2015 (3) TMI 1376 - AT - Income Tax

Revision u/s 263 - Deduction u/s 80IB(10) - HELD THAT - It is not in dispute that the AO had taken into consideration the revised certificate issued by the Pune Municipal Corporation while granting the benefit of deduction under section 80IB(10) of the Act. It cannot be disputed that the view taken by the AO is one of the possible views on the matter. As rightly observed in the case Gabrial India Ltd. 1993 (4) TMI 55 - BOMBAY HIGH COURT as well as case of Sunbeam Auto Ltd. 2008 (11) TMI 348 - RAJASTHAN HIGH COURT merely because the Commissioner of Income Tax holds a different opinion on the matter an order passed by the AO cannot be considered as erroneous and prejudicial to the interests of Revenue particularly when it cannot be attributed to lack of enquiry by the AO. We are of the firm view that the learned Commissioner has no jurisdiction to invoke provisions of section 263. - Decided in favour of assessee.

Summary

Issues:
1. Validity of deduction under section 80IB(10) of the Income Tax Act, 1961 for the assessment year 2005-06.

Analysis:
The case involved an appeal against an order passed under section 263 of the Income Tax Act, 1961 regarding the deduction claimed under section 80IB(10) for the assessment year 2005-06. The appellant, a Director of a company engaged in various business activities, claimed the deduction for a housing project in Pune. The Assessing Officer (AO) initially allowed the deduction, considering the revised approval plan and certification by the Pune Municipal Corporation. However, the Commissioner, exercising powers under section 263, found the AO's decision erroneous. The Commissioner observed that the net plot area did not meet the criteria of one acre as required by section 80IB(10). The AO's decision was set aside for fresh assessment to verify the land area conditions for the deduction.

The appellant contended that the AO's decision was based on independent inquiry and material on record, satisfying the requirements for the deduction. The appellant cited legal precedents and argued that the Commissioner's decision was a change of opinion, not permissible under section 263. The appellant emphasized that the area of the plot was correctly certified by the Pune Municipal Corporation, and the AO's decision aligned with legal principles. The appellant presented cases supporting the claim that the area calculation should include certain demarcated spaces and FSI rights granted for the project.

On the contrary, the Departmental Representative (D.R.) argued that the net available area for development did not meet the one-acre requirement as certain land portions were earmarked for road widening and parks. The D.R. relied on a CBDT circular to assert that the AO's decision was contrary to the circular and prejudicial to revenue interests. The D.R. emphasized that FSI rights could be sold outside the project, affecting the net available area for development.

After considering the submissions, the Tribunal found that the AO had considered the revised certificate from the Pune Municipal Corporation while granting the deduction. Citing legal precedents, the Tribunal held that the AO's decision was a possible view on the matter and not erroneous or prejudicial to revenue interests. Referring to relevant court decisions, the Tribunal concluded that the Commissioner lacked jurisdiction to invoke section 263 in this case. Consequently, the proceedings under section 263 were quashed, and the appeal by the assessee was allowed.

In conclusion, the Tribunal's decision upheld the validity of the deduction claimed under section 80IB(10) for the assessment year 2005-06, emphasizing the AO's independent inquiry and compliance with legal requirements, while rejecting the Commissioner's view as a change of opinion not warranting revision under section 263.