Gavva Amarender Reddy, Hyd, Hyderabad V. DCIT, Circle-2(3), Hyd, Hyderabad

ITA 900/HYD/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3200 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 27-01-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 03-07-2015
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: S RAVI
• Keywords: Depreciation; Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH ES A , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. ASST. YEAR APPELLANT RESPONDENT 896/HYD/2015 2007 - 08 SRI GAVVA AMARENDER REDDY, H YDERABAD [PAN: ACAP G 1085F] THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 2(3), HYDERABAD 897/HYD/2015 2008 - 09 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 2(3), HYDERABAD 898/HYD/2015 2009 - 10 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 2(3), HYDER ABAD 899/HYD/2015 2010 - 11 900/HYD/2015 2011 - 12 FOR ASSESSEE : SHRI S. RAVI, AR FOR REVENUE : S HRI M. SITARAM , DR DATE OF HEARING : 27 - 0 1 - 201 6 DATE OF PRONOUNCEMENT : 17 - 0 2 - 201 6 O R D E R PER B. RAMAKOTAIAH, A.M. : THESE FIVE AP PEALS ARE BY ASSESSEE AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) - XI , HYDERABAD DATED 2 4 - 0 4 - 2015 FOR AYS. 200 7 - 0 8 AND 2009 - 10 TO 2011 - 12 AND ORDER DT. 24 - 04 - 2015 FOR AY. 2008 - 09 , WHICH WAS SEPARATELY PASSED. SINCE C OMMON ISSUE IS INVOLVED IN ALL THESE APPEALS, THESE ARE HEARD TOGETHER AND DECIDED BY THIS COMMON ORDER . ITA NOS. 896 TO 900/HYD/2015 SRI GAVVA AMARENDER REDDY : - 2 - : 2. THE FOLLOWING ARE THE GROUNDS OF APPEAL COMMONLY RAISED IN ALL APPEALS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) ERR ED IN CONFIRMING THE DECISION OF THE ASSESSING OFFICER BY DENYING THE RELIEF UNDER SECTION 80 I A(4)(III) OF THE INCOME TAX ACT, 1961 AND WITHOUT GOING INTO THE MERITS OF THE CASE. 2. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFI CER WHEREIN HE DISALLOWED DEDUCTION CLAIMED UNDER SECTION 80 I A(4)(III) STATING THAT THE INDUSTRIAL PARK ON WHICH SUCH DEDUCTION WAS CLAIMED WAS EXISTING EVEN BEFORE NOTIFICATION WAS ISSUED BY DIPP AND CBDT AND THEREFORE NOT ELIGIBLE FOR CLAIMING DEDUCTION UNDER SECTION 80 I A (4) (III). 3. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER WHEREIN HE OUGHT TO HAVE SEEN THAT SECTION 80 I A (4) (III) DOES NOT PROHIBIT ISSUE OF NOTIFICATION AS AN INDUSTRIAL PARK UNDER SECTION 80 I A (4) (I II) FOR AN EXISTING PROPERTY. 4. THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THE CLAIM OF THE ASSESSEE THAT THERE WAS NO PREREQUISITE OF SEEKING APPROVAL FOR PROPERTY THAT WAS COMPLETED IN THE YEAR 1999, AS IT IS NOT PROVIDED FOR UNDER SECTION 80LA (4) (III) . 5. THE LEARNED CIT (A) FAILED TO APPRECIATE THE FACT THAT THE YEAR OF CONSTRUCTION OF THE PROPERTY IS IRRELEVANT FOR CLAIMING DEDUCTION UNDER SECTION 80 I A (4) (III). 6. THE LEARNED CIT (A) FAILED TO NOTE THAT ON A PROPER CONSTRUCTION OF THE PROVISIONS OF SECTION 80LA (4) (III) AND HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT HEREIN WAS ENTITLED TO THE BENEFIT OF THE EXEMPTION UNDER SECTION 80LA (4) (III). 7. