TaxTMI 
TaxTMI 
2021 (6) TMI 1030
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....rch operation and therefore no addition can be made in assessment order passed u/s 153A r.w.s. 143(3) in this year. 3. The appellant craves for leave to add, amend any/all the ground of appeal before or during the course of hearing of the appeal. 2. Briefly stated facts of the case relevant to dispute before us are that the assessee, a company, was engaged in the development of Special Economic Zone (SEZ) for Information Technology (IT)/Information Technology enabled services (ITes) in Noida (Uttar Pradesh). For the year under consideration, the assessee filed return of income on 30/09/2011 declaring nil income. A search and seizure action under section 132 of the Income-tax Act, 1961 (in short 'the Act') was carried out at the premises of the assessee on 29/10/2013. A notice under section 153A of the Act was issued on 11/11/2014 for filing return of income consequent to search action. The assessee requested to treat the original return of income filed on 30/09/2011 as return filed in response to notice under section 153A of the Act. In the return of income, the assessee declared net profit of Rs. 155,13,39,200/-, which was claimed as deduction under section 80IAB of th....
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....hat addition was based on core documents being documents and statement recorded both during and post search proceeding. The Ld. CIT(A) in his detailed factual finding held that in the assessment order for making addition there was only reference of the statement of valuer Sh. B.P. Singh, which was recorded in post search proceedings and therefore addition was not based on any incriminating material found during the course of the search. The relevant discussion in the impugned order on the issue whether the disallowance of deduction under section 80 IAB is based on incriminating material or not, is reproduced as under: "4.7 The AO has referred to the appraisal report and stated that the perusal of the appraisal report shows that the case is based on core documents being documents and statements recorded both during and post search proceedings. The appraisal report is a confidential document and cannot be confronted to the appellant. Therefore, mere reference to the appraisal report does not establish the case of the AO. It is undisputed that the incriminating material would be used for the assessment (otherwise, it cannot be said to be incriminating). In the report dated 12....
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....e u/s 153A, AR of the appellant requested to treat original return filed on 30.09.2011 as return filed in response to notice u/s 153A. Subsequently, the AO has reduced the deduction claimed u/s 80IAB because of the dispute on valuation of sold/transfer land. Therefore, there it cannot be under dispute that the fact of transfer/sale of SEZ to Aachvis IT SEZ Infra Pvt. Ltd. and Standard IT Web Solution Pvt. Ltd. was recorded in books of accounts and corresponding return was filed and intimation u/s 143(1) was received before the date of search. A perusal of balance sheet of M/s Aachivis Softtech Pvt. Ltd. for the year ending 31.03.2011 shows that as per sub-paras i), ii) and iii) of para 3 of Schedule 12 (Significant accounting policies and notes annexed to and forming part of Balance Sheet as at 31st March, 2011 and the Profit and Loss Account for the year ended on that date), it is mentioned that there was lease deed dt. 31.09.2007 with NOIDA Authority and later on sub-lease agreements were executed namely i) Co-Development agreement dt. 30.11.2009 read with supplementary Co-Development agreement dt. 30.10.2010 with M/s Aachivis IT SEZ Infra Pvt. Ltd. and ii) Co-Developmen....
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....9-04-2010 and 01-12- 2010 and accordingly on 31st December, 2010, a Tripartite Sub-Lease Deed was executed between the Noida Authority, the Company and fee Sub- Lessee. iil) The Company has further executed another Co-Development agreement dated 30th November 2010 with M/S. Standard IT Web Solutions Pvt. Ltd,, ("Sublessee") for appointment of Sub-lessee as the co-developer to undertake- to - develop, operate and mamtain.fee TT.SEZ project along with the Company of the said IT .SEZ on 5,322 sq. metres as separately earmarked out of a total area of 1,00,498 sq, metres of fee said Plot, which was duly approved by fee BOA, vide approval letter dated 19-04-2010 and accordingly on 31st December, 2010, a Tripartite Sub-Lease Deed was executed between the Noida Authority, the Company and the Sub-Lessee. 4.11 A perusal of audit report u/s 80IAB (Form No. 10CCB) in case of M/s Aachivis Softtech Pvt. Ltd. for AY 2011-12 (ref. column no. 28) shows that there were reporting of transactions between M/s Aachivis Softtech Pvt. Ltd. and i) M/s Aachvis IT SEZ Infra Pvt. Ltd. and ii) M/s Standard IT Web Solution Pvt. Ltd. A copy of relevant portions of the said Schedule 12 are repro....
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....and intimation u/s 143(1) was received before the date of search, there is inevitable conclusion that the 'documents' referred to in the above reproduced portion of notice dated 14.10.2015 were not incriminating. 4.14 Regarding, statement of Sh. BP Singh (valuer), recorded post search (date of recording of this statement is not mentioned) referred to in para 3.2 of the assessment order, it is mentioned that, "During the post search proceedings, statement of Sh. BP Singh, the valuer who had valued the land @Rs. 50,000/- per sqm was recorded. It was stated by him that the land rate was taken as Rs. 50000/- per sq. metre of the developed and working SEZ project where all the facilities were available for this project as per existing market rate in the nearby locality and considering the FAR. He was asked as to whether he was aware that the land was lease hold land for 90 years and he was also asked to explain as to how the valuation of land changes due to this reason. To this it was stated by him that in such a case the valuation should have been done at Rs. 25,000/- if this sale lease hold land." 4.15 It has been argued by the AR that the fact of land being leasehol....
