2009 (10) TMI 636 - AT - Income Tax

Deductions - Profits and gains from industrial undertakings, etc., after certain dates/infrastructure undertaking, Revision - Of orders prejudicial to interest of revenue

Summary

Issues Involved:
1. Disallowance of claim of deduction under section 80-IA(4F) read with section 80-IA(5)(vi) and 80-IB(10) of the Income-tax Act.
2. Legality and validity of proceedings initiated under section 147/148 of the Income-tax Act for the assessment year 1999-2000.
3. Action under section 263 of the Income-tax Act for the assessment year 2002-03.

Issue-wise Detailed Analysis:

1. Disallowance of Claim of Deduction under Section 80-IA(4F) and 80-IB(10)
The core issue revolves around the eligibility of the assessee to claim deductions under sections 80-IA(4F) and 80-IB(10) for the profits derived from four projects within the Shipra Riviera Complex. The Assessing Officer (AO) disallowed these claims, arguing that the development and construction of the projects commenced before the prescribed date of 1-10-1998. The CIT(A) allowed the claims for the assessment years 2000-01, 2001-02, and 2002-03, but not for 1999-2000.

The Tribunal examined the facts and found that the development and construction of the four disputed projects (Brahmaputra, Kaveri, Amravati, and Damodar) indeed commenced after 1-10-1998, based on evidence such as work orders, foundation laying ceremonies, and contracts with sub-contractors. The Tribunal emphasized that mere earth filling and levelling activities prior to the specified date do not constitute the commencement of development and construction of housing projects. Therefore, the Tribunal upheld the CIT(A)'s decision to allow the deductions for the assessment years 2000-01, 2001-02, and 2002-03.

2. Legality and Validity of Proceedings under Section 147/148 for Assessment Year 1999-2000
The assessee challenged the legality and validity of the proceedings initiated under sections 147/148 for the assessment year 1999-2000. The Tribunal found that the AO had not provided sufficient grounds to justify the reopening of the assessment. The Tribunal ruled in favor of the assessee, stating that the proceedings under sections 147/148 were not validly initiated.

3. Action under Section 263 for Assessment Year 2002-03
The CIT invoked section 263, alleging that the AO had not declined the claim on the grounds that the four projects were undertaken as a result of splitting up and reconstruction of an already existing project. The Tribunal found that the CIT's allegations were without merit and not supported by any material evidence. The Tribunal held that the AO had duly examined the books of account and other relevant documents before allowing the claim. The Tribunal set aside the CIT's order under section 263, thereby allowing the assessee's appeal.

Conclusion:
The Tribunal dismissed the revenue's appeals and allowed the assessee's appeals in part. The Tribunal upheld the CIT(A)'s decision to allow deductions under sections 80-IA(4F) and 80-IB(10) for the assessment years 2000-01, 2001-02, and 2002-03. The Tribunal also ruled in favor of the assessee regarding the validity of proceedings under sections 147/148 for the assessment year 1999-2000 and set aside the CIT's order under section 263 for the assessment year 2002-03.