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2018 (12) TMI 1964 - AT - Income TaxReopening of assessment u/s 147 - Deduction u/s 80IA(4) - application under rule 27 of ITAT Rules vide letter contending the validity of the reopening u/s 147 - HELD THAT - There was an amendment under the Act by the Finance Act 2009 with retrospective effect from 01.04.2000. AO was of the view that the assessee who is acting as a work contractor is not entitled to the benefit of deduction u/s 80IA(4) - Accordingly the AO on the basis of such retrospective amendment reopened the case of the assessee under section 147 - The reason for the reopening has already been discussed in the preceding paragraph. It is settled law that reopening of the assessment under section 147 of the Act cannot be done on account of retrospective amendment in view of the judgment of Hon ble Gujarat High Court in the case of Sadbhav Engineering Ltd. 2014 (6) TMI 296 - GUJARAT HIGH COURT The principles laid down by the Hon ble Gujarat High Court as discussed above are squarely applicable to the facts of the present case on hand. Therefore respectfully following the same we are not inclined to uphold the reassessment proceedings under section 147 of the Act. Thus we hold that the order framed under section 147 of the Act is not sustainable in the given facts and circumstances. The assessee succeeds on the technical ground raised by it in the application filed under rule 27 of ITAT rules. Thus we are not inclined to decide the issue on the grounds raised by the Revenue on merit. Hence the ground of appeal of the Revenue is dismissed. Eligible for deduction u/s 80IA(4) - As there is no ambiguity that the issue whether the assessee is acting as developer or works contractor has already been decided by the Tribunal in the own case of the assessee for the assessment year 2007-08 after considering explanation added in subsection 13 to section 80IA(4) of the Act which has already been discussed in the preceding paragraph. Therefore we are of the view that the impugned issue stands decided in favor of the assessee. There was no change in the facts and circumstances in the case of the assessee in the year under consideration. Therefore in our considered view the principle of consistency will be applied in the case on hand as held by the Hon ble Supreme Court in the case of Radhasoami Satsang 1991 (11) TMI 2 - SUPREME COURT We hold that the assessee is very much eligible for deduction u/s 80IA(4) of the Act. Accordingly we set aside the order of the CIT-A and direct the AO to delete the addition made by him by making the disallowance under section 80IA(4) of the Act. Thus the ground of appeal of the assessee is allowed.
Issues Involved:
1. Validity of reopening of assessment under section 147 of the Income Tax Act, 1961. 2. Eligibility for deduction under section 80IA(4) of the Income Tax Act, 1961. 3. Application of retrospective amendments and their implications on reassessment. Detailed Analysis: 1. Validity of Reopening of Assessment under Section 147: The assessee challenged the reopening of the assessment under section 147 of the Income Tax Act, 1961, arguing that it was based on a retrospective amendment and amounted to a change of opinion, which is not permissible by law. The Tribunal acknowledged that the original assessment was framed under section 143(3) and later reopened by the AO on the grounds of escapement of income due to the assessee's ineligibility for deduction under section 80IA(4) as per the retrospective amendment by the Finance Act 2009. The Tribunal referenced the Gujarat High Court's decision in Sadbhav Engineering Ltd. vs. DCIT, which held that reopening based on retrospective amendments is invalid. Consequently, the Tribunal ruled that the reassessment proceedings under section 147 were not sustainable, thereby dismissing the Revenue's appeal on this ground. 2. Eligibility for Deduction under Section 80IA(4): The Revenue contested the deletion of disallowance of deductions under section 80IA(4) by the CIT(A) for various assessment years, arguing that the assessee acted as a works contractor and not as a developer. The Tribunal examined past records and judgments, including its own previous decisions and those of the Gujarat High Court, confirming that the assessee was a developer and not merely a contractor. The Tribunal reiterated that the assessee's activities involved significant investment, technical expertise, and risk, qualifying it as a developer eligible for deduction under section 80IA(4). The Tribunal upheld the CIT(A)'s decision to allow the deduction, dismissing the Revenue's appeals. 3. Application of Retrospective Amendments: The Tribunal addressed the issue of whether the retrospective amendment to section 80IA(4) by the Finance Act 2009, effective from 01.04.2000, could invalidate the assessee's claim for deduction. The Tribunal noted that the reopening of assessments based on retrospective amendments is not permissible, referencing the Gujarat High Court's decision in Sadbhav Engineering Ltd. vs. DCIT. Furthermore, the Tribunal distinguished the facts of the assessee's case from those in the Gujarat High Court's judgment in Katira Construction Ltd. vs. Union of India, which upheld the validity of the retrospective amendment but did not specifically address whether the assessee was a developer or a contractor. The Tribunal concluded that the assessee's eligibility for deduction under section 80IA(4) had been consistently upheld in previous years, and there was no material change in facts to warrant a different view. Conclusion: The Tribunal dismissed the Revenue's appeals for the assessment years 2005-06, 2006-07, and 2008-09, upholding the CIT(A)'s decision to allow deductions under section 80IA(4). For the assessment year 2009-10, the Tribunal allowed the assessee's appeal, directing the AO to delete the disallowance of deduction under section 80IA(4). The Tribunal emphasized the principle of consistency and the invalidity of reassessment based on retrospective amendments.
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