2018 (8) TMI 1993 - AT - Income Tax

Deduction u/s.80IA(4) - eligible profits earned by the assessee from IT park and related activities - deduction in the first year of the undertaking stands undisturbed or not withdrawn - no provision for withdrawal of special deduction for the subsequent years for breach of certain conditions - HELD THAT - Unless the relief claimed in the first year of undertaking is withdrawn the AO cannot withhold the relief for the subsequent years. In the present case though an attempt is made to withdraw the claim of deduction through the invoking of the provisions of section 148 the same did not fructify for one reason or the other and the judgment of the Hon ble High Court in the writ proceedings evidences the same. In effect the claim of the assessee u/s.80IA(4) of the Act stands allowed in the first year of undertaking. Considering the fact that the same is allowed in the first year of undertaking the AO cannot withdraw the deduction when the facts are identical. Therefore we are of the opinion that the judgment of Hon ble Jurisdictional High Court in the case of CIT Vs. Paul Brothers 1992 (10) TMI 5 - BOMBAY HIGH COURT stands applicable to the facts of the present case legally. Assessee is entitled to relief for both the years on this legal issue alone - Decided in favour of assessee.

Summary

Issues:
Allowability of claim of deduction u/s.80IA(4) of the Act in respect of eligible profits earned by the assessee from IT park and related activities.

Analysis:
The core issue in this case pertains to the allowability of the claim of deduction u/s.80IA(4) of the Income Tax Act, 1961 concerning the eligible profits earned by the assessee from IT park and related activities. The assessee, a company engaged in Builders and Developers business, filed returns declaring income after claiming deductions u/s.80IA(4)(iii). The Assessing Officer (AO) observed completion of only 7 units as per the PMC certificate, with the remaining units completed later without fresh approval for the delay. The AO denied the claim based on the Industrial Park Scheme 2002 conditions, stating each unit should be allocated to distinct parties. The CIT(A) upheld the AO's decision. The issue was whether the claim was allowable under section 80IA(4) for the relevant years.

The assessee's claim for deduction u/s.80IA(4) was allowed in the A.Y. 2009-10 but disallowed in subsequent years due to completion date discrepancies and lack of approvals. The AO contended only 7 out of 14 units were completed as per the PMC certificate, leading to denial of the claim. The assessee argued that the claim was allowed in the first year and should not be disturbed in subsequent years. Citing the judgment in CIT Vs. Paul Brothers, the assessee emphasized that unless the relief claimed initially was withdrawn, subsequent year's relief cannot be withheld. The Hon'ble High Court observed a clear case of change of opinion in the reassessment proceedings, favoring the assessee's claim.

In light of the legal precedents and judgments, the Tribunal analyzed the applicability of the binding judgment in CIT Vs. Paul Brothers. Referring to similar cases, the Tribunal reiterated that if the relief granted in the first year is not withdrawn, subsequent years' relief cannot be denied. The Tribunal also cited the judgment in the case of CIT Vs. Western Outdoor Interactive Pvt. Ltd., supporting the assessee's entitlement to deduction based on the initial approval. Additionally, the Pune Bench of the Tribunal in M/s. Ygyan Consulting Pvt. Ltd. Vs. DCIT upheld the assessee's claim based on the principle that if the claim was accepted initially, the Revenue cannot question eligibility in subsequent years.

Ultimately, the Tribunal concluded that the assessee was entitled to relief for both years based on legal principles and binding judgments. Considering the relief granted on technicalities, the Tribunal deemed further adjudication on merits as academic. Consequently, the relevant grounds were dismissed, and both appeals of the assessee were partly allowed.

In conclusion, the judgment focused on the allowability of the deduction u/s.80IA(4) for the assessee's profits from IT park activities, emphasizing legal principles and precedents to support the assessee's claim based on initial approvals and relief granted in the first year of the undertaking.