M/s. Regency Saroj Infrastructure, V. Income-tax Officer,

ITA 429/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4638 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-01-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 14-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: HARI KRISHAN
• Keywords: Opportunity of being heard; Retrospective amendment; Question of law; Difference of opinion
• Section: 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO S.429 & 430 /P U N/201 6 / ASSESSMENT YEAR S : 20 07 - 08 & 2008 - 09 M/S. REGENCY SAROJ INFRASTRUCTURE, C/O FLOWER VALLEY PROPERTIES & BUILDCON, 111/112, ANIL COMPLEX, NEAR REGENCY HALL, NEW LINK ROAD, ULHASNAGAR 421003 PAN : AAAAR3556M ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD 7(1), PUNE / RESPONDENT ASSESSEE BY : S HRI HARI KRISHAN REVENUE BY : SHRI SHIVRAJ MOREY / DATE OF HEARING : 2 6 - 09 - 201 8 / DATE OF PRONOUNCEMENT : 18 - 10 - 201 8 / ORDER PER VIKAS AWASTHY, JM : TH ESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) - II, PUNE DATED 25 - 10 - 2013 COMMON FOR THE ASSESSMENT YEARS 2007 - 08 AND 2008 - 09. 2. THE ASSESSEE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS : 2 ITA NO S. 429 & 430/PUN/2016, A.YS. 2007 - 08 & 2008 - 09 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DISMISSING THE ASSESSEES APPEAL. 2. ON T HE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN NOT APPRECIATING THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION OF RS.15,16,65,920/ - U/S. 80IA(4) OF THE INCOME TAX ACT 1961. 3. THE APPELLANT CRAVES LEAVE TO DELETE OR TO MODIFY, ALTER OR AMEND ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL. IDENTICAL GROUNDS (EXCEPT FOR THE AMOUNTS) HAVE BEEN RAISED BY THE ASSESSEE IN THE APPEAL FOR ASSESSMENT YEAR 2008 - 09. 3. SHRI HARI KRISHAN APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT IN BOTH THE APPEALS THE COMMON ISSUE IS WITH RESPECT TO DISALLOWANCE OF DEDUCTION U/S. 80IA(4) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). THE LD. AR SUBMITTED THAT THE ASSESSEE IS AN AOP. THE ASSESSEE IS A BUILDER AND DEVELOPER. THE ASSESSEE DEVELOPE D A INFORMATION TECHNOLOGY PARK NAMELY, THE METROPOLITAN UNDER INDUSTRIAL PARK SCHEME, 2002 (IN SHORT IPS 2002) AND CLAIMED DEDUCTION OF RS.15,16,65,919/ - U/S. 80IA(4) OF THE ACT ON THE INCOME DERIVED FROM THE SAID INDUSTRIAL PARK . DURING THE SCRUTINY ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2007 - 08 THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS TO BE ELIGIBLE FOR DEDUCTION U/S. 80IA(4) (III) OF THE ACT AND HENCE DISALLOWED ASSESSEES CLAIM OF DEDUCT ION OF RS.15,16,65,919/ - . THE ASSESSEE HAD APPLIED FOR APPROVAL OF PROJECT TO THE MINISTRY OF COMMERCE & INDUSTRY