2020 (2) TMI 588 - HC - Income Tax

Revision u/s 263 - claim of the deduction u/s. 80IB - HELD THAT - Revenue stand squarely covered by the decision of this Court in the case of Principal Commissioner of Income Tax vs. Alidhara Taxspin Engineers Anr. 2017 (5) TMI 1684 - GUJARAT HIGH COURT held that on interpretation of the partnership agreement and considering the wish of the partners reflected in the partnership deed, not to pay/charge interest on the partners capital and the remuneration, the learned tribunal has rightly deleted the disallowance made by the Assessing Officer with respect to the deduction claimed under Section 80IB. As rightly observed by the tribunal, mere incorporation of interest on the partners capital and remuneration does not signify that the same are mandatory in nature. We concur with the view taken by the learned tribunal. No substantial questions of law.

Summary

Issues:
Appeal under Section 260A of the Income Tax Act, 1961 against ITAT order for A.Y. 2013-14.
1. Whether ITAT correctly set aside order u/s 263 when AO's assessment order was prejudicial to revenue?
2. Whether ITAT correctly allowed deduction u/s 80IB without original assessment inquiry?
3. Whether ITAT's order on deduction u/s 80IB(10) should be based on total income as per Sec 29 to 43D?
4. Whether ITAT correctly applied rule of consistency for deduction u/s 80IB(10)?

Analysis:

Issue 1:
The Revenue challenged ITAT's decision to set aside the order u/s 263 despite AO's erroneous assessment prejudicial to revenue. The Court referred to a previous decision and concurred with ITAT's findings, stating that no substantial questions of law were involved. The Court dismissed the appeal, upholding ITAT's decision.

Issue 2:
The Revenue questioned ITAT's allowance of deduction u/s 80IB without original assessment inquiry. Referring to a previous case, the Court agreed with ITAT's decision based on the partnership agreement and partners' wish not to pay interest on capital. The Court dismissed the appeal, stating no substantial questions of law were raised.

Issue 3:
Regarding the deduction u/s 80IB(10) based on total income as per Sec 29 to 43D, the Court upheld ITAT's decision following a previous judgment. The Court found no substantial questions of law and dismissed the appeal.

Issue 4:
The Revenue challenged ITAT's application of the rule of consistency for deduction u/s 80IB(10) despite lack of support from the assessee. The Court, in line with previous decisions, upheld ITAT's decision and dismissed the appeal, stating no substantial questions of law were involved.

In conclusion, the High Court dismissed the Tax Appeal, upholding ITAT's decision on all issues raised by the Revenue, as the questions proposed did not raise substantial questions of law based on previous judgments and legal interpretations.