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2017 (8) TMI 1122 - AT - Income TaxRevision u/s 263 - AO has not considered the provisions of section 80A(5) before allowing the claim of deduction u/s 80IB(10) - AO has allowed deduction claimed u/s 80IB(10) even though such claim was not made u/s 139 or in the revised returns filed u/s 153A - assessee contended that, the issue of claim of deduction u/s 80IB(10) was subject matter of appeal before the CIT(A) as well as the Hon ble ITAT have considered the issue and after taking into account the facts of the case and also the provisions of section 80A(5) has directed the AO to examine the issue of deduction claimed u/s 80IB(10). Held that - Though the Ld.CIT(A) did not allow the claim of the assessee, the ITAT has admitted the additional ground filed by the assessee and directed the AO to examine the other conditions prescribed u/s 80IB(10). The AO, after satisfying with the other conditions, has allowed the claim of the assessee towards deduction u/s 80IB(10) of the Act. Therefore, we are of the view that the claim made by the assessee u/s 80IB(10) is in accordance with law and the AO has rightly allowed the claim made by the assessee. Accordingly, the order passed by the AO is not prejudicial to the interest of the revenue. The assessment order passed by the AO u/s 143(3) r.w.s. 254 of the Income-tax Act, 1961 is neither erroneous nor prejudicial to the interest of the revenue. - revision order set aside - Decided in favour of assessee.
Issues Involved:
1. Legality of the Principal CIT's revision of assessment orders under Section 263 of the Income-tax Act, 1961. 2. Eligibility of the assessee for deduction under Section 80IB(10) despite not claiming it in the original or revised returns. 3. Interpretation and application of Section 80A(5) in relation to Section 80IB(10). Detailed Analysis: 1. Legality of the Principal CIT's Revision of Assessment Orders under Section 263: The Principal CIT issued a show cause notice to the assessee, proposing to revise the assessment orders on the grounds that the AO allowed the deduction under Section 80IB(10) without the assessee making any claim in the original or revised returns. The Principal CIT argued that this was in contravention of Section 80A(5), which mandates that deductions must be claimed in the return of income. The Principal CIT held that the AO's assessment orders were erroneous and prejudicial to the interest of the revenue, thus justifying the revision under Section 263. 2. Eligibility of the Assessee for Deduction under Section 80IB(10): The assessee, engaged in the business of builders and developers, developed a housing project named 'Madhav Srushti', Phase-I. The assessee did not claim the deduction under Section 80IB(10) in the original or revised returns but raised the claim for the first time before the CIT(A) based on the judgment of the Hon'ble Bombay High Court in the case of Brahma Associates. The CIT(A) rejected the claim, but the ITAT restored the matter to the AO for verification of the claim in light of the provisions of Section 80IB(10). The AO, after verification, allowed the deduction. 3. Interpretation and Application of Section 80A(5) in Relation to Section 80IB(10): The Principal CIT argued that the AO allowed the deduction under Section 80IB(10) without considering Section 80A(5), which mandates that deductions must be claimed in the return of income. However, the ITAT noted that the AO passed the assessment orders as per the specific directions given by the ITAT, which included verifying the eligibility of the deduction under Section 80IB(10). The ITAT emphasized that the provisions of Section 80A(5) were within the knowledge of the ITAT and were considered before allowing the claim. Conclusion: The ITAT held that the Principal CIT's revision of the assessment orders under Section 263 was not justified. The ITAT observed that the AO's assessment orders were neither erroneous nor prejudicial to the interest of the revenue, as the AO followed the ITAT's directions and verified the eligibility of the deduction under Section 80IB(10). The ITAT also noted that the appellate authorities, including the CIT(A) and the ITAT, have the power to consider claims not made in the original or revised returns if the relevant material is available on record. Consequently, the ITAT set aside the order passed by the Principal CIT and restored the assessment orders passed by the AO for the assessment years 2003-04 to 2008-09. The appeals filed by the assessee were allowed.
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