ON 23 - 09 - 2006 UNDER IPS 2002. THE DATE OF COMMENCEMENT OF INDUSTRIAL PARK MENTIONED IN APPLICATION WAS 01 - 07 - 2005, WHICH IN FACT WAS THE DAT E OF COMMENCEMENT OF CONSTRUCTION. THE PUNE MUNICIPAL CORPORATION ISSUED COMPLETION CERTIFICATE ON 29 - 08 - 2007. IT WAS HELD THAT AS PER THE SCHEME IF COMMENCEMENT OF THE PROJECT IS DELAYED BY MORE THAN A YEAR, FRESH APPROVAL IS REQUIRED UNDER IPS 2002 FOR AVAILING BENEFIT U/S. 80IA(4)(III) OF THE ACT. THE IPS 2002 IS APPLICABLE TO UNDERTAKING WHICH 3 ITA NO S. 429 & 430/PUN/2016, A.YS. 2007 - 08 & 2008 - 09 DEVELOPS AND OPERATES OR MAINTAINS AND OPERATES AN INDUSTRIAL PARK BETWEEN 01 - 04 - 1997 AND 31 - 03 - 2006, SINCE, THE ASSESSEE APPLIED FOR APPROVAL AFTER 31 - 03 - 2006 , THE ASSESSEE H AS NOT FOUND ELIGIBLE TO BE COVERED UNDER IPS 2002. THE ASSESSEE CLAIMED DEDUCTION U/S. 80IA(4) AMOUNTING TO RS.7,83,40,480/ - IN ASSESSMENT YEAR 2008 - 09 , AS WELL . THE SAME WAS DISALLOWED FOR THE SIMILAR REASONS. 3.1 THE ASSESSEE FILED WRIT PETITION BEFORE THE HONBLE DELHI HIGH COURT CHALLENGING THE APPLICABILITY OF INDUSTRIAL PARK SCHEME 2008 WITH RETROSPECTIVE EFFECT AS THE SCHEME WAS NOTIFIED BY CBDT ON 08 - 01 - 2008. THE ASSESSEE FURTHER PRAYED THAT THE APPLICATION OF THE ASSESSEE SHO ULD BE CONSIDERED UNDER IPS 2002. THE HONBLE HIGH COURT DISMISSED THE WRIT PETITION OF ASSESSEE. AGAINST THE JUDGMENT OF HONBLE DELHI HIGH COURT IN WRIT PETITION (CIVIL) NO. 13825/2009 DECIDED ON 24 - 01 - 2012 , THE ASSESSEE FILED SPECIAL LEAVE PETITION BE FORE THE HONBLE SUPREME COURT OF INDIA. THE SAID SLP IS PENDING BEFORE THE HONBLE APEX COURT FOR FINAL ADJUDICATION. THE ASSESSEE HAS FILED DECLARATION IN PRESCRIBED FORM NO. 8 U/S. 158A OF THE ACT FOR BOTH THE ASSESSMENT YEARS UNDER APPEAL. THE LD. A R CONTENDED THAT THE DECISION OF HONBLE APEX COURT MAY BE APPLIED IN THE ASSESSMENT YEAR UNDER APPEAL , AS THE ISSUE RAISED IN APPEAL ARE IDENTICAL TO THE ISSUE RAISED IN SLP BEFORE THE HONBLE SUPREME COURT OF INDIA. THE ASSESSEE FILED DECLARATION IN FOR M NO. 8 U/S. 158A OF THE ACT. 4. SHRI SHIVRAJ MOREY REPRESENTING THE DEPARTMENT HAS FILED REPORT DATED 20 - 07 - 2018 FROM THE CONCERNED ITO ON THE DECLARATION OF ASSESSEE. AS PER THE REPORT, THE WRIT PETITION FILED BY ASSESSEE INTER ALIA CHALLENGING THE A SSESSMENT ORDER DATED 22 - 10 - 2010 WAS DISMISSED BY THE HONBLE DELHI HIGH COURT . NOW, THE SLP OF THE ASSESSEE BEFORE THE HONBLE SUPREME COURT OF INDIA IS PENDING FOR FINAL ADJUDICATION AND HAS BEEN TAGGED ALONG WITH THE CASE OF SILVER LAND DEVELOPERS PVT. LTD. 4 ITA NO S. 429 & 430/PUN/2016, A.YS. 2007 - 08 & 2008 - 09 5. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . THE ASSESSEE IN PRESENT SET OF APPEALS HAS FILED DECLARATION IN PRESCRIBED FORM NO. 8 STATING THAT THE ASSESSEE WOULD ABIDE BY THE DECISION IN SLP PENDING BEFORE THE HONBLE APEX COURT, THEREFORE, THE PRESENT APPEALS MAY BE DISPOSED OF ON THE BASIS OF DE CLARATION FILED BY THE ASSESSEE. 6. BEFORE PROCEEDING FURTHER IT WOULD BE RELEVANT TO REFER TO THE PROVISIONS OF SECTION 158A UNDER WHICH THE ASSESSEE HAS FILED DECLARATION. THE RELEVANT EXTRACT OF THE PROVISIONS OF SECTION 158A READS AS UNDER : PROCE DURE WHEN ASSESSEE CLAIMS IDENTICAL QUESTION OF LAW IS PENDING BEFORE HIGH COURT OR SUPREME COURT. 158A. (1) NOTWITHSTANDING ANYTHING CONTAINED IN THIS ACT, WHERE AN ASSESSEE CLAIMS THAT ANY QUESTION OF LAW ARISING IN HIS CASE FOR AN ASSESSMENT YEAR WHICH IS PENDING BEFORE THE [ASSESSING] OFFICER OR ANY APPELLATE AUTHORITY (SUCH CASE BEING HEREAFTER IN THIS SECTION REFERRED TO AS THE RELEVANT CASE) IS IDENTICAL WITH A QUESTION OF LAW ARISING IN HIS CASE FOR ANOTHER ASSESSMENT YEAR WHICH IS PENDING BEFORE T HE HIGH COURT ON A REFERENCE UNDER SECTION 256 OR [BEFORE THE SUPREME COURT ON A REFERENCE UNDER SECTION 257 OR IN APPEAL UNDER SECTION 260A BEFORE THE HIGH COURT OR IN APPEAL UNDER SECTION 261 BEFORE THE SUPREME COURT] (SUCH CASE BEING HEREAFTER IN THIS S ECTION REFERRED TO AS THE OTHER CASE), HE MAY FURNISH TO THE [ASSESSING] OFFICER OR THE APPELLATE AUTHORITY, AS THE CASE MAY BE, A DECLARATION IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER, THAT IF THE [ASSESSING] OFFICER OR THE APPELLATE AU THORITY, AS THE CASE MAY BE, AGREES TO APPLY IN THE RELEVANT CASE THE FINAL DECISION ON THE QUESTION OF LAW IN THE OTHER CASE, HE SHALL NOT RAISE SUCH QUESTION OF LAW IN THE RELEVANT CASE IN APPEAL BEFORE ANY APPELLATE AUTHORITY OR [IN APPEAL BEFORE THE HI GH COURT UNDER SECTION 260A OR IN APPEAL BEFORE THE SUPREME COURT UNDER SECTION 261]. (2) WHERE A DECLARATION UNDER SUB - SECTION (1) IS FURNISHED TO ANY APPELLATE AUTHORITY, THE APPELLATE AUTHORITY SHALL CALL FOR A REPORT FROM THE [ASSESSING] OFFICER ON TH E CORRECTNESS OF THE CLAIM MADE BY THE ASSESSEE AND, WHERE THE [ASSESSING] OFFICER MAKES A REQUEST TO THE APPELLATE AUTHORITY TO GIVE HIM AN OPPORTUNITY OF BEING HEARD IN THE MATTER, THE APPELLATE AUTHORITY SHALL ALLOW HIM SUCH OPPORTUNITY. 7. A BARE PE RUSAL OF PROVISIONS OF SUB - SECTION (1) WOULD SHOW THAT THE PROVISIONS OF SECTION 158A SHALL APPLY WHERE ANY PROCEEDINGS ARE PENDING BEFORE THE HONBLE HIGH COURT ON A REFERENCE U /S. 256 OR BEFORE THE HONBLE SUPREME COURT ON REFERENCE U /S. 257 OR IN APPEAL U /S. 260A BEFORE THE 5 ITA NO S. 429 & 430/PUN/2016, A.YS. 2007 - 08 & 2008 - 09 HONBLE HIGH COURT OR IN APPEAL U /S. 261 BEFORE THE HONBLE SUPREME COURT OF INDIA . THE PROVISIONS OF SECTION 158 A WOULD NOT APPLY WHERE THE