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING . 3 . THE ISSUE IN THE SE APPEALS IS WITH REFERENCE TO CLAIM FOR DEDUCTION U/S. 80IA (4)(III) OF THE INCOME TAX ACT [ACT] ON THE INDUSTRIAL PARK STATED TO HAVE BEEN DEVELOPED BY ASSESSEE IN HIS INDIVIDUAL CAPACITY. BRIEF FACTS ARE THAT, ASSESSEE SRI GAVVA AMARENDER REDDY, ALONG WITH HIS MOTHER SMT. GAVVA LAXMI DEVI ITA NOS. 896 TO 900/HYD/2015 SRI GAVVA AMARENDER REDDY : - 3 - : WAS A CO - OWNER OF THE PLOT AT 8 - 2 - 681/3 & 3 A, AND 8 - 2 - 682, ROAD NO.12, BANJARA HILLS, HYDERABAD. AFTER GETTING REQUISITE PERMISSION S FROM THE MCH ON 14 - 0 9 - 1995, THEY TOGETHER CONSTRUCTED A COMMERCIAL COMPLEX IN THE NAME OF 'LAXMI CYBER CENTRE' ON THE AFOREMENTIONED PIECE OF LAND. THIS COMPLEX GOT COMPLETED IN THE YEAR 1999 AND WAS RENTED OUT TO DIFFERENT PERSONS AND THE RENTAL INCOME DERIVED FROM IT WAS SHOWN AND TAXED UNDER THE HEAD, 'INCOME FROM HOUSE PROPERTY'. THE SHARE OF ASSESSEE AND THE MOTHER IN THE LAND/BUILT UP AREA WAS IN THE RATIO OF 13:10 WHICH IN SQUARE FEET TRANSLATED TO 75,918 SQ. FT AND 60,167 SQ.FT RESPECT I VEL Y . 3 .1 . ASSESSEE MADE AN APPLICATION ON 14 - 10 - 2005, BEFORE DEPARTMENT OF INDUSTRIAL POLICY & PROMOTION (DIPP), MINISTRY OF COMMERCE & INDUSTRY, GOVERNMENT OF INDIA, FOR SETTING UP AN INDUSTRIAL PARK IN TERMS WITH THE INDUSTRIAL PARK SCHEME, 2002. THIS APPLICATION WAS MADE BY ASSES SEE IN THE CAPACITY OF AN INDIVIDUAL PROMOTER. ACCORDING TO THE TERMS AND CONDITIONS MENTIONED IN THE SAID APPLICATION, ASSESSEE PROPOSED TO SET UP/CONSTRUCT THE INDUSTRIAL PARK ON THE LAND AT 8 - 2 - 681/3&3A, ROAD NO.12, BANJARA HILLS, HYDERABAD ON A TOTAL AREA OF 75,918 SQ.FT I.E. ON THE SAME ADDRESS WHERE A BUILDING HAD BEEN COMPLETED AND FROM WHICH RENTAL INCOME HAD BEEN EARNED SINCE THEN. OUT OF THIS TOTAL AREA, SPACE OF 63,018 SQ. FT. WAS PROPOSED TO BE EARMARKED FOR INDUSTRIAL USE, WHICH IN TERMS OF PE RCENTAG E TRANSLATED TO 90.13%. A MINIMUM OF 3 INDUSTRIAL UNITS WERE PROPOSED TO BE SET UP. A TOTAL INVESTMENT OF RS.10.48 C RORES (INCLUDING RS. 6 C RORES FOR BUILT - UP SPACE) WAS PROPOSED FOR SETTING UP OF THIS INDUSTRIAL PARK. THE EXPECTED DATE OF COMMENCE MENT OF THE INDUSTRIAL PARK WAS STATED TO BE FROM APRIL, 2005. THE MOTHER ITA NOS. 896 TO 900/HYD/2015 SRI GAVVA AMARENDER REDDY : - 4 - : OF ASSESSEE , SMT. GAVVA LAXMI DEVI, ALSO FILED AN APPLICATION BEFORE THE DIPP IN SIMILAR FASHION AND THE TOTAL INVESTMENT PROPOSED BY HER WAS TO THE TUNE OF RS . 8.27 C RORES. 3 .2 . ASSESSEE GOT APPROVAL TO SET UP THE I NDUSTR I AL PARK ON THE BASIS OF THE ABOVE - MENTIONED PROPOSAL FROM THE DIPP ON 0 5 - 12 - 2006 W.E.F. 01 - 0 4 - 2005. IT WAS STATED IN THE LETTER OF APPROVAL THAT ANY FAILURE TO COMPLY WITH ANY OF THE CONDITIONS OR MISINFORMATION OF THE FACTS MAY RESULT IN WITHDRAWAL OF THE SAID APPROVAL. LATER, CBDT, VIDE ITS NOTIFICATION DATED 23 - 0 2 - 2007, NOTIFIED THE SAID INDUSTRIAL PARK U/S 80IA(4)(III) OF THE ACT FOR AVAILING OF TAX BENEFITS. ASSESSEE STARTED CLAIMING DEDUCTION U/S 80IA(4)(II I) OF THE ACT ON THE INCOME BEIMG RECEIVED BY HIM FROM AY . 