearly substantiate that the OC issued on 31.01.2007 is Final OC and the apprehensions drawn by the Ld. PCIT are clearly misplaced. Further, at page 8 of the order u/s 263, the Ld. PCIT is referring to the Fire NOC of the building no. 1A. The relevant extract of the Ld. PCIT's observation has been reproduced below: ii ****** The NOC issued by the Director General of Fire Services in respect of this building NO.1 A is dated 23.03.2007. This certificate was issued with reference to the Multi Storeyed Building (MSB) Inspection Committee Report dated 12.03.2007 in LR RC No. 7256/E4/04 and it states that occupancy certificate....
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....h was not in force during the relevant period. The arguments of the learned counsel for the revenue on these grounds requires to be negated. " 55. The Hon'ble Karnataka High Court has further relied upon following decisions in support of the proposition that the relevant date is the date of application made by the assessee; a) CIT v. Tarnetar Corporation 362 ITR 174 (Guj) b) CIT v. Ceebros Hotels P. Ltd. 409 ITR 423 (Mad) c) PCIT v. Ambey Developers P. Ltd. 399 ITR 216 (P&H) 56. Further, we would like to draw Your Honours' attention to the decision of the Hon'ble Bombay High Court in the case of CIT v. Hindustan Samuh Awas Ltd [2015] [62 taxmann.com 175 (Bombay)] (a copy of the said order has been enclosed as Annexure 7) wherein it is held that if an application is moved quite in time, for seeking completion certificate from the Municipal Authorities, and if they do not take steps urgently and delay the issuance of completion certificate from their side, it cannot be said that such certificate would alone decide the date of completion of the project. The relevant extract of the order has been reproduced as under: " U....
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....ry right to examine the eligibility conditions. Approval by the Department of Commerce & Industries and notification by CBDT are the essential requirements. These approvals presume that the assessee will meet the conditions. In a case where the assessee resorts to violation or non-compliance of the said conditions and such violations are not in the notice of the approving Authority, it does not mean that the assessee is eligible for deduction even when the assessee does not meet the required conditions. The argument that the provisions of Section 80IA have to be applied automatically as long as approval is not revoked is devoid of merit because verification of eligibility conditions by the LT. Authorities is an inherent statutory duty. Accepting such a plea would defeat the purpose of granting of deduction. Therefore, the Income Tax Authorities are well within their statutory power to examine whether the eligibility conditions are met or not. 4. In the present case, the Pr.CIT assumed jurisdiction u/s 263 of the Act in rightful manner because there was clear evidence on record that the conditions were not met and the AO did not examine the matter and granted deduc....
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....humbly submitted that with regard to three documents which are in the nature of application for fire safety NOC are not admissible as additional evidence because the assessee did not cite any reasons as to why he was prevented by any sufficient cause for not filing the same before lower authorities. Also, the said three documents involves matters necessitating detailed factual enquiry and therefore on this ground also, the same are not admissible. 9. With regard to fourth document which is a confirmation letter of issuing occupancy certificate at an earlier date by TSIIC Ltd on 9.10.2020, it is submitted that this document is of no relevance because it is again a routine certificate issued on the basis of earlier routine occupancy certificate. 10. Lastly, reliance is placed on the decision of Hon'ble Supreme Court in the case of Dilip Kumar & Company [95 taxmann.com 325] wherein the Constitutional Bench of Hon'ble Supreme Court held that exemption provisions are to be interpreted strictly and in case of any ambiguity the benefit will flow to the Revenue. In the present case, unless fire safety clearance is available, the routine occupancy certificates are ....
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.... taxed under the head 'Profits and Gains from business or profession'. 7.1 The Pr.CIT relying on the orders passed u/s 263 of the Act for AY 2006-07, 2007-08 and 2009-10, held that the assessment order passed for AY 2011-12 is prejudicial to the interests of the revenue and directed the AO to revise the assessment order by disallowing the assessee's claim of deduction u/s 80IA of the Act as the assessee has not fulfilled the eligibility conditions for claiming deduction u/s 80IA. 7.2 The contention of the ld. AR of the assessee before us is that when deduction u/s 80IA(4) has been granted in the first year of claim, the same cannot be declined in the subsequent years. In this connection, ld. AR of the assessee relied on the decision of the ITAT in assessee's own case for AY 2009-10 wherein the ITAT decided the issue in favour of the assessee. In assessee's own case for AY 2010-11 in ITA No. 1774/Hyd/2014 and others, dated 11/07/2016, the order of which is placed at pages 314 to 337 of the paper book, the coordinate bench of ITAT, Hyderabad held as under: "19. Further, we also find that this is the second year of the claim of deduction under section 80lA of th....
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....ection 263 by Ld, CIT, we are convinced that the orders of A.O. are not either erroneous or prejudicial to the interests of Revenue. In A.Ys. 2006-07 and 2007-08, since the issues were concluded in earlier orders and not in the orders sought to be revised, they are also time barred. In view of this, in all the impugned assessment years assessee's contentions are accepted and the orders of Ld, CIT under section 263 are set aside. We restore the orders of Assessing Officer in respective years. Accordingly, in all the three appeals, grounds raised by assessee are allowed." 7.4 Referring to the above decisions of coordinate bench in assessee's own case, the ld. AR of the assessee strongly contended that the eligibility of the deduction under section 80-IA(4)(iii) of the Act must be tested in the first year of the claim. The department is not empowered to test the requirement of the section for each of the 9 consecutive years. This argument has been upheld by the Hon'ble ITAT in the appellant's own case in A.Y. 2010-11 and in the year under consideration a different view can not be taken. No new facts have been pointed out which were not existing in the earlier years. ....