2022 (5) TMI 621 - AT - Income Tax

Deduction claimed u/s 80IA(4)(iii) in respect of profits from industrial park known as Salarpuria Touchstone - Claim rejected on the ground that the assessee has failed to furnish the CBDT notification qua the said Industrial Park - HELD THAT - We note that the assessee has also filed a writ petition before the Hon ble Karnataka High Court seeking the direction to CBDT/competent authority to bring out a notification in respect of Salarpuria Touchstone and the Hon ble Karnataka High Court was also pleased to give certain directions to competent authority in respect of above Industrial Park however again due to the failure of competent authority to follow the directions of Hon ble Karnataka High Court another writ petition was filed by the assessee before the Hon ble Karnataka High Court seeking necessary directions to the competent authority which is pending for adjudication. Undisputedly till date the project has not been notified by the competent authority which was a pre-condition for grant of deduction u/s 80IA (4) of the Act. Under these circumstances we are of the view that the deduction u/s 80IA(4) in respect of Salarpuria Touchstone park cannot be allowed. However in case the Hon ble High Court decides the issue favorably and the project is notified in future by the competent authority then the assessee may approach the AO for grant of relief/deduction 80IA(4) of the Act and the AO will be bound to amend the order accordingly. Subject to above observations this issue is decided against the assessee. Accordingly ground nos. 1 2 are dismissed with the above observations. Disallowing the relief in respect of TDS being the short credit allowed by the AO by restoring the issue back to the file of AO with the direction to allow the TDS on the basis of TDS certificates - HELD THAT - We are inclined to direct the AO to allow the credit of TDS of Rs. 1, 38, 282/- to the assessee after verifying the TDS certificates and other evidences as may be furnished by the assessee in respect of its claim. Accordingly the ground no. 3 is allowed for statistical purposes. Allowability of MAT credit of taxes of earlier years u/s 115JAA - HELD THAT - After hearing the rival parties and perusing the facts on records as placed before us we are convinced that the assessee is entitled to credit of MAT as per the provisions of the Act. However the said claim has been made for the first time before us and therefore involves verification of facts at the end of the AO. Accordingly we restore this issue back to the file of AO with the direction to decide the issue as per the provisions of the Act by doing necessary verification after affording a reasonable opportunity of hearing to the assessee. Accordingly ground no. 4 is allowed for statistical purposes. Assessment u/s 153A - HELD THAT - After carefully analyzing the facts of the acts and after the perusal of assessment order we find that there is no reference at all by the AO to any such incriminating material found during search. The various additions were undisputedly made on the basis of observation of the AO during assessment proceedings for which were no incriminating materials found during search. The additions made inter alia include disallowance u/s 14A disallowance of interest on service tax TDS disallowance of donation membership and subscription and loss on sale of fixed assets etc. the case of the assessee is squarely supported a series decisions as decided by various judicial forums which have laid down the same ratio namely PCIT vs. Meeta Gutgutia 2017 (5) TMI 1224 - DELHI HIGH COURT CIT vs. Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT and CIT vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. 2015 (5) TMI 656 - BOMBAY HIGH COURT - Under these facts and circumstances and respectfully following the ratio as laid down in the above decisions we hold that the additions have been made without any incriminating material found during the course of search and therefore cannot be sustained. The legal and jurisdictional grounds raised by the assessee are allowed. Addition u/s 14A r.w.r. 8D - HELD THAT - We find that during the year the assessee has not earned any exempt income. The ld. Counsel of the assessee took us through the audited balance sheet for the year ended on 31.03.2014 to show that there is no exempt income during the year. Besides the Ld. Counsel of the assessee also argued that sum of the share capital reserve and surplus are far more than the investments made by the assessee and therefore no disallowance can be made in consonance with the ratio laid down by the Hon ble Apex Court in the case of Max India Ltd. 2018 (3) TMI 805 - SUPREME COURT . After perusing the order of Ld. CIT(A) in the light of the decisions as discussed above we do not find any infirmity in the appellate order and accordingly ground nos. 1 of the revenue s appeal is dismissed. Addition on account of bad debts during the year - HELD THAT - We note that sundry balances were written off by the assessee including unserviceable stocks to the tune of Rs. 2, 36, 454/- which were apparently arising in normal course of business or pertaining to amounts receivable and therefore the assessee is entitled to charge the same against the profits during the year in terms of ratio laid down in T.R.F Ltd. 2010 (2) TMI 211 - SUPREME COURT We therefore do not find any infirmity in the order of Ld. CIT(A) and accordingly ground no. 3 raised by the revenue is dismissed. Addition on account of on money received upon sale of flats - HELD THAT - As no addition can be made on the basis of doubt unless there is material to prove the receipt of on-money by the assessee. Similarly the addition made on the basis of statement without any corroborative material cannot be sustained as has been held in the case of Best Infrastructure India Pvt. Ltd.. 2017 (8) TMI 250 - DELHI HIGH COURT Shri Saurabh Mittal 2018 (9) TMI 1233 - ITAT JAIPUR and SRM Securities Ltd. 2018 (9) TMI 1233 - ITAT JAIPUR . Considering the facts of the cases in the light of the decisions as mentioned and discussed earlier we are inclined to uphold the order of Ld. CIT(A) and dismiss the appeal of the revenue

