2014 (12) TMI 49 - AT - Income Tax

Allowability of deduction u/s 80IB(10) Undisclosed income on extra work done for addition amenities/internal alterations Held that - As decided in assessee s own case for the earlier assessment year, it has been held that, since the surrender of additional income was made in other cases and the issues of joining the flats to make them bigger flats exceeding 1000 sq. ft. were the subject matter of other assessees and other years of the assessee, the details were called for thus, the assessee is eligible for the claim of deduction u/s 80IB(10). Whether there was a retraction of the statement given by the managing partner to not to include the amount of ₹ 95,00,000/- in the amount qualifying for deduction u/s 80IB(10) Held that - The CIT(A) has concluded that the AO has not brought any new facts for the year under consideration - The facts that emerged at the time of survey u/s 133A. Whether the source of ₹ 95,00,000/- is the business of the assessee or something else Held that - It is a settled line of adjudication that any claim for deduction under Income Tax Act are dependent upon the conditions laid down under the provisions of the Act and there are requisite formalities which are required to be done as per the law - once these conditions are fulfilled, the assessee is entitled for statutory deduction or claim to which he is entitled to - Mere consent or acquiescence by the assessee cannot take away the otherwise a legitimate claim to which he is entitled to - an admission or acquiescence cannot be a foundation for assessment where the income is returned under erroneous impression or misconception of law - even though the assessee had surrendered its claim before the AO relying upon CIT vs Sheth Developers (P) Ltd. 2012 (8) TMI 159 - BOMBAY HIGH COURT - the assessee surrendered the income, whose only source, was the business of the assessee - the claim of the assessee to include ₹ 95,00,000/- in the computation of deduction u/s 80IB(10) is in accordance with law and must be allowed. Whether the statement given oath u/s 133A is binding and cannot be retracted Held that - Statement given u/s 133A is not on oath - the statement made by the managing partner to not to include the amount of ₹ 95,00,000/- in the claim of deduction would have no relevance, first on the fact that the statement was made u/s 133A - even if the statement was recorded on oath, the assessee has prerogative to change his/its stand, after taking into consideration the facts that emerge from the papers seized or impounded - the disclosure is off shoot of survey carried out on 11/10/2005 on the same group Decided against revenue.

Summary

Issues Involved: Deduction under Section 80IB(10) of the Income-tax Act, 1961; Inclusion of undisclosed income in the computation of deduction; Compliance with conditions for claiming deduction; Validity and retraction of statements made during survey under Section 133A.

Issue-Wise Detailed Analysis:

1. Deduction under Section 80IB(10) of the Income-tax Act, 1961:
The primary issue was whether the assessee was entitled to a deduction under Section 80IB(10) concerning an amount of Rs. 16 lakh declared as undisclosed income. The assessee, a partnership firm engaged in the business of building and developing, had claimed a deduction under Section 80IB(10) which was challenged by the Assessing Officer (AO). The AO disallowed the deduction on the grounds that certain flats were amalgamated into larger units exceeding 1000 sq. ft., and there was a commercial area of 1500 sq. ft. in one of the buildings, making the project ineligible for the deduction.

2. Inclusion of Undisclosed Income in the Computation of Deduction:
The AO contended that the amount of Rs. 95,00,000/- declared during the survey should not be included in the computation of the deduction under Section 80IB(10). The assessee had included this amount in the qualifying amount for the deduction, which the AO viewed as a retraction of the statement made during the survey. The CIT(A) allowed the inclusion, observing that the income was related to the business and no new facts were brought by the AO to disprove this.

3. Compliance with Conditions for Claiming Deduction:
The assessee argued that all conditions for claiming the deduction under Section 80IB(10) were met, including the completion of the housing project within the stipulated time and the area of the flats being less than 1000 sq. ft. The CIT(A) and the Tribunal found that the assessee had indeed complied with these conditions, and the completion certificates issued by the local authority supported this compliance.

4. Validity and Retraction of Statements Made During Survey under Section 133A:
The AO relied on the statement made by the managing partner during the survey, wherein it was declared that the additional income of Rs. 95,00,000/- would not be eligible for the deduction under Section 80IB(10). The CIT(A) and the Tribunal held that statements made during a survey under Section 133A are not on oath and can be retracted. The Tribunal emphasized that the law does not bar retraction if the facts support the claim for deduction.

Judgment Summary:
The Tribunal upheld the CIT(A)'s decision to allow the deduction under Section 80IB(10) for the amount declared as undisclosed income. It was concluded that the assessee had complied with all the necessary conditions for the deduction, and the inclusion of the undisclosed income in the computation was justified. The Tribunal also affirmed that statements made during surveys under Section 133A are not binding and can be retracted if the facts and materials support the claim. The appeal of the Revenue was dismissed, and the assessee's claim for deduction under Section 80IB(10) was upheld.

Finally, the Tribunal dismissed the appeal of the Revenue, affirming the decision of the CIT(A) and allowing the deduction under Section 80IB(10) for the assessee.