PROCEEDINGS ARE PENDING IN EXTRAORDINARY WRIT JURISDICTION BEFORE THE HONBLE HIGH COURT OR IN SUBSEQUENT PROCEEDINGS ARISING THERE FROM PENDING BEFORE THE HONBLE SUPREME COURT OF INDIA. THE PROVISION S OF SECTION 158A DOES NOT EXTEN D TO ANY QUESTION OF LAW RAISED BY THE ASSESSEE IN AN EXTRAORDINARY WRIT JURISDICTION. IN OTHER WORDS, THE PROVIS IONS OF SECTION 158A ONLY DEALS WITH THE SITUATION WHERE ANY REFERENCE U/S. 256 OR U/S. 257 IS PENDING BEFORE THE HONBLE HIGH COURT OR HONBLE SUPREME COURT OF INDIA, RESPECTIVELY AND IN THE CASES OF APPEAL PENDING BEFORE THE HONBLE HIGH COURT U/S. 260A OR BEFORE THE HONBLE SUPREME COURT OF INDIA U/S. 261 OF THE ACT. IN THE PRESENT CASE THE ASSESSEE HAS FILED DECLARATION IN THE PRESCRIBED FORM IN RESPECT OF ISSUES WHICH HAS BEEN ADJUDICATED BY THE HONBLE DELHI HIGH COURT IN WRIT PETITION. SINCE, THE ASSESSEE FAILED TO GET ANY RELIEF FROM THE HONBLE HIGH COURT , THE ASSESSEE HAS FILED SLP BEFORE THE HONBLE APEX COURT AGAINST THE JUDGMENT OF HONBLE DELHI HIGH COURT . THUS, THE DECLARATION S FILED BY ASSESSEE ARE NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 158A , A CCORDINGLY, THE SAME ARE REJECTED. 8. NOW, WE PR OCEED TO TAKE UP THE ISSUES RAISED BY ASSESSEE IN GROUNDS OF APPEAL. IN BOTH THE APPEALS THE ASSESSEE HAS ASSAILED THE ACTION OF AUTHORITIES BELOW IN REJECTING ASSESSEES CLAIM OF DEDUCTION U/S. 80IA(4) OF THE ACT. THE PRIMARY REASON FOR HOLDING ASSESSEE INELIGIBLE FOR CLAIMING BENEFIT U/S. 80IA(4) IS THAT THE ASSESSEE FAILED TO OBTAIN REQUISITE APPROVAL FROM THE MINISTRY OF COMMERCE & INDUSTRY BEFORE THE DUE DATE AS PER IPS 2002. THE IPS 2002 IS APPLICABLE FOR ANY UNDERTAKING WHICH DEVELOPS AND OPERATES OR MAINTAINS AND OPERATES AN INDUSTRIAL PARK FOR THE PERIOD 6 ITA NO S. 429 & 430/PUN/2016, A.YS. 2007 - 08 & 2008 - 09 BEGINNING ON 01 - 04 - 1997 AND ENDING ON 31 - 03 - 2006. THE MINISTRY OF COMMERCE & INDUSTRY, DEPARTMENT OF INDUSTRIAL POLICY & PROMOTION, NEW DELHI VIDE LETTER NO. 15 (103)/2006 - ID - II DATED 22 - 05 - 2009 INTIMATED THE ASSESSEE THAT SINCE THE DATED OF COMMENCEMENT OF THE PARK IS AFTER 31 - 03 - 2006 IT IS NOT COVERED UNDER THE IPS 2002. THE ASSESSEE CHALLENGED THE DENIAL OF APPROVAL BY MINISTRY OF COMMERCE & INDUSTRY UNDER IPS 2002 AND CONSEQUENT REJECTION O F CLAIM U/S. 80IA(4) OF THE ACT. THE HONBLE DELHI HIGH COURT DISMISSED THE WRIT PETITION OF THE ASSESSEE VIDE ORDER DATED 24 - 01 - 2012. THE RELEVANT EXTRACT OF THE JUDGMENT OF HONBLE DELHI HIGH COURT READS AS UNDER : 26. THE FACT NOTICED ABOVE INDICATE THAT THE PETITIONER HAD FILED THE APPLICATION FOR REGISTRATION ON 23RD SEPTEMBER, 2006 AFTER THE 2002, SCHEME HAD COME TO AN END, AS THE SCHEME WAS APPLICABLE ONLY UPTO 31ST MARCH, 2006. THE INDUSTRIAL PARK SET UP BY THEM WAS NOT OPERATIONAL/FUNCTIONAL BY 31ST MARCH, 2006. IT BECAME OPERATIONAL ON A SUBSEQUENT DATE. THE COMPLETION CERTIFICATE FOR THE SAID PARK ISSUED BY THE PUNE MUNICIPAL CORPORATION IS DATED 29TH AUGUST, 2007. THE PETITIONER CANNOT, THEREFORE, CLAIM NOTIFICATION UNDER THE 2002, SCHEME. 27. WE MAY NOTE THAT THE POLICY DATED 8TH JANUARY, 2008 HAS NOT BEEN CHALLENGED BEFORE US ON MERITS. THE GROUND OF CHALLENGE BEFORE US WAS LIMITED TO THE RETROSPECTIVE OPERATION AND TO THE EXTENT THAT THERE IS CONFLICT BETWEEN THE 2008 SCHEME AND THE PARENT A CT, I.E., SECTION 80 IA (4) AS THE PROVISO HAD EXTENDED THE PERIOD OF THE 2002 POLICY. WE HAVE REJECTED THESE CONTENTIONS. A POLICY DECISION, THOUGH NOT BEYOND THE SCOPE AND POWER OF JUDICIAL REVIEW, CAN BE INTERFERED WITH WHEN IT IS WHOLLY IRRATIONAL OR I NCONSISTENT WITH THE EXPRESS OR IMPLIED PROVISIONS OF THE STATUTE. GOVERNMENT IS NORMALLY FREE TO MODIFY, AMEND OR WITHDRAW FISCAL BENEFITS FROM TIME TO TIME AND THEY HAVE RIGHT TO IMPLEMENT THE POLICY DECISIONS. SOMETIMES, THERE CAN BE RADICAL DIFFERENCE OF OPINION ON VIEWS BUT THAT CANNOT BE A GROUND TO SET ASIDE/QUASH A POLICY DECISION. A POLICY DECISION IS QUASHED WHEN THERE IS SOMETHING OVERWHELMING AND IT IS APPARENT THAT THE DECISION IS COMPLETELY IRRATIONAL OR AS STATED ABOVE IS INCONSISTENT WITH TH E EXPRESS OR IMPLIED PROVISIONS OF THE STATUTE. 28. IN VIEW OF THE AFORESAID POSITION, WE DO NOT FIND ANY MERIT IN THE PRESENT WRIT PETITIONS AND THE SAME ARE DISMISSED. THE INTERIM ORDER IS VACATED. LIBERTY IS, HOWEVER, GRANTED TO THE PETITIONER TO FILE A N APPEAL AGAINST THE ASSESSMENT ORDER DATED 22ND OCTOBER, 2010 BEFORE THE APPELLATE AUTHORITY ON MERITS, BUT THE PETITIONER WOULD NOT BE ENTITLED TO QUESTION THE VALIDITY OF THE LETTERS/ORDERS DATED 28TH JULY, 2009 AND 8TH OCTOBER, 2008 IN THE APPELLATE PR OCEEDINGS OR CLAIM THAT THE PETITIONER HAS BEEN REGISTERED UNDER SECTION 80 IA(4)(III) OF THE ACT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THERE WILL BE NO ORDER AS TO COSTS. 7 ITA NO S. 429 & 430/PUN/2016, A.YS. 2007 - 08 & 2008 - 09 9. IT IS ADMITTED BY THE ASSESSEE THAT THE ISSUE RAISED IN THE APPEALS IS IDENTICAL TO THE QUESTIONS RAISED IN WRIT PETITION BEFORE HONBLE DELHI HIGH COURT , THEREFORE, IN THE LIGHT OF THE JUDGMENT OF THE HONBLE HIGH COURT IN WRIT PETITION FILED BY THE ASSES SEE, BOTH THE APPEALS ARE DISMISSED BEING DEVOID OF MERIT. 10. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 18 TH DAY OF OCTOBER, 201 8 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 18 TH OCTOBER, 2018 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - II, PUNE 4. / THE CIT - II, PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE