Parakar Hospital & Research Institute P. Ltd., V. Pr. Commissioner of Income-tax - 2,

ITA 795/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7226 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-10-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 29-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRUPAMA KOTRU
• Keywords: Corroborative evidences
• Section: 143(3); 115JB; 80IB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 795 /P U N/20 1 5 / ASSESSMENT YEAR : 20 10 - 1 1 PARAKAR HOSPITAL & RESEARCH INSTITUTE PVT. LTD., 828, SHIVAJI NAGAR, RATNAGIR 415639 . / APPELLANT PAN:A A FCP0664H VS. THE PR. COMMISSIONER OF INCOME TAX - 2 , KOLHAPUR . / RESPONDENT / APPELLANT BY : S HRI NIKHIL PATHAK / RESPONDENT BY : SMT. NIRUPAMA KOTRU / DATE OF HEARING : 24 . 10 .2017 / DATE OF PRONOUNCEMENT: 31 . 1 0.2017 / ORDER PER SUSHMA CHOWLA, JM: THE APPEAL FILED BY THE ASSESSEE IS AGAINST ORDER OF PR. CIT - 2 , KOLHAPUR , DATED 31.03.2015 RELATING TO ASSESSMENT YEAR 20 1 0 - 1 1 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT). 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE REVISION ORDER PASSED U/S 263 IS BAD IN LAW AND THE SAME MAY BE DECLARED AS NULL AND VOID SINCE THE ASST. ORDER PASSED U/S 143(3) WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. 2 ITA NO. 795 /PUN/20 15 PARAKAR HOSPITAL & RESEARCH INSTITUTE PVT. LTD. 2. THE LEARNED PR. COMMISSIONER OF INCOME TAX - 2, KOLHAPUR, (PC I T) ERRED IN LAW AND ON FACTS IN INVOKING THE PROVISIONS OF SECTION 263 OF THE INCOME TAX ACT, 1961 (THE ACT) AND SETTING ASIDE THE ASSESSMENT ORDER DATED 31 ST MARCH, 2015 PASSED BY THE ASSESSING OFFICER U/S. 143(3) FOR THE ASSESSMENT YEAR 2010 - 11, FOR A FRESH DETERMINATION OF INCOME AND PROPER EXAMINATION OF FACTS AND LAW. 3. THE LEARNED PC I T FAILED TO APPR ECIATE THAT THE LEARNED A.O. HAD ALLOWED THE CLAIM OF DEDUCTION U/S. 80 I B (11C) AFTER VERIFYING ALL THE CONDITIONS FOR THE ELIGIBILITY OF THE CLAIM OF DEDUCTION MADE BY THE APPELLANT COMPANY AND HENCE, THERE WAS NO QUESTION OF SETTING ASIDE THE ASST. ORDER ON THE GROUND THAT THE DEDUCTION WAS ALLOWED BY THE LEARNED A.O. WITHOUT MAKING PROPER ENQUIRIES. 4. THE LEARNED PCIT ERRED IN INITIATING THE PROCEEDINGS U/S 263 MERELY ON THE DOUBT THAT THE ORDER PASSED BY THE AO APPEARS TO BE WITHOUT BRINGING ON RECORD SUFFICIENT MATERIAL AND DETAILS OF PROPER VERIFICATION THEREOF AND THAT THE ORDER PASSED BY THE AO APPEARS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN THE MEANING OF SEC. 263 OF THE ACT. 5. THE LEARNED PCIT FAILED TO APPRECIATE THAT THE APPELLANT COMPANY HAS COMPLIED WITH ALL THE RELEVANT CONDITIONS TO BE ELIGIBLE FOR DEDUCTION U/S 80 I B(11C) WHICH ARE ALSO REPRODUCED BY THE PCIT IN THE NOTICE ISSUED U/S. 263 INITIATING THE PROCEEDINGS AND ALL THE ISSUES WERE ALSO VERIFIED BY THE LEARN ED A.O. AND HENCE, THERE WAS NO REASON TO HOLD THAT THE ASST. ORDER PASSED BY THE LEARNED A.O. WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 6. THE LEARNED PCIT ERRED IN HOLDING THAT THE AO HAS NOT EXAMINED THE PROVISIONS OF SUB - SECTION (1) & (2) OF SECTION 80 I B OF THE ACT WHILE ALLOWING THE CLAIM OF DEDUCTION U/S. 80 I B(11C) WITHOUT APPRECIATING THAT THE CONDITIONS LAID DOWN IN SUB - SECTIONS (1) AND (2) ARE NOT RELEVANT, FOR THE ELIGIBILITY OF DEDUCTION U/S. 80IB (11C) BECAUSE SUB - SECTION (11C) OF SEC. 80 IB DOES NOT ENVISAGES ANY 'INDUSTRIAL UNDERTAKING' AND THEREFORE, THE QUESTION OF EXAMINATION OF CONDITIONS LAID DOWN IN SUB SECTIONS (1) AND (2) OF SECTION 80 I B SIMPLY DID NOT ARISE AND ACCORDINGLY, THE REVISION ORDER PASSED BY THE LEARNE D PCIT IS BAD IN LAW AND THE SAME MAY KINDLY BE QUASHED. 7. THE LEARNED PCIT ERRED IN HOLDING THAT THE ORDER OF THE AO IS ERRONEOUS FOR THE REASON OF NOT VERIFYING THE FULFI L LMENT OR OTHERWISE OF THE CONDITIONS U/S. 80 IB (1) & (2) WHICH REASONS ARE DIFFE RENT THAN THE REASONS STATED IN THE NOTICE ISSUED UNDER SECTION 263. 8. THE LEARNED PCIT ERRED IN NOT APPRECIATING THAT THE VIEW TAKEN BY THE LEARNED A.O. WAS CERTAINLY A POSSIBLE VIEW AND THEREFORE, THE ASST. COMPLETED U/S 143(3) COULD NOT BE SAID TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 9. THE ORDER OF THE PCIT PASSED U/S 263 OF THE ACT IS NOT IN ACCORDANCE WITH LAW, IS BAD IN LAW AND HENCE BE QUASHED . 3 ITA NO. 795 /PUN/20 15 PARAKAR HOSPITAL & RESEARCH INSTITUTE PVT. LTD. 3. THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEAL, BUT THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST INVOKING OF JURISDICTION BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS ENGAGED IN RUNNING A HOSPITAL AND FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD FILED T HE RETURN OF INCOME DECLARING TOTAL INCOME AT NIL. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IB(11C) OF THE ACT, IN RESPECT OF WHICH AUDITOR CERTIFICATE IN FO RM NO.10CCBD WAS FILED. THE ASSESSEE WAS ASKED TO FURNISH INFORMATION TO JUSTIFY ITS CLAIM OF DEDUCTION UNDER SECTION 80IB(11C) OF THE ACT. THE ASSESSEE IN TURN, SUBMITTED THAT IT HAD COMPLIED WITH ALL THE CONDITIONS STIPULATED UNDER THE SECTION BEING EL IGIBLE FOR CLAIMING SAID DEDUCTION, WHEREIN THE HOSPITAL WAS NOT SET UP IN THE EXCLUDED AREA SINCE IT WAS SET UP IN RATNAGIRI. THE HOSPITAL WAS CONSTRUCTED AND HAD STARTED OPERATIONS WITHIN STIPULATED PERIOD I.E. FIRST DAY OF APRIL, 2008 AND ENDING ON THE 31 ST DAY OF MARCH, 2013 . THE ASSESSEE POINTED OUT THAT IT HAD CAPACITY OF 102 BEDS FOR THE PATIENTS ON FIRST DAY OF JULY, 2009, HENCE THE CONDITION WAS FULFILLED. THE CONSTRUCTION OF HOSPITAL WAS IN ACCORDANCE WITH REGULATIONS, BYELAWS OF THE LOCAL AUTHORITY AND IT HAD ALSO RECEIVED COMPLETION CERTIFICATE FROM CEO OF RATNAGIRI NAGAR PAR ISHAD, COPY OF WHICH WA S FILED. THE ASSESSEE ALSO REFERRED TO THE AUDITORS REPORT FOR CLAIMING THE AFORESAID DEDUCTION. THE ASSESSING OFFICER VIDE PARA 9 NOTES THAT HE HAD CONSIDERED THE SUBMISSIONS OF ASSESSEE REGARDING ITS CLAIM OF DEDUCTION AND HAD A LSO VERIFIED THE COMPLIANCE OF ALL THE CONDITIONS AS SUBMITTED BY THE ASSESSEE, AS REQUIRED AS PER THE PROVISIONS OF SECTION 80IB(11C) OF THE ACT. HE FURTHER HOLDS THAT HE WAS SATISFIED THAT THE ASSESSEE HAD COMPLIED WITH ALL THE CONDITIONS 4 ITA NO. 795 /PUN/20 15 PARAKAR HOSPITAL & RESEARCH INSTITUTE PVT. LTD. STIPULATED IN THE SECTION AND THE ASSESSEE WAS ENTITLED TO CLAIM THE DEDUCTION UNDER THE SAID SECTION. ACCORDINGLY, THE CLAIM OF ASSESSEE IN THIS REGARD, WAS ALLOWED. 5. THE COMMISSIONER ON THE OTHER HAND, ON VERIFICATION OF RECORDS NOTED THAT THE ASSESSING OFFICER HA D NOT VERIFIED THE BASIC CONDITIONS FOR ALLOWING DEDUCTION UNDER SECTION 80IB(11C) OF THE ACT, WHICH HAD RESULTED INTO UNDER - ASSESSMENT OF INCOME BY RS.30,66,514/ - . THE COMMISSIONER WAS OF THE VIEW THAT THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT WAS PRIMA FACIE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE . SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE IN THIS REGARD. THE COMMISSIONER IN THE SHOW CAUSE NOTICE POINTED OUT THAT THE CONSTRUCTION OF HOSPITAL WAS MADE ON LEASEHOLD LAND IN THE NAME OF DIRECTOR OF COMPANY, WHEREIN THE COMPANY WAS ESTABLISHED ON 13.03.2009 BUT PERMISSION FOR CONSTRUCTION WAS GRANTED ON 03.09.2007 I.E. BEFORE INCORPORATION OF THE COMPANY. THE COMPLETION CERTIFICATE WAS ISSUED ON 10.07.2009 IN THE NAME OF DI RECTOR AND NOT IN THE NAME OF ASSESSEE. FURTHER, THE COMMISSIONER ALSO NOTED THAT THERE WAS NO DOCUMENTARY EVIDENCE REGARDING PURCHASE OF BEDS. HE WAS OF THE VIEW THAT THE ASSESSING OFFICER SHOULD HAVE CALLED FOR THE DETAILS DURING THE COURSE OF ASSESSME NT PROCEEDINGS TO ASCERTAIN THE GENUINENESS AND FULFILLMENT OF ELIGIBILITY CONDITIONS BEFORE ALLOWING THE CLAIM OF DEDUCTION UNDER SECTION 80IB(11C) OF THE ACT. SINCE THE ASSESSING OFFICER HAD FAILED TO DO NECESSARY VERIFICATION BEFORE COMPUTING THE INCOM E UNDER SECTION 115JB OF THE ACT AND TAX THEREON, THE COMMISSIONER WAS OF THE VIEW THAT THE ORDER PASSED BY THE ASSESSING OFFICER SEEMS TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND HENCE, NOTICE WAS ISSUED TO THE ASSESSEE. IN RESPONSE TH ERETO, THE ASSESSEE POINTED OUT THAT THE ASSESSING OFFICER HAD MADE 5 ITA NO. 795 /PUN/20 15 PARAKAR HOSPITAL & RESEARCH INSTITUTE PVT. LTD. SPECIFIC ENQUIRIES REGARDING THE FULFILLMENT OF CONDITIONS PRESCRIBED IN SECTION 80IB(11C) OF THE ACT BUT THE COMMISSIONER WAS OF THE VIEW THAT THE ASSESSING OFFICER DID NOT PERFORM THE BA SIC PRE - REQUISITE INVESTIGATION BEFORE APPLYING THE PROVISIONS OF SECTION 80IB(11C) OF THE ACT. HE FURTHER OBSERVED THAT THE ASSESSING OFFICER WAS REQUIRED TO EXAMINE SUB - SECTION (1) OF SECTION 80IB AND ALSO EXAMINE THE CASE FROM THE POINT OF VIEW THE APP LICATION OF SECTION 80IB(2) OF THE ACT AS TO WHETHER OR NOT THE ASSESSEE HAD FULFILLED THE BASIC CRITERIA MENTIONED IN SECTION 80IB(2) OF THE ACT IN ORDER TO QUALIFY FOR CLAIMING THE DEDUCTION UNDER SECTION 80IB(11C) OF THE ACT. THE COMMISSIONER FURTHER O BSERVED THAT ON EXAMINATION OF CASE RECORDS, IT IS OBSERVED THAT THE EXERCISE WHETHER THE ASSESSEE QUALIFIES U/S 80IB(1) FOR CLAIMING DEDUCTION U/S 80IB(11C) HAS NOT BEEN DONE BY THE ASSESSING OFFICER AND THE CASE WAS NOT EXAMINED FROM THE PURVIEW OF SECTI ON 80IB(2). THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE DURING THE COURSE OF PROCEEDINGS UNDER SECTION 263 OF THE ACT ADMITTED THAT THE ASSESSING OFFICER HAD NOT RAISED ANY QUERIES IN THIS REGARD BUT HAD EXAMINED IN DEPTH WHETHER THE CONDITIONS MENTIONED IN SECTION 80IB(11C) OF THE ACT WERE SATISFIED OR NOT. THE COMMISSIONER AFTER TAKING INTO CONSIDERATION THE VARIOUS JUDICIAL PRECEDENTS WAS OF THE VIEW THAT WHERE THE ASSESSING OFFICER HAS TAKEN A VIEW WITHOUT MAKING REQUISITE ENQUIRIES OR EXAM INING THE CLAIM OF ASSESSEE WOULD PERSE BE AN ERRONEOUS VIEW AND WOULD BE AMENABLE TO REVISIONARY JURISDICTION UNDER SECTION 263 OF THE ACT. FURTHER, THE CIT(A) HELD THAT TAKING ONE VIEW WHERE TWO OR MORE VIEWS ARE POSSIBLE ALSO, NECESSARILY MERITS THE REQUIREMENT OF ANALYZING THE FACTS IN THE LIGHT OF APPLICABLE LAW. HE WAS OF THE VIEW THAT PROPER EXAMINATION OF FACTS IN THE LIGHT OF RE LEVANT LAW WAS NECESSARY IN ORDER T O SAY THAT THE ASSESSING OFFICER HAD ADOPTED PERMISSIBLE COURSE OF LAW OR TAKEN A V IEW WHERE TWO OR MORE VIEWS WERE POSSIBLE. HE HELD 6 ITA NO. 795 /PUN/20 15 PARAKAR HOSPITAL & RESEARCH INSTITUTE PVT. LTD. THAT IN THE PRESENT CASE THE ASSESSING OFFICER HAD NOT AT ALL EXAMINED AS TO WHETHER ONLY ONE VIEW IS POSSIBLE OR TWO OR MORE VIEWS ARE POSSIBLE AND HENCE, THE QUESTION OF HIS ADOPTING OR CHOOSING ONE VIE W IN PREFERENCE TO OTHERS DOES NOT ARISE. THE COMMISSIONER WAS ALSO OF THE VIEW THAT WITHOUT PREJUDICE TO DISCUSSION IN THE ORDER, ANOTHER ASPECT WHICH REQUIRES TO BE DULY TAKEN NOTE OF WAS THAT THERE WAS NOTHING IN THE ACT WHICH FORBIDS THE COMMISSIONER FROM EXAMINING / RE - EXAMINING THE ISSUES THAT HAVE BEEN WRONGLY / INADEQUATELY DEALT WITH BY THE ASSESSING OFFICER. THE COMMISSIONER THUS, SET ASIDE THE ASSESSMENT FOR DENOVO EXAMINATION OF FACTS AND SET ASIDE THE ASSESSMENT FRAMED UNDER SECTION 143(3) OF THE ACT FOR FRESH DETERMINATION OF INCOME AFTER PROPER EXAMINATION OF FACTS AND LAW. 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF COMMISSIONER. 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE ASSESSMENT ORDER AND ALSO REFE RRED TO THE LETTER FILED BEFORE THE COMMISSIONER CLARIFYING THE FULFILLMENT OF CONDITIONS LAID DOWN IN SECTION 80IB(11C) OF THE ACT. HE FURTHER REFERRED TO SHOW CAUSE NOTICE ISSUED BY THE COMMISSIONER WHICH WAS ONLY ON NON - FULFILLMENT OF CONDITIONS UNDER SECTION 80IB(11C) OF THE ACT. HE FURTHER REFERRED TO PARA 6 OF THE ORDER OF COMMISSIONER AND POINTED OUT THAT IT TALKS OF NON - FULFILLMENT OF CONDITIONS OF SECTION 80IB(1) AND (2) OF THE ACT AND THE COMMISSIONER POINTS OUT THAT NO PROPER VERIFICATION WAS C ARRIED OUT BY THE ASSESSING OFFICER. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STRESSED THAT THE COMMISSIONER HAD NOT DEALT WITH THE ISSUE WHICH WAS RAISED IN THE SHOW CAUSE NOTICE ISSUED BUT HAS INCORRECTLY INVOKED SUB - SECTIONS (1) AND (2) O F SECTION 80IB OF THE ACT. OUR ATTENTION WAS DRAWN TO THE SAID SUB - SECTIONS 7 ITA NO. 795 /PUN/20 15 PARAKAR HOSPITAL & RESEARCH INSTITUTE PVT. LTD. AND IT WAS POINTED OUT THAT SUB - SECTION (1) DOES NOT SPECIFY ANY CONDITIONS TO BE FULFILLED AND SUB - SECTION (2) TALKS OF INDUSTRIAL UNDERTAKING. HE FURTHER REFERRED TO SUB - SECTIO NS (3) TO (5) OF SECTION 80IB OF THE ACT, WHICH TALKED OF AN INDUSTRIAL UNDERTAKING. WHEREAS THE ASSESSEE WAS HOSPITAL AND WAS GOVERNED BY THE PROVISIONS OF SECTION 80IB(11C) OF THE ACT ONLY. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REFERRE D TO THE REPLY FILED BY THE ASSESSEE BEFORE THE COMMISSIONER WHICH IS PLACED AT PAGE 131 ONWARDS AND WHICH HAS NOT BEEN CONSIDERED BY THE COMMISSIONER ; ON THE OTHER HAND, POINTS RAISED BY THE COMMISSIONER IN HIS REVISIONARY ORDER HA D NO RELEVANCE. HE FURTHER REFERRED TO THE BALANCE SHEET AND THE NOTE THEREUNDER WHICH IS PLACED AT PAGE 8 OF THE PAPER BOOK, WHEREIN THE FACTUM OF LAND OWNERSHIP WAS CLARIFIED. HE FURTHER REFERRED TO THE REPLY FILED BEFORE THE ASSESSING OFFICER WHICH IS PLACED AT PAGE 70 OF THE PAPER BOOK AND POINTED OUT THAT THE FACT THAT THE LAND WAS TAKEN FROM THE DIRECTOR WAS NOT ONLY NOTIFIED IN THE BALANCE SHEET BUT ALSO TO THE ASSESSING OFFICER. HE ALSO REFERRED TO PAGE 48 OF THE PAPER BOOK, WHICH ENLISTS THE ADDI TIONS TO THE FIXED ASSETS WHICH WAS FILED ALONG WITH BALANCE SHEET AND AUDITED PROFIT AND LOSS ACCOUNT. HE STRESSED THAT RELEVANT CONDITIONS OF SECTION 80IB(11C) OF THE ACT WERE VERIFIED BY THE ASSESSING OFFICER. 8. THE LEARNED DEPARTMENTAL REPRESENTATIV E FOR THE REVENUE ON THE OTHER HAND, POINTED OUT THAT NO COPY OF SANCTION LAYOUT PLAN WAS FILED. FURTHER, IT WAS THE DUTY OF THE ASSESSING OFFICER TO VERIFY THAT THE CONDITIONS HAVE BEEN FULFILLED IN RESPECT OF CONDITIONS OF HAVING 100 BEDS. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE DOCUMENTARY EVIDENCE IN THIS REGARD WAS NOT FILED. HENCE, IT IS CASE OF LACK OF ENQUIRY AND IN THE ABSENCE OF ANY INSPECTION BY THE ASSESSING OFFICER OF THE HOSPITAL BEING RUN BY THE 8 ITA NO. 795 /PUN/20 15 PARAKAR HOSPITAL & RESEARCH INSTITUTE PVT. LTD. ASSESSE E, INVOKING OF PROVISIONS OF SECTION 263 OF THE ACT BY THE COMMISSIONER IS JUSTIFIED. 9. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN REJOINDER, REFERRED TO PARA 9 OF THE ASSESSMENT ORDER, WHEREIN THE ASSESSING OFFICER STATES THAT IT HAD VERI FIED ALL THE CONDITIONS OF THE SAID SECTION AND THE ASSESSEE HAD COMPLIED WITH THE SAME. HE FURTHER REFERRED TO THE ORDER OF COMMISSIONER AND POINTED OUT THAT HE NOWHERE STATES THAT THE CONDITION OF 100 BEDS HAS NOT BEEN FULFILLED. THE COMMISSIONER ON TH E OTHER HAND, HAD SET ASIDE THE ISSUE IN GENERAL MANNER AND SUCH SETTING ASIDE WAS NOT PROPER COURSE OF ACTION TO BE TAKEN. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST INVOKING O F JURISDICTION BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT. THE COMMISSIONER IS EMPOWERED TO INVOKE REVISIONARY JURISDICTION UNDER SECTION 263 OF THE ACT WHERE THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND ALSO PREJUDICIAL TO THE INTERES T OF REVENUE. BOTH THE LIMBS OF SAID SECTION NEED TO BE FULFILLED BEFORE EXERCISE OF PROVISIONS UNDER SECTION 263 OF THE ACT. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD CLAIMED DEDUCTION UNDER SECTION 80IB(11C) OF THE ACT. THE ASSESSEE CLAIMS THAT IT HAD SUBMITTED THE SUPPORTING EVIDENCE REGARDING FULFILLMENT OF ELIGIBILITY CONDITIONS UNDER SECTION 80IB(11C) OF THE ACT, WHICH HAD BEEN VERIFIED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THEREAFTER, THE ASSESSMENT OR DER WAS PASSED. THE SAID VERIFICATION EXERCISE BY THE ASSESSING OFFICER, AS PER THE ASSESSEE , WAS COMPLETE IN ALL RESPECTS AND SINCE THE ASSESSEE HAD FULFILLED THE CONDITIONS LAID DOWN IN THE SAID SECTION, THE ASSESSEE WAS ELIGIBLE TO CLAIM THE AFORESAID 9 ITA NO. 795 /PUN/20 15 PARAKAR HOSPITAL & RESEARCH INSTITUTE PVT. LTD. DEDUCTION UNDER SECTION 80IB(11C) OF THE ACT. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGARD, HAS REFERRED TO THE CORRESPONDENCE WITH THE ASSESSING OFFICER WHICH WAS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ALSO THE ASS ESSMENT ORDER PASSED BY THE ASSESSING OFFICER, WHEREIN THE CONTENTS OF ONE OF THE LETTERS IS REPRODUCED. THE ASSESSEE WAS ESTABLISHED HOSPITAL ON LEASEHOLD LAND TAKEN BY THE DIRECTOR OF THE COMPANY IN ITS NAME AND THE COMPLETION CERTIFICATE IN RESPECT OF BUILDING WAS ALSO FILED. THE ASSESSEE HAS IN THE BALANCE SHEET ITSELF POINTED OUT THAT THE LAND ON WHICH THE SAID HOSPITAL WAS BEING RUN WAS IN THE NAME OF DIRECTOR OF THE ASSESSEE COMPANY. FURTHER, THE ASSESSEE HAS REFERRED TO THE FIXED ASSETS AND POINT ED OUT THAT IT WAS 100 BEDDED HOSPITAL . ONE OF THE CONDITIONS OF SECTION 80IB(11C) OF THE ACT IS THAT IN ORDER TO BE ELIGIBLE FOR CLAIMING THE DEDUCTION, HOSPITAL SHOULD BE 100 BEDDED. THE COMMISSIONER ON VERIFICATION OF RECORDS WAS OF THE VIEW THAT THE ASSESSING OFFICER HAD NOT VERIFIED THAT THE CONDITIONS HAVE BEEN FULFILLED BY THE ASSESSEE IN ORDER TO BE ELIGIBLE TO CLAIM THE DEDUCTION. SHOW CAUSE NOTICE IN THIS REGARD WAS ISSUED TO THE ASSESSEE. THE ASSESSEE EXPLAINED ITS CASE AND REPLY WAS FILED BE FORE THE COMMISSIONER. 11. THE COMMISSIONER WHILE EXERCISING THE JURISDICTION UNDER SECTION 263 OF THE ACT, REFERRED TO THE PROVISIONS OF SECTION 80IB(1) AND (2) OF THE ACT AND WAS OF THE VIEW THAT THE CONDITIONS LAID DOWN IN THE SAID SUB - SECTIONS NEED TO BE FULFILLED IN ORDER TO CL AIM THE DEDUCTION UNDER SECTION 80IB(11C) OF THE ACT. THE PERUSAL OF SAID SUB - SECTION (1) REFLECTS THE GENERAL PROVISION FOR ALLOWING THE DEDUCTION FROM THE PROFITS AND GAINS. IT IS PROVIDED IN SUB - SECTION (1) THAT WHERE THE GROSS TOTAL INCOME OF ASSESSE E INCLUDES ANY PROFITS AND GAINS DERIVED FROM ANY BUSINESS REFERRED TO IN SUB - SECTION (3) TO (11B) OF THE ACT , THEN SUBJECT TO THE 10 ITA NO. 795 /PUN/20 15 PARAKAR HOSPITAL & RESEARCH INSTITUTE PVT. LTD. PROVISIONS OF THIS SECTION, THE ASSESSEE WOULD BE ALLOWED DEDUCTION FROM SUCH PROFITS AND GAINS OF AMOUNT EQUAL TO SUCH PERCE NTAGE AND FOR SUCH NUMBER OF ASSESSMENT YEARS AS SPECIFIED IN THE SECTION. IN OTHER WORDS, IT TALKS OF DEDUCTION TO BE ALLOWED IN RESPECT OF PROFITS AND GAINS DERIVED FROM ANY BUSINESS REFERRED TO IN SUB - SECTIONS THEREUNDER I.E. SUB - SECTION (3) TO SECTION 80IB(11B) OF THE ACT . ALSO SUB - SECTION (11C) HAS INSERTED W.E.F. 01.04.2009, HAS BEEN INCORPORATED . S UB - SECTION (2) REFERS TO ANY INDUSTRIAL UNDERTAKING WHICH HAS TO FULFILL CERTAIN CONDITIONS PROVIDED THEREIN. SUB - SECTIONS (3), (4) AND (5) TALKS ABOUT DIFFERENT CASES OF INDUSTRIAL UNDERTAKINGS. IF WE REFER TO SUB - SECTION (6), IT TALKS OF BUSINESS OF SHIP WHICH IS NOT AN INDUSTRIAL UNDERTAKING. SUB - SECTION (7) TALKS OF A BUSINESS OF ANY HOTEL, (7A) OF MULTIPLEX THEATRE, (8) OF SCIENTIFIC RESEARCH AND DEVELOPMENT AND THEREAFTER . S IMILARLY SECTION (11C) TALKS ABOUT THE UNDERTAKING WHICH IS OPERATING AND MAINTAINING HOSPITAL. THE COMMISSIONER WHILE PASSING THE ORDER UNDER SECTION 263 OF THE ACT HAS OBSERVED THAT WHERE THE ASSESSING OFFICER HAS FAILED TO LOOK INTO THE FULFILLMENT OF CONDITIONS OF SUB - SECTIONS (1) AND (2) BEFORE ALLOWING DEDUCTION UNDER SECTION 80IB(11C) OF THE ACT , HAS HELD THAT THE ASSESSING OFFICER HAS NOT VERIFIED THE CLAIM OF ASSESSEE IN THIS REGARD PROPERLY AND HENCE, ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. REFERENCE TO SUB - SECTION (1) AND (2) OF SECTION 80IB OF THE ACT WHILE MAKING DEDUCTION UNDER SECTION 80IB(11C) OF THE ACT IS MISPLACED. THE ASSESSEE ADMITTEDLY, IS NOT AN IND USTRIAL UNDERTAKING AND THE PROVISIONS OF SUB - SECTION (2) ARE NOT TO BE APPLIED TO THE ASSESSEE. UNDER SUB - SECTION (1), IT IS PROVIDED THAT DEDUCTION IS TO BE ALLOWED FROM THE PROFITS AND GAINS OF ASSESSEE FOR SUCH NUMBER OF ASSESSMENT YEARS AND SUCH PERC ENTAGE OF AMOUNT AS IS SPECIFIED IN THE SECTION. THE CRITERIA OF ALLOWING THE DEDUCTION AND 11 ITA NO. 795 /PUN/20 15 PARAKAR HOSPITAL & RESEARCH INSTITUTE PVT. LTD. THE PERCENTAGE AND THE PERIOD FOR WHICH IT IS TO BE ALLOWED IS ADMITTEDLY, PROVIDED IN SECTION 80IB(11C) OF THE ACT ITSELF. SUB - SECTION (11C) READS AS UNDER: - 80IB: ....... (11C) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTAKING DERIVING PROFITS FROM THE BUSINESS OF OPERATING AND MAINTAINING A HOSPITAL LOCATED ANYWHERE IN INDIA, OTHER THAN THE EXCLUDED AREA, SHALL BE HUNDRED PER CENT OF THE PROFITS AND GA INS DERIVED FROM SUCH BUSINESS FOR A PERIOD OF FIVE CONSECUTIVE ASSESSMENT YEARS, BEGINNING WITH THE INITIAL ASSESSMENT YEAR, IF (I) THE HOSPITAL IS CONSTRUCTED AND HAS STARTED OR STARTS FUNCTIONING AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 2008 AND ENDING ON THE 31ST DAY OF MARCH, 2013; (II) THE HOSPITAL HAS AT LEAST ONE HUNDRED BEDS FOR PATIENTS; (III) THE CONSTRUCTION OF THE HOSPITAL IS IN ACCORDANCE WITH THE REGULATIONS OR BYE - LAWS OF THE LOCAL AUTHORITY; AND (IV) THE ASSESSEE FURNISHES ALONG WITH THE RETURN OF INCOME, A REPORT OF AUDIT IN SUCH FORM AND CONTAINING SUCH PARTICULARS, AS MAY BE PRESCRIBED, AND DULY SIGNED AND VERIFIED BY AN ACCOUNTANT, AS DEFINED IN THE EXPLANATION TO SUB - SECTION (2) OF SECTION 2 88, CERTIFYING THAT THE DEDUCTION HAS BEEN CORRECTLY CLAIMED. EXPLANATION. FOR THE PURPOSES OF THIS SUB - SECTION, (A) A HOSPITAL SHALL BE DEEMED TO HAVE BEEN CONSTRUCTED ON THE DATE ON WHICH A COMPLETION CERTIFICATE IN RESPECT OF SUCH CONSTRUCTION IS ISSUED BY THE LOCAL AUTHORITY CONCERNED; (B) 'INITIAL ASSESSMENT YEAR' MEANS THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE BUSINESS OF THE HOSPITAL STARTS FUNCTIONING; (C) 'EXCLUDED AREA' SHALL MEAN AN AREA COMPRISING (I ) GREATER MUMBAI URBAN AGGLOMERATION; (II ) DELHI URBAN AGGLOMERATION; (III ) KOLKATA URBAN AGGLOMERATION; (IV ) CHENNAI URBAN AGGLOMERATION; (V ) HYDERABAD URBAN AGGLOMERATION; (VI ) BANGALORE URBAN AGGLOMERATION; (VII) AHMEDABAD URBAN AGGLOMERATION; (VIII) DISTRICT OF FARIDABAD; (IX ) DISTRICT OF GURGAON; (X ) DISTRICT OF GAUTAM BUDH NAGAR; (XI ) DISTRICT OF GHAZIABAD; (XII) DISTRICT OF GANDHINAGAR; AND (XIII) CITY OF SECUNDERABAD; (D) THE AREA COMPRISING AN URBAN AGGLOMERATION SHALL BE THE AREA INCLUDED IN SUCH URBAN AGGLOMERATION ON THE BASIS OF THE 2001 CENSUS.. 12 ITA NO. 795 /PUN/20 15 PARAKAR HOSPITAL & RESEARCH INSTITUTE PVT. LTD. 1 2 . IN ORDER TO LOOK INTO THE CLAIM OF ASSESSEE, THE ASSESSING OFFICER HAD TO VERIFY THE ABOVE SAID CONDITIONS THAT THE CONSTRUCTION WAS WITHIN TIME FRAME AND THE COMPLETION CERTIFICATE IN THAT REGARD HAS BEEN RECEIVED OR NOT. FURTHER, WHETHER THE CONSTRUCTION OF HOSPITAL WAS IN ACCORDANCE WI TH THE REGULATIONS OR BYELAWS OF THE LOCAL AUTHORITY AND HOSPITAL SHOULD HAVE ATLEAST 100 BEDS FOR THE PATIENTS. ANOTHER REQUIREMENT WAS FOR THE ASSESSEE TO FURNISH THE REPORT OF AUDIT IN THE PRESCRIBED FORM ALONG WITH RETURN OF INCOME. ONCE ALL THESE CO NDITIONS HAVE BEEN VERIFIED BY THE ASSESSING OFFICER AND THE ASSESSEE HAS BEEN FOUND TO HAVE FULFILLED THE SAME, THEN THE ORDER OF ASSESSING OFFICER HAVING TAKEN A VIEW OF ALLOWING THE DEDUCTION UNDER SECTION 80IB(11C) OF THE ACT TO THE ASSESSEE CANNOT BE SAID TO BE AN ERRONEOUS ORDER. SINCE THE ASSESSING OFFICER HAS VERIFIED THE CLAIM OF ASSESSEE AND HAD FOUND THAT ALL THE CONDITIONS HAVE BEEN SATISFIED BY THE ASSESSEE, THEN ALLOWING THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER THE SAID SUB - SECTION DOES NO T MAKE THE ORDER PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY, WE HOLD SO. THUS, IN SUCH CIRCUMSTANCES, THE EXERCISE OF REVISIONARY POWER BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT DOES NOT SURVIVE. WE FIND NO MERIT IN THE ORDER OF COMMISSI ONER IN FIRST OF ALL, ENLARGING THE SCOPE OF INVESTIGATION BY HOLDING THAT THE ASSESSING OFFICER HAS FAILED TO VERIFY THE FULFILLMENT OF CONDITIONS OF SUB - SECTIONS (1) AND (2) AND IN HOLDING THAT THE ORDER PASSED BY THE ASSESSING OFFICER IN THIS REGARD WAS ERRONEOUS. FURTHER, THE COMMISSIONER HAS ALSO ERRED IN NOT LOOKING AT THE CLAIM OF ASSESSEE THAT IT HA D FULFILLED ALL THE CONDITIONS AND MERELY BECAUSE THE LAND WAS IN THE NAME OF THE DIRECTOR AND CONSTRUCTION WAS SO COMPLETED IN THE NAME OF DIRECTOR AND COMPLETION CERTIFICATE WAS IN THE NAME OF THE DIRECTOR , BUT NOTE REGARDING THE SAME WAS ALSO FILED ALONG WITH THE BALANCE SHEET, WHICH WAS VERIFIED BY THE ASSESSING OFFICER. HENCE, IT COULD NOT BE SAID THAT THERE WAS ERRONEOUS 13 ITA NO. 795 /PUN/20 15 PARAKAR HOSPITAL & RESEARCH INSTITUTE PVT. LTD. ASSUMPTION OF FACTS BY THE ASSESSING OFFICER. ACCORDINGLY, WE HOLD THAT THE ORDER PASSED BY THE COMMISSIONER UNDER SECTION 263 OF T HE ACT IS INVALID AND BAD IN LAW. THE COMMISSIONER HAS SET ASIDE THE ISSUE FOR DENOVO EXAMINATION, WHICH IS NOT CORRECT METHOD OF EXERCISE OF JURISDICTION UNDER SECTION 263 OF THE ACT. HENCE, THE SAME IS HELD TO BE INVALID. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 1 3 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 3 1 S T DAY OF OCTO BER , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 3 1 S T OCTO BER , 201 7 . G G C C V V S S R R / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3 . , , / DR B , ITAT, PUNE; 4 . / GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE