Hindumal blmukund Investment Co. Pvt. Ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 266/PUN/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2528 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-08-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 16-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJEEV GHEI
• Assessee Lawyers: V L JAIN
• Keywords: Opportunity of being heard; Difference of opinion; Competent authority; Change of opinion
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NOS. 266 & 267/PUN/2015 / ASSESSMENT YEARS : 2010-11 & 2011-12 HINDUMAL BALMUKUND INVESTMENT CO. PVT. LTD., 893/6, LOHIA JAIN HOUSE, BHANDARKAR ROAD, PUNE 411 004 PAN : AAACH4226Q ....... / APPELLANT / V/S. DCIT, CIRCLE-11, PUNE / RESPONDENT ASSESSEE BY : SHRI V.L. JAIN REVENUE BY : SHRI SANJEEV GHEI / DATE OF HEARING : 21.08.2018 / DATE OF PRONOUNCEMENT : 24.08.2018 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE TWO APPEALS FILED BY THE ASSESSEE INVOLVING ASS ESSMENT YEARS 2010-11 AND 2011-12. THEY ARE FILED AGAINST THE SEPARAT E ORDERS OF CIT(A)-1, PUNE COMMONLY DATED 27-02-2015. 2. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER : 1. THE LD.CIT(A) ERRED IN LAW AND FACTS IN NOT GRA NTING A PROPER OPPORTUNITY OF BEING HEARD. 2. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN HOLDI NG THAT THE GROUND RAISED BY THE APPELLANT REGARDING LACK OF OPPORTUNITY OF H EARING BEFORE THE AO IS ACADEMIC. 2 ITA NOS. 266 & 267/PUN/2015 HINDUMAL BALMUKUND INVESTMENT CO. PVT. LTD., 3. THE LD.CIT(A) ERRED ON FACTS AND IN LAW IN CONFI RMING THE ADDITION OF RS.1,51,06,508/- ON ACCOUNT OF DISALLOWANCE OF CLAI M U/S.80IA(4) OF THE INCOME TAX ACT, 1961 FOR THE REASON THAT THE CONDITIONS OF THE NOTIFICATION HAVE NOT BEEN COMPLIED WITH. 4. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND, MODI FY OR DELETE ANY OF THE GROUNDS OF APPEAL, IF DEEMED NECESSARY. FROM THE ABOVE, IT IS EVIDENT THAT THE CORE ISSUE FOR ADJ UDICATION RELATES TO THE ALLOWABILITY OF CLAIM OF DEDUCTION U/S.80IA(4) OF THE ACT IN RESPECT OF THE ELIGIBLE PROFITS EARNED BY THE ASSESSEE FROM IT PARK AND RELATED AC TIVITIES. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT TH E ASSESSEE IS COMPANY ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPER S, OPERATING A BUSINESS CENTRE AND IT PARK AND TRADING IN SHARES. ASS ESSEE FILED THE RETURN OF INCOME ON 15-10-2010 DECLARING TOTAL INCOME OF RS.1,51,06 ,479/- AFTER CLAIMING DEDUCTION OF RS.1,51,06,508/- U/S.80IA(4)(III) OF THE ACT. AO NOTICED THAT AS PER COMPLETION CERTIFICATE ISSUED BY THE PMC ON 29-03-2006, ONLY 7 UNITS HAVE BEEN COMPLETED. THE REMA INING UNITS WERE BEEN COMPLETED BY 07-11-2007. THERE IS NO FRESH APPROV AL OBTAINED BY THE ASSESSEE FOR DELAY OF MORE THAN