2016 (11) TMI 1511 - AT - Income Tax

Reopening of assessment - Eligibility for deduction U/S 80IB - non-furnishing of reasons recorded by AO - Held that - As this is not disputed that the reasons recorded were not furnished by the AO to the assessee, we decline to interfere with the order of the ld. CIT(A) on this issue i.e. regarding quashing the assessment order on this basis that the reasons recorded for re-opening were not furnished to the assessee by the AO. See Commissioner of Income Tax Versus M/s Trend Electronics 2015 (9) TMI 1119 - BOMBAY HIGH COURT when the AO failed to furnish the reasons recorded for re-opening of the assessment, the re-assessment order passed by the AO is bad in law - Decided in favour of assessee

Issues:
1. Deduction under section 80IB(10) for works contract.
2. Validity of relying on court decisions for deductions.
3. Permission of local authorities for construction.
4. Admission of fresh evidence under Rule 46A(iii).
5. Compliance with section 80IB(10)(d) for commercial establishments.
6. Eligibility for deduction under section 80-IB for housing projects.
7. Phase-wise completion for deduction under section 80-IB.
8. Interpretation of section 80-IB conditions.
9. Validity of assessment order cancellation for non-furnishing of reasons.

Analysis:
1. The appeal concerned the revenue's challenge against the CIT(A)'s order for the assessment year 2008-09. The revenue disputed the allowance of deduction under section 80IB(10) for a works contract, arguing that ownership rights were not with the assessee. The Tribunal noted the revenue's contentions but upheld the CIT(A)'s decision.

2. The revenue contested the CIT(A)'s reliance on a Karnataka High Court decision, arguing that the Supreme Court's dismissal of an SLP did not establish a binding precedent. The Tribunal acknowledged the revenue's argument but found in favor of the assessee, citing legal principles regarding the weight of court decisions.

3. The revenue raised concerns about the absence of permission from local authorities for construction in the assessee's name. The Tribunal considered this issue but ultimately upheld the CIT(A)'s decision to allow the deduction, as the permission aspect did not affect the eligibility for the deduction.

4. The revenue objected to the admission of fresh evidence by a Chartered Engineer without providing an opportunity to the AO under Rule 46A(iii). The Tribunal reviewed this issue and concluded that the evidence was relevant to the case, supporting the CIT(A)'s decision to admit it.

5. The revenue argued that the CIT(A) erred in allowing the deduction under section 80IB without complying with section 80IB(10)(d) regarding the built-up area for commercial establishments. The Tribunal examined the relevant provisions and upheld the CIT(A)'s decision based on the facts presented.

6. The eligibility for deduction under section 80-IB for housing projects was disputed by the revenue, claiming that the completion certificate was only for the first phase. The Tribunal analyzed the provisions and upheld the CIT(A)'s decision, emphasizing the completion of the initial phase as part of the project.

7. The revenue challenged the CIT(A)'s interpretation of section 80-IB conditions, arguing that the project did not meet the criteria for deduction. The Tribunal reviewed the provisions and supported the CIT(A)'s decision based on the specifics of the case.

8. The revenue contested the cancellation of the assessment order due to non-furnishing of reasons for re-opening. The Tribunal referenced a previous case and upheld the CIT(A)'s decision, stating that the failure to provide reasons rendered the reassessment order invalid.

9. The Tribunal dismissed the revenue's appeal, confirming the CIT(A)'s decision to quash the assessment order. With the assessment order invalidated, the Tribunal did not address the other grounds raised by the revenue, emphasizing that no additions were required due to the quashing of the assessment order.

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