2007 - 08 ONWARDS. 3 .3 . THE AO DENIED EXEMPTION U/S 80IA(4)(III) OF TH E ACT TO ASSESSEE ON THE GROUND THAT THE BUILDING - IN - QUESTION HAD BEEN CONSTRUCTED PRIOR TO 15 - 0 9 - 1999 AND THAT ASSESSEE HAD B EEN ALREADY DERIVING RENTAL INCOME FROM IT. ACCORDING TO THE A O , A SSESSEE HAD SOUGHT APPROVAL OF SETTING UP OF THE INDUSTRIAL PARK ON AN ALREADY EXISTING INFRASTRUCTURE. HE FURTHER ADDED THAT THE INDUSTRIAL PARK WAS NOT DEVELOPED / CONSTRUCTED IN THE INDIV IDUAL CAPACITY BY ASSESSEE AS STATED BY HIM I N HIS APPLICATION B EFORE THE DIPP. INSTEAD, ASSESSEE ALONG WITH MRS. G. LAXM I DEVI JOINTLY OWNED THE SAID PROPERTY AND BUILDING, WHEREIN THEIR RESPECTIVE SHARE S WERE ALSO NOT CLEARLY D I VIDED AND DEMARCATED. AS THE TERMS AND CONDITIONS LAID DOWN IN THE NOTIFICATION, ON THE BASIS OF WHICH APPROVAL WAS ACCORDED BY THE CENTRAL GOVERNMENT, WERE NOT COMPLIED/FULFILLED BY ASSESSEE AND ON THE FACT THAT THE APPLICATION CONTAINED WRONG INFORMATION/MISINFORMATION, THE AO DISALLOWED THE CLAIM FOR DEDUCTION U/S 80IA(4)(III) OF THE ACT. ITA NOS. 896 TO 900/HYD/2015 SRI GAVVA AMARENDER REDDY : - 5 - : 3 .4 . IN THE APPELLATE PROCEEDINGS , ASSESSEE HAS REITERATED THE ARGUMENTS MADE BEFORE THE AO. IT WAS SUBMITTED THAT SECTION 80IA (4)(III) OF THE ACT DID NOT PRESCRIBE THAT THE INDUSTRIAL PARK HAD TO BE SET UP AFTER THE NOTIFICATION WAS ISSUED BY THE DIPP AND THAT ONCE AN INDUSTRIAL PARK WAS NOTIFIED BY THE DIPP AND THE CBDT, EXE MP T ION U/S 80I A (4)(III) HAD TO BE GRANTED BY THE AO. ASSESSEE ALSO RELIED ON THE LEGAL OPINION WHICH HAD BEEN OBTAINE D BY HIM ON 25 - 0 9 - 2008. 4 . LD. CIT(A) HOWEVER, DID NOT AGREE AND DECIDED THE ISSUE AGAINST ASSESSEE BY STATING AS UNDER: 07.0 DECISION: THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSIONS .SUBMITTED BY THE APPELLANT WERE CAREFULLY CONSIDERED. ON A PERUS AL OF THE CHRONOLOGY OF EVENTS LEADING TO THE CLAIM FOR DEDUCTION U/S 80IA(4)(III) OF THE ACT, ONE THING THAT CRIES FOR ATTENTION IS THAT THE BUILDING IN QUESTION, THAT HAS BEEN GIVEN THE NOMENCLATURE OF 'INDUSTRIAL PARK' WAS ALREADY IN EXISTENCE BEFORE TH E APPLICATION WAS MADE TO THE DIPP FOR SETTING IT UP. ANOTHER POINT THAT STRIKES THE MIND IS THAT IN SPITE OF THE FACT THAT THE SAID BUILDING WAS ALREADY IN EXISTENCE, INVESTMENT OF RS.10.48 CRORES WAS PROPOSED TO BE MADE BY/AT THE TIME OF COMMENCEMENT OF THE INDUSTRIAL PARK I.E. 01.4.2005. 07.1 ACCORDING TO THE IPSS - II FORM (STATUTORY REQUIREMENT OF HALF YEARLY STATEMENTS TO BE FILED BEFORE THE DIPP), AND THE TAX AUDIT REPORTS (BALANCE SHEETS, PROFIT & LOSS ACCOUNTS) OF THE ASSESSEE AN INVESTMENT OF O NLY RS 2.56 CRORES WAS CLAIMED TO HAVE BEEN MADE INSTEAD OF THE PROPOSED AMOUNT OF RS. 10.48 CRORES. THE REASON FOR THIS VARIATLON IS MENTIONED IN ANNEXURE II OF IPS S FOR M AGAINST COLUMN I UNDER THE ITEM, 'CAPITAL OUTLAY FOR THE PROJECT' AS UNDER: 'IN T HE ORIGINAL PROPOSAL COST OF INTERIORS, FURNITURE AND FIXTURES, ELECTRICAL FITTINGS, AIR CONDITIONERS ETC. WAS CONSIDERED. HOWEVER, ACTUALLY, AS A TENANT WANTED THE AREA ON BARE - SHELL BASIS EXPENSES ON ABOVE