Summary

Issues Involved:
1. Deduction under Section 80IA(4)(iii)
2. TDS Credit
3. MAT Credit
4. Interest under Section 234C
5. Interest under Section 244A
6. Validity of Order under Section 153A/143(3)
7. Addition under Section 14A
8. Bad Debts Write-off
9. On-Money Received on Sale of Flats

Issue-wise Detailed Analysis:

1. Deduction under Section 80IA(4)(iii):
The assessee's claim for deduction under Section 80IA(4)(iii) for the "Salarpuria Touchstone" industrial park was rejected due to the absence of the CBDT notification. The Tribunal upheld the disallowance, noting that the notification is a pre-condition for the deduction. However, it allowed the possibility for the assessee to approach the AO for relief if the Karnataka High Court decides favorably in the pending writ petition.

2. TDS Credit:
The assessee claimed a TDS credit of Rs. 9,68,352, but the AO allowed only Rs. 8,30,070, resulting in a shortfall of Rs. 1,38,282. The Tribunal directed the AO to verify the TDS certificates and other evidence and allow the credit accordingly.

3. MAT Credit:
The assessee sought MAT credit of Rs. 16,77,72,220 for earlier years (AY 2006-07 to 2009-10). The Tribunal restored the issue to the AO for verification and directed the AO to allow the credit as per the provisions of the Act after due verification.

4. Interest under Section 234C:
The issue of excess levy of interest under Section 234C amounting to Rs. 17,433 was deemed consequential and not adjudicated separately.

5. Interest under Section 244A:
Similarly, the issue of granting interest under Section 244A on the refund amount was also deemed consequential and not separately adjudicated.

6. Validity of Order under Section 153A/143(3):
The Tribunal addressed the validity of the assessment order under Section 153A/143(3) for AY 2010-11. It noted that the assessment was unabated on the date of search and that additions in an unabated assessment year require incriminating material found during the search. Since no such material was found, the Tribunal quashed the additions.

7. Addition under Section 14A:
The AO disallowed Rs. 10,05,218 under Section 14A read with Rule 8D(2)(ii) and Rs. 1,87,34,612 under Rule 8D(2)(ii) & (iii) for AY 2014-15. The Tribunal upheld the CIT(A)'s deletion of these disallowances, noting that no exempt income was earned during the year, relying on the decisions in REI Agro Ltd. and Maxopp Investments Ltd.

8. Bad Debts Write-off:
The AO disallowed Rs. 2,36,454 on account of bad debts and stock write-off. The Tribunal upheld the CIT(A)'s decision to allow the write-off, noting that the amounts were related to rent not realized and unserviceable stock, and were thus allowable as per the decision in T.R.F Ltd.

9. On-Money Received on Sale of Flats:
The AO added Rs. 72,93,646 as on-money received on the sale of flats based on documents and statements found during the search. The Tribunal upheld the CIT(A)'s deletion of this addition, noting that no specific incriminating material was found for the assessee's project, and the addition was based on extrapolation and conjecture without corroborative evidence.

Conclusion:
The Tribunal allowed the assessee's appeal on the legal issue of the validity of the assessment order under Section 153A/143(3) for AY 2010-11, dismissed the appeals on the merits of the deduction under Section 80IA(4)(iii) and TDS credit, and upheld the CIT(A)'s decisions on Section 14A disallowance, bad debts write-off, and on-money received. The appeals of the revenue were dismissed, and the cross-objections of the assessee were deemed infructuous.