2024 (12) TMI 385 - AT - Income Tax

Denial of deduction u/s. 80IC - unit of the assessee is not located in the eligible physical location as per the notification of CBDT - HELD THAT - As gone through District wise details of Industrial Estates and Industries established therein by the Uttarakhand Government wherein the assessee s name is found at serial no.7 plot no.20 and area 1992 square meter. We find that that the entire confusion arose because of the mistake of the assessee mentioning as Rudrapur instead of Kalyanpur in the form 10CCB. Rudrapur being the Municipal limit, Kalyanpur is the village in the Tehsil Kichha being survey no.373 in village Kalyanpur has been duly notified as an eligible area for claim u/s. 80IC. Since the fact proves that the establishment of the assessee is in the eligible area, the appeal of the assessee is hereby allowed. This case signifies the lack of judgement among the official undermining the efficiency, equity and credibility of the taxation system. The weak standards and lack of accurate mechanism can lead to bias judgement. Inefficient and poor decision making can lead to prolonged disputes, backlog of cases and higher litigation cost for the assessee as well as for the Revenue Department. This ultimately leads to fostering of resentment and impedes discharge of voluntary compliances. Such overly aggressive action may drive the tax payer to deflate public trust and fairness of assessment. The tax official must primarily rely on the facts as per the record to ensure fairness. Focus should be on the material aspects that directly impact the correct collection of taxes. Striking this balance is essential to maintain the integrity of the tax system while upholding the tax payers rights and promoting compliance. In this case, the allowability of the deduction primarily beyond the jurisdiction of the provisions of Section 154. In spite of the robust evidences filed by the assessee before the AO, the AO chose to act in an unjustifiable manner. The action of the AO and the ld. CIT(A) calls for examination of the records administratively to fix the responsibilities of the officials concerned. Appeals of the assessee are allowed.

Summary

Issues:
- Deduction under section 80IC denied due to location discrepancy

Analysis:
The appeals were filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals) for the Assessment Years 2009-10, 2015-16, and 2016-17. The common issue in all three appeals was the denial of the claim of deduction under section 80IC. The Assessing Officer rejected the claim based on the physical location of the unit not meeting the criteria specified by the CBDT. The Assessee's address was mentioned as Village Rudrapur in the 10CCB report, but the unit was actually located in Village Kalyanpur, creating a discrepancy.

The Assessee appealed to the CIT(A), who upheld the Assessing Officer's decision. Subsequently, the Assessee approached the Tribunal challenging the orders. During the proceedings, the Assessee argued that the discrepancy in the village names was a mistake, as Rudrapur and Kalyanpur were part of the same conglomerate. The Revenue, however, supported the lower authorities' decisions and highlighted that similar issues were pending for other assessment years.

Upon reviewing the submissions and evidence, the Tribunal noted that the distance between Rudrapur and Kalyanpur was 6.1 km. The CBDT notification specified Kalyanpur as an eligible industrial area for the deduction under section 80IC. Additionally, the Assessee provided a certificate from SIDCUL confirming the location in Kalyanpur. The Tribunal also considered the details of Industrial Estates in Uttarakhand, which supported the Assessee's claim. It was established that the Assessee's unit was indeed in an eligible area, and the discrepancy arose due to a clerical error in mentioning the village name.

The Tribunal allowed the Assessee's appeal, emphasizing the importance of accurate decision-making in the taxation system. It highlighted the need for officials to rely on factual records to ensure fairness and avoid biased judgments. The case underscored the consequences of inefficient decision-making, leading to prolonged disputes, increased litigation costs, and reduced compliance. The Tribunal stressed the importance of maintaining the integrity of the tax system while safeguarding taxpayers' rights and promoting compliance. The Tribunal concluded that the deduction was allowable, primarily beyond the scope of Section 154, and criticized the Assessing Officer's unjustifiable actions.

In conclusion, the Tribunal allowed the Assessee's appeals, emphasizing the significance of fair and fact-based decision-making in taxation matters. The judgment highlighted the need for officials to act responsibly and ensure accurate assessments to uphold the integrity of the tax system and foster voluntary compliance.