ONE YEAR. ASSESSEE HA S GIVEN 7 UNITS ON RENT TO IFLEX SOLUTIONS LTD. AND 7 UNITS TO IIFL REALITY LTD. AO OPINED THAT EACH UNIT HAS TO BE ALLOCATED TO EACH DISTINCT PARTY AS PER T HE CONDITION MENTIONED IN INDUSTRIAL PARK SCHEME 2002 UNIT WHICH MEANS SEPARATE AND DISTINCT ENTITY FOR THE PURPOSE OF ONE OR MORE STATE OR CENTRAL TAX LAWS. HOWEVER, THE ASSESSEE HAS GIVEN ITS PARK FOR TWO ENTITIES ONLY. ASSESS EE SUBMITTED ITS ELABORATE SUBMISSIONS AND RELIED ON VARIOUS DECISIONS APART FROM ITS OWN CASE FOR THE A.Y. 2009-10 WHERE DEDUCTION U/S.80IA(4) WAS ALLOWED FOR THE FIRST TIME. REJECTING THE EXPLANATION AS WELL AS THE DECISION S RELIED ON BY THE ASSESSEE, THE AO DENIED CLAIM MADE BY THE ASSESSEE U/S.80IA(4) OF THE A CT. 3 ITA NOS. 266 & 267/PUN/2015 HINDUMAL BALMUKUND INVESTMENT CO. PVT. LTD., THE ABOVE FACTS INDICATE THAT ASSESSEE MADE A CLAIM FOR THE FIRST TIME IN THE A.Y. 2009-10. AFTER DUE VERIFICATION OF THE CLAIM IN THE A .Y. 2009-10, THE SAME WAS ALLOWED. HOWEVER, IN THE A.YRS. 2010-11 AND 201 1-12, THE ALLOWABILITY OF THE CLAIM WAS AGAIN SCRUTINIZED BY THE AO AND THE SAME WAS DISALLOWED. THE DATE OF COMPLETION OF THE ELIGIBLE UNDERTAKING AND APPROVAL FROM THE COMPETENT AUTHORITY WERE THE REASONS FOR THE DENIAL. CONTENTS OF PARA NO. 8 OF THE ASSESSMENT ORDER ARE RELEVANT. IT IS THE CLAIM OF THE AO THAT ONLY 7 UNITS OUT OF THE 14 UNITS WERE COMPLETED, AS PER THE COMPLETION CERTIFICATE ISSUED BY THE PMC DATED 29-03-2006. THE CIT (A) CONFIRMED THE SAID DECISION OF THE AO. AGGRIEVED WITH THE SAME, THE ASSE SSEE IS IN APPEAL FOR BOTH THE YEARS WITH IDENTICAL ISSUES ARISING FROM THE GROUNDS EXTRACTED ABOVE. 4. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ASSESSMENT PROCEEDINGS FOR THE A.Y. 2009-10 AND SUBMITTE D THAT THE CLAIM OF THE ASSESSEE FOR THIS A.Y. 2009-10 STANDS ALLOWED BOTH IN THE REGULAR ASSESSMENT PROCEEDINGS AS WELL AS IN THE RE-ASSESSMENT PROCEEDINGS. REFERRING TO THE WRIT PETITION NO.1899/2016, DATED 17-02-2 016 BEFORE THE HONBLE BOMBAY HIGH COURT, LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE RE-ASSESSMENT PROCEEDINGS, BEING CHANGE OF OPINION, STANDS QUASHED IN THE INTERIM PROCEEDINGS OF THE WRIT. IN THIS REGARD, HE READ T HE CONTENTS OF PARA NO.5 AND THE SAME READS AS UNDER : 5. WE FIND THAT THE ISSUE WHICH ARISES HERE IS THE QUESTION OF JURISDICTION OF THE ASSESSING OFFICER TO ISSUE A NOTICE. THE PETITIONE R HAS SATISFIED US THAT PRIMA- FACIE THIS IS A CLEAR CASE OF CHANGE OF OPINION. I N SUCH CIRCUMSTANCES, THE PETITIONER IS NOT TO BE RELEGATED TO SEEKING THE S TATUTORY ALTERNATIVE REMEDY. FROM THE ABOVE, IT IS EVIDENT THAT THE HONBLE HIGH COURT HAS OBSERVED THAT THE PETITIONER HAS SATISFIED THE COURT THAT PRIMA-FACI E IT IS A CLEAR CASE OF CHANGE OF OPINION . THIS OBSERVATION WAS GIVEN IN THE CONTEXT OF NOTICE DAT ED 4 ITA NOS. 266 & 267/PUN/2015 HINDUMAL BALMUKUND INVESTMENT CO. PVT. LTD., 20-03-2014 ISSUED U/S.148 OF THE ACT. AS PER THE LD. CO UNSEL, THE RE- ASSESSMENT PROCEEDINGS INITIATED BY THE AO STANDS DISMISS ED AND IN EFFECT, THE CLAIM OF DEDUCTION U/S.80IA(4) OF THE ACT STAND ALLOWED IN THE INITIAL OF T HE UNDERTAKING. IN EFFECT, THIS IS A CASE WHERE DEDUCTION IN T HE FIRST YEAR OF THE UNDERTAKING STANDS UNDISTURBED OR NOT WITHDRAWN WITHIN T HE MEANING OF THE RATIO OF THE JUDGMENT IN THE CASE OF CIT VS. PAUL BROTHE RS (SUPRA). UNDER SUCH CIRCUMSTANCES, THE CLAIM OF THE ASSESSEE NEED NOT B E DISTURBED CONSIDERING THE FACT THAT THERE ARE NO CHANGES ON THE FACTS IN THE SUBSEQUENT ASSESSMENT YEARS, I.E. A.YRS. 2010-11 AND 2011-12. FOR TH IS PROPOSITION, LD. COUNSEL BROUGHT OUR ATTENTION TO VARIOUS DECISIONS INCLUDIN G THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PAUL BRO THERS REPORTED IN 216 ITR 548. 5. ON THE OTHER HAND, LD. DR FOR THE REVENUE RELIED HEAV ILY ON THE SUPREME COURT JUDGMENT IN THE CASE OF DCIT VS. M/S. ACE MULTI AXES SYSTEMS LTD. IN CIVIL APPEAL NO.20854/2017 AND OTHERS, DAT ED 05-12-2017 (REPORTED IN 88 TAXMANN.COM. 69 (SC). LD. DR SUBMITTED THAT THIS JUDGMENT IS GIVEN IN THE CONTEXT OF DENIAL DEDUCTION U/S.80IB OF THE ACT IN RESPECT OF A SMALL SCALE INDUSTRY MATURING INTO LARGE UNIT. 6. WE HEARD BOTH THE PARTIES ON THIS LEGAL ISSUE OF APPLICA BILITY OF THE RATIO OF THE BINDING JUDGMENT OF HONBLE JURISDICTION HIGH COURT IN THE CASE OF CIT VS. PAUL BROTHERS (SUPRA). THE SAID JUDGMENT IS RELEVANT FO R THE FOLLOWING PROPOSITION : 6. EITHER IN SECTION 80HH OR IN SECTION 80J, THERE IS NO PROVISION FOR WITHDRAWAL OF SPECIAL DEDUCTION FOR THE SUBSEQUENT YEARS FOR BREACH OF CERTAIN CONDITIONS. HENCE UNLESS THE RELIEF GRANTED FOR THE ASSESSMENT YEAR 1980-81 WAS WITHDRAWN, THE INCOME-TAX OFFICER COULD NOT HAVE WITHHELD THE RELIEF FOR THE SUBSEQUENT YEARS. 5 ITA NOS. 266 & 267/PUN/2015 HINDUMAL BALMUKUND INVESTMENT CO. PVT. LTD., FROM THE ABOVE, IT IS EVIDENT THAT UNLESS THE RELIEF CLAIMED IN THE FIRST YEAR OF UNDERTAKING IS WITHDRAWN, THE AO CANNOT WITHHOLD T HE RELIEF FOR THE SUBSEQUENT YEARS. IN THE PRESENT CASE, THOUGH AN ATT EMPT IS MADE TO WITHDRAW THE CLAIM OF DEDUCTION THROUGH THE INVOKING OF THE PROVISIONS OF SECTION 148 OF THE ACT, THE SAME DID NOT FRUCTIFY FOR ONE REASON OR THE OTHER AND THE JUDGMENT OF THE HONBLE HIGH COURT IN THE WRIT PROCEEDINGS EVIDENCES THE SAME. IN EFFECT, THE CLAIM OF THE ASSESSEE U/S.80IA(4) OF THE ACT STANDS ALLOWED IN THE FIRST YEAR OF UNDERTAKING. CONSIDERING THE FACT THAT THE SAME IS ALLOWED IN THE FIRST Y EAR OF UNDERTAKING, THE AO CANNOT WITHDRAW THE DEDUCTION WHEN THE FACTS ARE IDENTICAL. THEREFORE, WE ARE OF THE OPINION THAT THE JUDGM ENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PAUL BROTHER S (SUPRA) STANDS APPLICABLE TO THE FACTS OF THE PRESENT CASE LEGALLY. 7. FURTHER, FOR COMMENTING OUR VIEW ON THE ISSUE, WE ALSO PERUSED THE JUDGMENT IN THE CASE OF CIT VS. WESTERN OUTDOOR INTERA CTIVE PVT. LTD. REPORTED IN 349 ITR 309 (BOM.) WHEREIN THE HONBLE HIGH CO URT HELD AS UNDER: 6) WE HAVE CONSIDERED THE SUBMISSIONS. WE FIND THA T THE SUBMISSIONS MADE BY MR. PARDIWALLA ON THE BASIS OF THE DECISION OF THIS COURT IN THE MATTER OF PAUL BROTHERS (SUPRA) AND DIRECTOR OF INFORMATION PVT. L TD. (SUPRA) MERITS ACCEPTANCE. THEREFORE, IN THIS CASE, IT IS NOT NECESSARY FOR US TO DECIDE WHETHER SEEPZ UNIT WAS SET UP/FORMED BY SPLITTING UP OF THE FIRST UNIT . IN BOTH THE ABOVE DECISIONS, THIS COURT HAS HELD THAT WHERE A BENEFIT OF DEDUCTI ON IS AVAILABLE FOR A PARTICULAR NUMBER OF YEARS ON SATISFACTION OF CERTA IN CONDITIONS UNDER THE PROVISIONS OF THE INCOME TAX ACT, THEN UNLESS RELIE F GRANTED FOR THE FIRST ASSESSMENT YEAR IN WHICH THE CLAIM WAS MADE AND ACC EPTED IS WITHDRAWN OR SET ASIDE, THE INCOME TAX OFFICER CANNOT WITHDRAW T HE RELIEF FOR SUBSEQUENT YEARS. MORE PARTICULARLY SO, WHEN THE REVENUE HAS N OT EVEN SUGGESTED THAT THERE WAS ANY CHANGE IN THE FACTS WARRANTING A DIFF ERENT VIEW FOR SUBSEQUENT YEARS. IN THIS CASE FOR THE ASSESSMENT YEARS 2000-01 AND 2 001 02 THE RELIEF GRANTED UNDER SECTION 10A OF THE ACT TO SEEP Z UNIT HAS NOT BEEN WITHDRAWN. THERE IS NO CHANGE IN THE FACTS WHICH WE RE IN EXISTENCE DURING THE ASSESSMENT YEAR 2000 01 VIS A VIS THE CLAIM TO EXEMPTION UNDER SECTION 10A OF THE ACT. THEREFORE, IT IS NOT OPEN TO THE DEPARTMENT TO DENY THE BENEFIT OF SECTION 10A FOR SUBSEQUENT A SSESSMENT YEARS I.E. ASSESSMENT YEARS 2002 03 AND 2003 04 AND 2004 05. BESIDES THAT, ON CONSIDERATION OF THE FACTS INVOLVED BOTH THE COMMIS SIONER OF INCOME TAX 6 ITA NOS. 266 & 267/PUN/2015 HINDUMAL BALMUKUND INVESTMENT CO. PVT. LTD., (APPEALS) AND THE TRIBUNAL HAVE RECORDED A FINDING OF FACT THAT THE SEEPZ UNIT IS NOT FORMED BY SPLITTING UP OF THE FIRST UNIT. 8. FURTHER, IN THE CASE OF M/S. YGYAN CONSULTING PVT. LTD . VS. DCIT IN ITA NO.65/PUN/2015 DATED 13-10-2017, THE PUNE BENCH OF THE TRIBUNAL OBSERVED AS UNDER : 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPR ESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. THE FIRST GROUND RAISED IN APPEAL BY ASSESSEE IS WITH RESPECT TO ASS ESSEE'S ELIGIBILITY FOR CLAIMING DEDUCTION U/S. 10A OF THE ACT. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE COMPANY WAS INCORPORATED IN THE YEAR 1991. THE DOCU MENTS ON RECORD SHOW THAT THE ASSESSEE WAS GRANTED STPI APPROVAL ON 30-0 3-2000. BEFORE GRANT OF APPROVAL THE ASSESSEE COULD NOT HAVE CLAIMED DEDUCTI ON U/S. 10A OF THE ACT. THE LD. AR HAS STATED AT THE BAR THAT FIRST YEAR FO R CLAIMING DEDUCTION U/S. 10A WAS ASSESSMENT YEAR 2001-02. THOUGH THE LD. AR COUL D NOT PLACE ON RECORD ASSESSEE'S RETURN OF INCOME IN ASSESSMENT YEAR 2001 -02 AND THE ASSESSMENT ORDER FOR THE SAID ASSESSMENT YEAR, HOWEVER, THE AS SESSEE HAS FURNISHED A COPY OF ASSESSMENT ORDER FOR ASSESSMENT YEAR 2004-0 5. A PERUSAL OF THE SAID ASSESSMENT ORDER AT PAGES 30 TO 40 OF THE PAPER BOO K CLEARLY INDICATE THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 10A IN RESPECT OF PROFITS FROM STPI UNIT AND THE SAME HAS BEEN ALLOWED BY THE ASSESSING OFFI CER IN SCRUTINY ASSESSMENT. ONCE HAVING ACCEPTED THE CLAIM OF ASSESS EE, THE REVENUE CANNOT QUESTION ASSESSEE'S ELIGIBILITY FOR CLAIMING SUCH D EDUCTION IN SUBSEQUENT ASSESSMENT YEARS. THE HON'BLE JURISDICTIONAL HIGH C OURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. PAUL BROTHERS (SUPRA) HAS OBSERVED THAT THERE IS NO PROVISION FOR WITHDRAWAL OF SPECIAL DEDUCTION FOR THE SUBSEQUENT YEARS FOR BREACH OF CERTAIN CONDITIONS. UNLESS THE RELIEF ITA NO. 65/PUN/2015, A.Y. 2005-06 GRANTED FOR THE INITIAL ASSESSMENT YEAR IS WITHDRAWN, THE ITO COULD NOT HAVE WITHHELD THE RELIEF FOR THE SUBSEQUENT YEARS. THUS, IN VIEW OF THE FACT THAT THE ASSESSEE'S CLAIM OF DEDUCTION U/S. 10A WAS NEVER QUESTIONED BY THE REVENUE IN INI TIAL ASSESSMENT YEAR, THE ASSESSING OFFICER CANNOT RAISE QUESTION O VER ASSESSEE'S ELIGIBILITY FOR CLAIMING DEDUCTION IN ANY OF THE SU BSEQUENT ASSESSMENT YEARS. THE LD. DR HAS ALSO ACCEPTED THE FACT THAT IN ASSE SSMENT YEAR 2004-05, ASSESSEE'S CLAIM OF DEDUCTION U/S. 10A WAS ALLOWED BY ASSESSING OFFICER IN SCRUTINY ASSESSMENT PROCEEDINGS. THUS, IN VIEW OF T HE FACTS OF THE CASE AND THE LAW LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH CO URT, GROUND NO. 1 RAISED IN APPEAL BY THE ASSESSEE IS ALLOWED. CONSIDERING THE ABOVE, WE ARE OF THE CONSIDERED OPINION, IN VIEW OF THE BINDING RATIO IN THE CASE OF CIT VS. PAUL BROTHERS (SUPRA) THAT THE ASSESSEE IS ENTITLED TO RELIEF FOR BOTH THE YEARS ON THIS LEGAL ISSUE ALON E. CONSIDERING THE RELIEF GRANTED TO THE ASSESSEE ON TECHNICALITIES, WE ARE OP INION THAT ADJUDICATION OF THE GROUNDS ON MERITS BECOMES AN ACADEM IC EXERCISE. ACCORDINGLY, THE RELEVANT GROUNDS ARE DISMISSED. 7 ITA NOS. 266 & 267/PUN/2015 HINDUMAL BALMUKUND INVESTMENT CO. PVT. LTD., 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWE D. ORDER PRONOUNCED ON 24 TH DAY OF AUGUST, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . / D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 24 TH AUGUST, 2018. SATISH # # # # / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS)-1, PUNE. 4. THE CIT-1, PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE.