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2014 (6) TMI 281 - AT - Income TaxValidity of revision by CIT u/s 263 of the Act Claim of deduction u/s 80IB of the Act Held that - Following Grasim Industries Ltd. V CIT 2010 (2) TMI 4 - BOMBAY HIGH COURT and CIT Vs. Toyota Motor Corporation 2008 (4) TMI 231 - DELHI HIGH COURT - the assessment order is a cryptic one and it does not contain any discussion about the deduction claimed by the assessee u/s 80IB(10) of the Act - the order passed by the AO should be a self-contained order giving the relevant facts and reasons for coming to the conclusion based on those facts and law - the assessment order was cryptic one and it did not contain any discussion about the deduction allowed to the assessee u/s 80IB of the Act - the assessee has placed all the details / documents before the assessing officer, nothing was brought on record to show that the assessing officer did apply his mind on those materials before allowing the deduction u/s 80IB of the Act - the assessment order passed without application of mind on the details / documents furnished by the assessee would be rendered erroneous - The question whether the deduction is allowable to the assessee or not has got tax implications. The assessee has failed to show that the assessing officer has examined the various details relating to the deduction u/s 80IB(10) of the Act - certain factual aspects like the date of completion of the project, the details relating to commercial establishments etc. are required to be verified - Apparently these points should have been examined by the AO before allowing the deduction claimed by the assessee u/s 80IB(10) of the Act - CIT was within his power to pass the impugned revision order, since the assessment order is rendered erroneous and prejudicial to the interests of revenue in view of lack of application of mind on the part of the AO - the assessee has got every right to put forth his arguments before the AO in respect of those issues thus, the order of the CIT is modified and the CIT is directed the AO that he should examine various issues relating to the deduction claimed u/s 80IB(10) of the Act without being influenced by the views expressed by CIT, i.e., the AO should examine the claim independently by duly considering the various contentions put forth by the assessee Decided partly in favour of Assessee.
Issues Involved:
1. Validity of revision proceedings initiated by the Commissioner of Income Tax (CIT) under section 263 of the Income-tax Act, 1961. 2. Applicability of the four-year limitation period for completion of the housing project. 3. Compliance with the conditions prescribed under section 80IB, specifically regarding the construction of commercial space. 4. Nature and validity of the occupancy certificate as a completion certificate under section 80IB. 5. Adequacy of the assessment order passed by the Assessing Officer (AO). Detailed Analysis: 1. Validity of Revision Proceedings Initiated by CIT: The appeal filed by the assessee challenges the order dated 27.03.2012 by the CIT under section 263 of the Income-tax Act, 1961, for the assessment year 2007-08. The CIT initiated revision proceedings on the grounds that the AO allowed the deduction claimed under section 80IB without proper examination of certain aspects. The CIT considered the assessment order erroneous and prejudicial to the interests of revenue, thereby justifying the initiation of revision proceedings. 2. Applicability of the Four-Year Limitation Period: The assessee argued that the limitation period of four years for completing the housing project applies only to approvals granted by the Local Authority on or after 1st April 2004. Since the approval in this case was granted before 1st April 2004, the four-year limitation period was not applicable. The project was required to be completed by 31-03-2008, which the assessee claimed to have done. 3. Compliance with Conditions Prescribed Under Section 80IB: The CIT noted that the AO failed to observe that the commercial space constructed exceeded 2000 sq. ft., violating section 80IB conditions. The assessee countered that the limit for commercial construction was introduced by the Finance (No.2) Act, 2004, effective from 1.4.2005, and should not apply to projects approved before 31.3.2005. The Mumbai Tribunal had previously ruled that such limits apply only to projects approved on or after 1.4.2005. 4. Nature and Validity of the Occupancy Certificate: The CIT questioned the validity of the occupancy certificate dated 26.02.2008, considering it a "part occupancy" certificate rather than a "completion certificate" as required under section 80IB. The assessee provided a clarificatory letter from the Local Authority stating that the occupancy certificate should be deemed a completion certificate. The CIT had not pointed out this defect in the show cause notice nor confronted the assessee during the hearing. 5. Adequacy of the Assessment Order: The CIT found the assessment order cryptic, lacking discussion on the deduction claimed under section 80IB. The Delhi High Court in CIT Vs. Toyota Motor Corporation emphasized that assessment orders should be self-contained, providing relevant facts and reasons. The Supreme Court upheld this view, stating that the AO must pass a reasoned order considering all relevant aspects and materials placed by the assessee. The Punjab and Haryana High Court also supported this view in the case of Commissioner of Income-tax vs. Sunil Kumar Goel. Conclusion: The Tribunal concluded that the assessment order was indeed cryptic and lacked discussion on the deduction under section 80IB. The assessee failed to show that the AO examined the relevant details before allowing the deduction. The CIT was within his power to pass the revision order due to the lack of application of mind by the AO, rendering the assessment order erroneous and prejudicial to revenue interests. However, the AO should independently examine the issues without being influenced by the CIT's views, allowing the assessee to present their arguments. Final Judgment: The appeal filed by the assessee was partly allowed. The AO was directed to re-examine the issues related to the deduction under section 80IB independently and take an appropriate decision in accordance with the law. The order was pronounced in open court on 23rd May 2014.
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