2019 (5) TMI 109 - HC - Income Tax

Revision u/s 263 - allowability of deduction u/s 80IB(10) to land owner who does not undertake the construction work himself - land owner who is equally a partner in the development of Industrial Undertaking other than the Infrastructure Development Undertaking - erroneous order and prejudicial to the interests of the Revenue - HELD THAT - Nothing in Section 80IB(10) to deny the benefit of Deduction to the land owner also, who is equally a partner in the development of Industrial Undertaking other than the Infrastructure Development Undertaking. Without the land, obviously, the construction of building cannot be undertaken and therefore, the land owner is an integral part of the development of the Buildings. It is considered to be an Industrial Undertaking other than Infrastructure Development in view of the said provision. Merely because the land owner does not undertake the construction work himself, the land owner cannot be excluded from the ambit and scope of Section 80IB(10). The Tribunal has, therefore, has by citing its earlier decision in the case of Sri Lakshmi Brick Industries, 2012 (11) TMI 1090 - ITAT CHENNAI wherein such benefit was allowed to the extent of 1/2 to both the land owner and the developer who constructed the building in question, has rightly given the said benefit to the land owner, the present Assessee before us and has rightly set aside the order passed by the Commissioner of Income Tax u/s 263 - no substantial question of law - Decided against revenue

Summary

Issues:
1. Whether the Tribunal was right in quashing the order under Section 263 based on a change of opinion?
2. Whether the order under Section 263 was justified in denying the deduction under Section 80IB(10) to the landowner?

Analysis:
1. The Revenue filed an appeal challenging the Tribunal's order under Section 263 of the Income Tax Act for the Assessment Year 2009-2010. The first issue raised was whether the Tribunal was correct in quashing the order under Section 263 on the grounds of a mere change of opinion. The Revenue contended that the deduction under Section 80IB(10) should not have been granted to the landowner, as it was the Joint Venture Partner who constructed the building. However, the High Court examined Section 80IB(10) and concluded that the landowner, being an integral part of the development process, is eligible for the deduction. The Court referenced a previous case where the benefit was allowed to both the landowner and the developer, emphasizing that the landowner's role in development cannot be disregarded.

2. The second issue revolved around the justification of denying the deduction under Section 80IB(10) to the landowner. The Tribunal, citing a previous decision, highlighted that the order under Section 263 was based solely on a change of opinion, which is impermissible under the law. The Tribunal emphasized that if the Act provides for a particular benefit, granting such deduction cannot be considered prejudicial to the Revenue. The Court agreed with the Tribunal's reasoning, stating that the revision under Section 263 was indeed based on a change of opinion, which is not a valid ground for revision. Consequently, the Court found no substantial question of law in the Revenue's appeal and dismissed it, upholding the Tribunal's decision to allow the deduction to the landowner.