WERE NOT INCURRED'. THE FACT HOWEVER, IS THAT EVEN THIS AMOUNT OF RS. 2.56 CRORES W A S NOT INVESTED IN PURSUANCE TO THE PROPOSAL. IT REPRESENTED THE INVESTMENT IN ALREADY E XISTING BUILDING. AS PER THE TAX AUDIT REPORT, THE COST OF OLD ITA NOS. 896 TO 900/HYD/2015 SRI GAVVA AMARENDER REDDY : - 6 - : BUILDING (RS.2.56 CRORES) AS ON 31.3.2006 HAD BEEN ADOPTED AS THE CO ST OF THE INDUSTRIAL PARK AS ON 1.4.2006. A SIMILAR TREATMENT WAS DONE IN THE CASE OF THE MOTHER ALSO. THUS, NEITHER THE ASSESSEE NOR HIS MOTHER SPENT A SINGLE PAISA TOWARDS THE 'SETTING UP OF THE INDUSTRIAL PARK' AS PER THE PROPOSAL SUBMITTED BEFORE THE D IPP. THE BUILDING WHICH HAD BEEN CONSTRUCTED IN 1999 AND HAD BEEN YIELDING RENTAL INCOME SINCE THEN WAS ONLY PRESENTED IN THE GARB OF THE 'INDUSTRIAL PARK 'IN THE ACCOUNTS OF THE ASSESSEE . 07.2 THE ASSESSEE HAS ALSO CLAIMED THAT SECTION 80IA(4)(III) OF TAE ACT DOES NOT PROHIBIT NOTIFICATION FOR AN EXISTING PROPERTY AND THAT ONCE A NOTIFICATION HAS BEEN ISSUED BY THE COMPETENT AUTHORITY I.E. DIPP AND THE CBDT, IT CANNOT BE D ISALLOWED BY THE ASSESSING OFFICER. THIS CLAIM OF THE ASSESSEE IS FALLACIOUS. THI S ARGUMENT OF THE ASSESSEE COULD ONLY BE CONSIDERED IF HE HAD ACTUALLY SOUGHT APPROVAL FOR THE PROPERTY WHICH WAS COMPLETED IN THE YEAR 1999. BUT AS DISCUSSED ABOVE, NO SUCH PROPOSAL WAS MADE BY HIM AND NO SUCH APPROVAL WAS GRANTED. THEREFORE, THERE IS NO OCCASION TO EVEN CONSIDER SUCH ARGUMENT. FURTHER, IT IS SEEN THAT THE 'INDUSTRIAL PARK' PROPOSED BY THE ASSESSEE FOR WHICH APPROVAL WAS GIVEN BY THE COMPETENT AUTHORITY WAS NEVER SET UP BY HIM. INSTEAD THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IA(4)(III) OF THE ACT FOR THE BUILDING WHICH WAS IN EXISTENCE BEFORE 1999 AND FOR WHICH NO APPROVAL WAS TAKEN BY HIM. THUS DEDUCTION U/S 80IA(4)(III) OF THE ACT, CANNOT BE GIVEN FOR A BUILDING FOR WHICH NO APPROVAL WAS TAKEN/GIVEN. THE APPROVAL OF THE COMPETENT AUTHOR ITY ONLY IS ONE OF THE CONDITIONS. THE ASSESSEE HAS TO ALSO DEMONSTRATE THAT: (I) THE INDUSTRIAL PARK AS APPROVED BY THE COMPETENT AUTHORITY WAS ACTUALLY SET UP BY HIM; (II) THE PROFIT SHOWN BY HIM HAD ACTUALLY BEEN 'DERIVED' FROM SUCH INDUSTRIAL PARK ; AND (III) ALL OTHER PROCEDURAL CONDITIONS PRESCRIBED UNDER THE IT ACT HAVE BEEN FULFILLED. SINCE THE ASSESSEE DID NOT SET UP THE INDUSTRIAL PARK FOR WHICH THE APPROVAL WAS GIVEN, HE CANNOT USE THAT APPROVAL AS THE BASIS FOR CL AIMING THE DEDUCTION I N RESPECT OF THE RENTAL INCOME FROM A PROPERTY WHICH HE HAD CONSTRUCTED AS EARLY AS IN 1999 AND THE EXISTENCE OF WHICH WAS NOT EVEN DISCLOSED TO THE COMPETENT AUTHORITY. 07.3 ACCORDING TO THE ASSESSEE , HE CLAIMED THE DEDUCTION ON THE BASIS OF THE LEGAL OPINION OBTAINED ON 25.9.2008 FROM MR. NIHAL DALVI, ADVOCATE, AND THE INSTRUCTING CHARTERED ACCOUNTANT FOR BSR &CO. A COPY OF THE SAME WAS SUBMITTED AND HAS BEEN PERUSED. ACCORDING TO I T, THE BUILDING CONSTRUCTED BY THE ASSESSEE IN THE YEAR 1999 COULD BE C ALLED AN ITA NOS. 896 TO 900/HYD/2015 SRI GAVVA AMARENDER REDDY : - 7 - : INDUSTRIAL PARK AND DEDUCTION U/S 80IA(4)(III) OF THE ACT IN RESPECT OF THE RENTAL INCOME COULD BE CLAIMED EVEN THOUGH THE SAME HAD BEEN SHOWN UNDER THE HEAD' INCOME FROM HOUSE PROPERTY'. THE ASSESSEE AS WELL AS HIS ADVISOR, TRIED TO FUDGE THE ISS UE AND STIPULATE THAT THE APPROVAL GRANTED BY THE COMPETENT AUTHORITY FOR THE PROPOSED INDUSTRIAL PARK IN 2005, COULD BE CONSIDERED AS THE APPROVAL FOR THE BUILDING WHICH HAD BEEN CONSTRUCTED AS EARLY AS IN 1999; EVEN THOUGH THE VITAL FACT THAT THE BUILDIN G HAD BEEN CONSTRUCTED IN 1999 WAS WITHHELD FROM THE AUTHORITIES AND THE IN VES TMENT PROPO SED I N THE APPLICATION WAS NEVER MADE. 07 .4 THE ASSESSEE REPRESENTED BEFORE THE D1PP THAT THE INVESTMENT COULD NOT BE MADE BECAUSE THE TENANTS WANTED THE BARE PREM ISES. BUT HE CONVENIENTLY SUPPRESSED THE FACT, THAT OUT OF THE PROPOSED INVESTMENT OF RS.10.48 CRORES, INVESTMENT OF RS.6 CRORES HAD BEEN PROPOSED FOR THE BUILT UP AREA I.E. THE BARE PREMISES ONLY. SINCE THAT INVESTMENT ITSELF WAS NOT MADE, THE QUESTION OF THERE BEING A TENANT FOR SUCH PREMISES AND THE QUESTION OF ANY INVESTMENT BEING MADE IN FURNITURE, FIXTURES AND AIR CONDITIONERS ETC. DOES NOT ARISE . THIS SHOWS CLEARLY THAT THE ASSESSEE NEVER INTENDED TO MAKE THE PROPOSED INVESTMENT AND HE MADE A FALSE R EPRESENTATION BEFORE THE COMPETENT AUTHORITY THAT A PART OF THE SUM (RS.2.56 CRORES) HAD ACTUALLY BEEN INVESTED AND THE BALANCE (RS.7.92 CRORES) WAS NOT REQUIRED TO BE INVESTED DUE TO THE DEMANDS OF THE TENANTS. THIS CONCLUSION IS ALSO SUPPORTED BY THE LEG AL OPINION (SUPRA) WHICH SHOWS CLEARLY THAT THE INTENTION FROM THE VERY BEGINNING WAS TO CLAIM DEDUCTION IN RESPECT OF EXISTING RENTAL INCOME FROM THE EXISTING BUILDING. 07.5 COMING TO THE HEAD OF INCOME UNDER WHICH THE INCOME TO BE TAXED, IT IS SETTL ED LAW THAT THE HEADS OF INCOME ARE MUTUALLY EXCLUSIVE, AND THAT, IF A PARTICULAR INCOME CAN BE TAXED UNDER A PARTICULAR HEAD, IT MUST BE TAXED UNDER THAT HEAD ONLY. IN THIS CASE, THE ASSESSEE HIMSELF HAD BEEN SHOWING THE RENTAL INCOME UNDER THE HEAD 'INCO ME FROM HOUSE PROPERTY' SINCE BEGINNING. NOT H ING NEW HAPPENED, EXCEPT THE ABOVE MENTIONED APPROVAL OF THE COMPETENT AUTHORITY FOR INDUSTRIAL PARK, WHICH NEVER CAME INTO BEING. HENCE, THERE IS NO REASON WHY, SIMPLY ON THE BASIS OF SUCH APPROVAL, THE INCOME IN QUESTION SHOULD BECOME 'PROFITS FROM BUSINESS'. A PERUSAL OF THE FINANCIAL STATEMENT ALSO MAKES IT CLEAR THAT THE ASSESSEE HAS SIMPLY LET OUT THE PREMISES, AND H AS E AR N ED RENTAL INCOME WITHOUT DOING ANY ACTIVITY WHICH COULD JUSTIFY THE LETTING OUT TO BE CALLED A BUSINESS. THE ASSESSING OFFICER IS, THEREFORE, DIRECTED TO RE - COMPUTE THE INCOM E UNDER THE HEAD, 'INCOME FROM HOUSE PROPERTY' AS PER LAW. NEEDLESS TO SAY THAT WHILE D OING SO, HE WILL ALLOW ONLY SUCH DEDUCTION WHICH IS ALLOWABLE UNDER THAT HEAD AN D WILL NOT ALLOW OTHER DEDUCTIONS SUCH AS DEPRECIATION. IN VIEW OF THE FOREGOING DISCUSSION, IT IS HELD THAT THE ASSESSING OFFICER WAS CORRECT IN DISALLOWING DEDUCTION U/S 80 IA (4)(III) OF THE IT ACT . ITA NOS. 896 TO 900/HYD/2015 SRI GAVVA AMARENDER REDDY : - 8 - : 5 . LD. COUNSEL REFERRING TO THE APPLICATION MADE BY ASSESSEE PLACED IN THE PAPER BOOK ALONG WITH APPROVAL GRANTED BY THE CDBT SUBMITTED THAT ASSESSEE INFORMED THAT THE BUILDING WAS IN EXISTENCE. THERE WAS NO SUPPRESSION OF INFORMATION. IT WAS THE CONTENTION THAT ALL FACTS ARE DISCLOSED INCLUDING EXISTENC E OF BUILDING AND EXISTENCE OF TENANTS. THE MOTHER AND SON JOINTLY OWNED THE PROPERTY AND APPLIED SEPARATELY AND THE SAME WERE APPROVED BY THE RELEVANT AUTHORITIES. THEREFORE, AO CANNOT REJECT THE CLAIM, ONCE THE INDUSTRIAL PARK WAS APPROVED. IT WAS THE SUBMISSION THAT THE SUBORDINATE AUTHORITY LIKE AO OR CIT(A) CANNOT CONSIDER THAT THE APPROVAL THAT WAS GRANTED WAS AUTOMATICALLY WITHDRAWN. IT WAS SUBMITTED THAT THERE WAS NO PROPOSAL FOR ITS REVOCATION AS WELL . IT WAS SUBMITTED THAT ASSESSEE SATISFIES T HE CRITERIA AND SO THE DEPARTMENT IS NOT CORRECT IN REJECTING THE CLAIM. 6 . LD. DR HOWEVER, REFERRED TO THE ORDERS OF THE AO TO SUBMIT THAT ASSESSEE HAS ALREADY STARTED USING THE BUILDING AND HAS LEAS ED OUT ON A LONG TERM BASIS MUCH PRIOR TO THE APPLICAT ION BUT BY MISREPRESENTATION , OBTAINED THE APPROVALS WHICH WILL BECOME AUTOMATICALLY INVALID. HE ALSO REFERRED TO THE ORDERS OF THE CIT(A) TO SUBMIT THAT THE APPROVALS TAKEN BY ASSESSEE ARE NOT FOR THE BUILDING IN WHICH ASSESSEE WAS SUPPOSED TO INVEST MON EYS. THEREFORE, ASSESSEE IS NOT ENTIT L ED TO CLAIM DEDUCTIONS. 7 . WE HAVE PERUSED THE RIVAL CONTENTIONS AND THE DOCUMENTS PLACED ON RECORD IN THE FORM OF PAPER BOOK. ASSESSEE HAS PLACED THE COPIES OF DIPP APPLICATION , APPROVAL, APPLICATION TO CBDT AND A PPROVAL ORDER . AS SEEN FROM THE FACTS OF THE CASE, ASSESSEE DID INDEED DEVELOP A BUILDING AS A CO - OWNER ON THE PLOT AT # 8 - 2 - 681/3 & 3A AT ROAD NO. 12, BANJARA HILLS, HYDERAB AD. ITA NOS. 896 TO 900/HYD/2015 SRI GAVVA AMARENDER REDDY : - 9 - : ASSESSEE S ADDRESS IS 8 - 2 - 682 IN LAXMI CYBER CENTRE. AS SEEN FROM THE RECOR DS, THESE TWO PROPERTIES SEEMS TO BE ADJACENT AND WE ARE NOT SURE WHETHER THERE IS ONLY ONE BUILDING OR TWO BUILDINGS IN THE ABOVE SAID TWO ADDRESSES. BEFORE ADVERTING TO THE ISSUES RAISED BY ASSESSEE AND REVENUE, WE ARE OF THE OPINION THAT THE FACTS OF T HE CASE ARE TO BE PLACED ON RECORD. ACCORDING TO ASSESSEE , HE HAS PROPOSED TO SET UP/CONSTRUCT THE INDUSTRIAL PARK ON THE LAND AT # 8 - 2 - 681/3 & 3A , ROAD NO. 12, BANJARA HILLS, HYDERABAD ON A TOTAL AREA OF 75, 918 SQ. FT., AND OUT OF THIS 63,018 SQ. FT., WAS PROPOSED TO BE EARMARKED FOR INDUSTRIAL USE. A MINIMUM OF THREE INDUSTRIAL UNITS WERE PROPOSED TO BE SET UP AND A TOTAL INVESTMENT OF 10.48 CRORES INCLUDING RS. 6 CRORES FOR BUILT UP SPACE WAS PROPOSED FOR SET UP FOR THIS INDUSTRIAL PARK. THE EXPECTE D DATE OF COMMENCEMENT WAS STATED AS APRIL, 2005. AND IN FACT, ASSESSEE APPLIED FOR THE NECESSARY PERMISSION VIDE HIS APPLICATION DT. 04 - 10 - 2005 I.E., AFTER THE COMMENCEMENT OF INDUSTRIAL PARK PROPOSED. ASSESSEE HAS GIVEN ADDRESS OF # 8 - 2 - 682 IN COLUM N NO. 3.1 OF THE APPLICATION AS NAME AND ADDRESS OF THE UNDERTAKING AND IN COLUMN NO. 4.1, THE PROPOSED LOCATION OF THE INDUSTRIAL PARK WAS STATED AS # 8 - 2 - 681/3 & 3A . OUT OF THE 75,918 SQ. FT., FOR ESTABLISHING THREE UNITS, THE APPLICATION TO CBDT DT. 2 4 - 01 - 2007 INDICATE S THAT THERE AR E FOUR UNITS OCCUPYING THE SPACE OF 48,326 SQ. FT., ONLY. WHAT HAPPENED TO THE BALANCE OF THE SPACE - WHETHER ANYBODY IS OCCUPYING THE SAME OR NOT - IS NOT FORTHCOMING FROM THE RECORD. OUT OF THESE FOUR UNITS, AO NOTED THAT THE AGREEMENT WITH SIS INFOTECH OCCUPYING 17,804 SQ. FT., TO BE A N UNIT ESTABLISHED MUCH EARLIER , ON A TEN YEAR LEASE. IT IS ALSO ON RECORD THAT ASSESSEE DID NOT INVEST ANY AMOUNT FOR INFRASTRUCTURE STATING THAT THE SAME WOULD BE TAKEN UP BY THE OCCUPANT S OF THE PLACE , AS THEY WANTED BARE STRUCTURE LEASE. E VEN THOUGH ASSESSEE OBTAINED THE APPRO VALS ITA NOS. 896 TO 900/HYD/2015 SRI GAVVA AMARENDER REDDY : - 10 - : FOR DEVELOPMENT AND MAINTAINING AND OPERATE AN INDUSTRIAL PARK , THE RECORD DO SUPPORT THE APPREHENSIONS OF REVENUE THAT ASSESSEE HAS SIMPLY CONVERTED THE EXIS TING BUILDING , WHICH WAS GIVEN ON LEASE , TO AN INDUSTRIAL PARK WITHOUT ANY FURTHER INVESTMENT. 8 . IN THE COURS E OF ARGUMENTS, LD. COUNSEL AS PART OF THE PAPER BOOK , PLACED ON RECORD THE APPROVALS TAKEN BY MOTHER OF ASSESSEE , SMT. GAVVA LAXMI DEVI , IN WH OSE CASE ALSO IT SEEMS THE DISPUTE WAS PENDING BEFORE LD. CIT(A) . AS SEEN FROM THAT APPLICATION, THE ADDRESS IN COLUMN NO. 3.1 OF THE APPLICATION AND THE PROPOSED LOCATION OF THE INDUSTRIAL PARK ARE SAME AS THAT OF # 8 - 2 - 682 . T HE FACT S INDICATE THAT BOTH THE PROPERTY AT # 8 - 2 - 682 AND # 8 - 2 - 681/3 & 3A SEEMS TO BE ONE AND THE SAME , WITH TWO DIFFERENT BUT COMMON OWNERSHIP . THE SAME FOUR COMPANIES HAVE OCCUPIED THE SPACE IN THAT BUILDING ALSO PARTLY OWNED BY THE MOTHER OF ASSESSEE TO AN EXTENT OF 37,174 SQ. FT., AS CAN BE SEEN FROM THE COLUMN 13 IN THE APPLICATION TO CBDT VIDE LETTER DT. 24 - 01 - 2007. 9 . BE THAT AS IT MAY, THE ISSUE BEFORE US IS WHETHER AO IS CORRECT IN DENYING THE BENEFIT WHEN T H E SAME WAS APPROVED BY THE CBDT. IF THERE IS ANY MISREPRESENTA TION OR M IS INFORMATION A S ALLEGED BY THE AO, THE PROPER COURSE WOULD BE TO MAKE FULL ENQ UIRY AND REPORT TO THE AUTHORITIES CONCERNED FOR TAKING NECESSARY STEPS TO WITHDRAW THE PERMISSIONS SO GRANTED. WITHOUT DOING SO, AO OR FOR THAT MATTER EVE N THE CIT(A) , WHO ARE SUBORDINATE AUTHORITIES TO THE CBDT , CANNOT COME TO A CONCLUSION AND SAY THAT THE APPROVAL GRANTED BY THE CBDT IS INVALID. AS INFORMED, NO STEPS HAVE BEEN TAKEN SO FAR BY EITHER THE AO OR BY ANY OTHER AUTHORITY TO WITHDRAW THE APPROVAL SO GRANTE D BY THE CBDT ON THE SO CALLED ALLEGATIONS OF ITA NOS. 896 TO 900/HYD/2015 SRI GAVVA AMARENDER REDDY : - 11 - : MISREPRESENTATION/MISINFORMATION. IN VIEW OF THIS, WE CANNOT APPRECIATE THE ACTION OF THE AO AND CIT(A) IN DENYING THE BENEFIT TO THE INDUSTRIAL PARK. TO THAT EXTENT, THE ORDERS OF AO AND CIT(A) CANNOT BE APP ROVED AND HAS TO BE SET ASIDE. 10. O N ASSESSEE S GROUNDS SO RAISED, THE ISSUE HA S TO BE DECIDED IN FAVOUR OF ASSESSEE . BUT W HAT WE NOTICED FROM THE ORDER OF THE CIT(A) IS THAT THE INCOMES FROM THE LETTING OUT OF PREMISES AND EARNING RENTAL INCOME HAS BEE N CONSIDERED AS INCOME FROM HOUSE PROPERTY , AND THERE IS A FINDING BY THE LD. CIT(A) THAT ASSESSEE WAS NOT DOING ANY ACTIVITY WHICH JUSTIFY THE LETTING OUT TO BE CALLED A BUSINESS . LD.CIT(A) AS EXTRACTED IN THE ORDER ABOVE, VIDE PARA 7.5 HAS DIRECTED THE AO TO ASSESS INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 10.1 . PROVISIONS OF SECTION 80 - IA ARE APPLICABLE TO THE INCOME FROM BUSINESS ONLY. SECTION 80IA(1) IS AS UNDER: 80 - IA(1): WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB - SECTION (4) (SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECT ION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION OF AN AMOUNT EQUAL TO HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TEN CONSECUTIVE ASSESSMENT YEARS. THUS AS CAN BE SEEN, DEDUCTION CAN BE ALLOWED ONLY IF THERE IS INCOME FROM THE HEAD BUSINESS. SUB - SECTION (4) APPLIES TO ANY ENTERPRISE CARRYING ON BUSINESS OF (I) DEVELOPING OR (II) OPERATING AND MAINTAINING (OR) (III) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY WHICH FULFILLS THE C ONDITIONS LAID DOWN. SINCE ASSESSEE HAS NOT CHALLENGED THE HEAD OF INCOME UNDER WHICH INCOME WAS DIRECTED TO BE ASSESSED , NATURE OF INCOME HAS BEEN ITA NOS. 896 TO 900/HYD/2015 SRI GAVVA AMARENDER REDDY : - 12 - : CRYSTALLIZED AS INCOME FROM HOUSE PROPERTY. THE PROVISIONS SECTION 80 - IA DOES NOT APPLY TO THE INCOME F ROM HOUSE PROPERTY. AS ASSESSEE HAS ACCEPTED THE INCOMES AS INCOME FROM HOUSE PROPERTY, QUESTION OF ALLOWING DEDUCTION U/S. 80 - IA DOES NOT ARISE. IN VIEW OF THIS, THE ABOVE GROUNDS RAISED HAVE BECOME ACADEMIC. MOREOVER, AO DID NOT MAKE ANY ENQUIRY IN TO THE PRESENT STATE OF AFFAIRS OF ASSESSEE ESTABLISHING A CYBER CENTRE AS INDUSTRIAL PARK AND THE EXTENT OF PROPERTY LEASED AND THE NATURE OF INCOMES EARNED WHICH MAY EFFECT IN CLAIM OF DEDUCTION . IN OUR VIEW F URTHER ENQUIRY MAY BE REQUIRED, IF THE CLAI MS ARE TO BE ALLOWED. S INCE INCOMES ARE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY, THERE IS NO NEED TO SET ASIDE THE ORDERS OF AO AND CIT(A) ON T HE ISSUE OF CLAIM UNDER S ECTION 80IA AND ADJUDICATE THE CLAIM . IN VIEW OF THIS, THE GROUNDS AS RAIS ED BY ASSESSEE ARE CONSIDERED ALLOWED FOR STATISTICAL PURPOSES TO THAT EXTENT. 11 . IN THE RESULT, ALL THE ABOVE APPEALS ARE CONSIDERED ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH FEBRU ARY, 2016 SD/ - SD/ - (P. MAD HAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 17 TH FEBRUARY, 2016 TNMM ITA NOS. 896 TO 900/HYD/2015 SRI GAVVA AMARENDER REDDY : - 13 - : COPY TO : 1. SRI GAVVA AMARENDER REDDY, H.NO. 8 - 2 - 682, LAXMI, ROAD NO. 12, BANJARA HILLS, HYDERABAD. C/ O. CH. PUSHYAM KIRAN, DIVYA DATLA, K. PRABHAVATHI, SAMEERA CHAMA, NEHA AKKINENI, ARJUN BHASKAR, ADVOCATES, FLAT NO. D, 1 ST FLOOR, UMA ENCLAVE, RD NO. 9, BANJARA HILLS, HYDERABAD. 2 . THE DEPUTY COMMISSIONER OF INCOME TAX , CIRCLE - 2 ( 3 ) , HYDERABAD. 3. TH E ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 2(3), HYDERABAD. 4 . CIT (APPEALS) - XI , HYDERABAD. 5 . PR. CIT , CENTRAL , HYDERABAD. 6 . D.R. ITAT, HYDERABAD. 7 . GUARD FILE.