2015 (6) TMI 276 - AT - Income Tax

Entitlement to deduction u/s 80IB - CIT(A) allowed the claim - Held that - In the appellant s case the provisions of section 801B(10) are applicable, as the appellant s project was approved prior to 01/04/05. The subsequent amendment will not affect the appellant s case in view of jurisdictional Bombay High Court decision in the case of Brahma Associates vs. JCIT (2011 (2) TMI 373 - BOMBAY HIGH COURT). As it is evident from the appellant s submission that the appellant comply all necessary conditions as envisaged under the provisions of law for claiming deduction u/s 80IB(l0) of the Act. Hence taking note, of all the facts on record, therefore to hold that the appellant is eligible for deduction u/s 80IB(10) of the Act. As could be noticed from the order of the learned CIT(A), when there is a specific direction to the AO by the ITAT to follow the Special Bench decision of ITAT it has to be assumed that the direction is with reference to the issues which were originally objected to by the AO and the AO cannot take advantage of the order of ITAT for repeating the addition, defying the directions of the ITAT. At least the senior officer such as Commissioner of Income Tax should have carefully perused the record and CIT(A) s order before granting authorisation. The very fact that the AO filed the appeals without even verifying the year, which was mentioned in the grounds of appeal, also indicates that the appeals were filed in a routine manner which causes lot of inconvenience to the tax payers and such a practice should be deprecated. With these observations, for the reasons given by the learned CIT(A), we hold that the appeals filed by the Revenue deserve to be dismissed in limine. - Decided against revenue.

Summary

Issues:
Appeal against orders passed by CIT(A)-7, Mumbai for assessment years 2005-06, 2006-07, and 2007-08.

1. Deduction Claim under Section 80IB:
The appellant claimed a deduction of Rs. 1,97,63,000 under section 80IB, which was allowed by CIT(A) based on the decision of the Bombay High Court in the case of Brahma Associates for AY 2003-04. The appellant argued that this decision was not applicable to their case for AY 2005-06 due to a specific restriction introduced by S 80IB(21)(d). The CIT(A) held that the amended section 80IB(10)(d) would not apply to the appellant's project as it was approved and started before 01.04.2005, citing the principle that the law in force in an assessment year applies unless expressly provided otherwise. The CIT(A) admitted additional evidence supporting the appellant's compliance with necessary conditions for the deduction.

2. Disallowance under Section 80IB(10):
The AO initially disallowed the deduction under section 80IB(10) due to exceeding commercial construction limits and incomplete project by 31.03.2008. The ITAT directed the AO to reconsider the issue in line with the decision of the ITAT Special Bench, Pune. However, the AO repeated the disallowance without giving the appellant an opportunity, contrary to the ITAT's direction. The CIT(A) reviewed the case, considering the High Court decision confirming the ITAT Special Bench's decision, and allowed the deduction under section 80IB(10) as the appellant fulfilled all necessary conditions.

3. Jurisdictional Errors and Appeal Dismissal:
The Revenue appealed the CIT(A)'s order, arguing that the AO exceeded jurisdiction in implementing the ITAT's directions. The Tribunal noted that the AO should have followed the ITAT's specific directions and criticized the routine filing of appeals without proper verification. The Tribunal dismissed the Revenue's appeals, affirming the CIT(A)'s decision based on the High Court's ruling and the appellant's compliance with section 80IB(10) conditions.

In conclusion, the Tribunal upheld the CIT(A)'s decision to allow the deduction under section 80IB(10) for the appellant's project, emphasizing compliance with necessary conditions and criticizing the Revenue's procedural errors in filing appeals.