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....t order that the statement of Sh. B.P. Singh was recorded during post search investigation, therefore, it is not recorded u/s 132(4) and hence, prima facie it is not coming under the category of material unearthed during the search. Therefore, it is a material which emanated from the search. However, this onus has not been discharged." 2.2 Thereafter, the Ld. CIT(A) following the judicial precedents on the issue in dispute quashed the impugned reassessment order of the Assessing Officer, observing as under : "5.3 It is held that the AO was not within the jurisdiction bestowed on him by law to make the impugned addition and, therefore, ground (nos. 7 and 8) are allowed the re-assessemnt order under reference is accordingly quashed." 2.3 Aggrieved, the Revenue is in appeal before the Income Tax Appellate Tribunal (in short 'the Tribunal') challenging the finding of the Ld. CIT(A). 3. We have heard representative of both the parties, who appeared through videoconferencing facility. 3.1 The Learned DR relied on the order of the Assessing Officer and referred to para 5(f) of the impugned order, which is reproduction of the remand report of the Assessing Officer. The....
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....50000/ per square metre to M/s standard IT Web solutions private limited as excessive and applied the rate of Rs. 25,000 per square metre and reduced the profit accordingly. The Learned Assessing Officer in para 3.6 to 3.7 of the assessment order has given the basis for reduction in the rate of land. For ready reference , the relevant paragraph are reproduced as under: "3.6 On consideration of replies of the assessee and facts of the case, it is evident that the assessee has transferred its assets and liabilities to its subsidiary companies and ip the process generated profits on account of revaluation of land, which has been leased out to its subsidiaries. This land was shown as work in progress in the books of assessee. Thus, the profits are related to the assets of the approved SEZ and therefore, the profits have to be treated as generated from the operation and maintenance of the SEZ, which is the condition provided in the Sec. 80IAB for availing deduction. However, the contention of the assessee as mentioned w.r.t differential valuation of land is not correct. It is stated by the valuer that in the case of lease hold land, the value is taken at 50% of its val....
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....and gains from the business of development and maintenance of SEZ. Then, as discussed above, the assessee has claimed deduction u/s 80IAB of the Act. Deduction is provided under this section for eligible business income and not any artificially inflated income. Section 80IAB (3) provides that "the provisions contained sub Section (5) and sub section (7) to (12) of section 80IA shall apply to the special economic zones for the purpose of allowing deductions under sub section (1). Further, sub section (8) & (10) of section 80IA provide as under: a) Section 80IA(8).:- "Where any goods [or services] held for the purposes of the eligible business are transferred to any other business carried on by the assessee, or where any goods [or services] held for the purposes of any other business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods [or services] as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of such eligible bus....
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....s. 50000/- per sq. metre for the developed and working SEZ project where all the facilities were available for this project as per existing market rate in the nearby locality and considering the FAR. He was asked as to whether he was aware that the land was . lease hold land for 90 years and he was also asked to explain as to how the valuation of land changes due to this reason. To this it was stated by him that in such a case the valuation should have been done at Rs. 25,000/- if this was lease hold land." 3.6 Evidently, the statement of the BP Singh was not recorded during search proceeding and therefore, there is no question of considering the same as part of the incriminating material found during the course of the search. 3.7 The learned DR has further referred to the remand report of the Assessing Officer, wherein it is mentioned that disallowance in question was based on documents and statement recorded both during and post search proceeding. The learned DR was given opportunity to produce any such search material related to part disallowance under section 80IAB, which is in the nature of the incriminating, but he failed to produce any such incriminating material. The ....
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....: 31" DEC 2010 3. Name of the owner (lessee). M/s AACHVIS SOFTECH P LTD. 4. If the property is under joint ownership. Co-Ownership and Share of each owner Are the Shares undivided. : Company Owner 5. Brief description of property. : 6. Location, street ward no. : G+4-Storey with basement Val Only EXL TOWER-B ONLY SECTOR-144, NOIDA, ,U.P. 7. Survey/Plot no. Of land. : EXL. TOWER-B OF PLOT NO;7 8. Is the property situated in residential/ Commercial/Mixed/Industrial Area. : LT.& SEZ AREA 9. Classification of locality. : HIGH CLASS High class/Middle class/Poor class 10. Proximity to civic amenities like schools, : Hospital, Office, market, cinemas etc. 11. Means and proximity to surface Available near by. : By NOIDA-GREATER NOIDA EXPRESSWAY Communication by which the locality is served. LAND 12. Area of land supported by documentary Proof,shape dimension and physical Feature. : 5322 sqmt. 13. Road or lanes on which the land is Abutting. : NOIDA TO G.NOIDA EXPRESS WAY. 14. Is it Freehold or leasehold land? 15. If leasehold Land the name of lesser/ ....