2013 (7) TMI 83 - AT - Income Tax

Deduction u/s. 80IA(4)(iii) of the IT Act No valid approval as required u/s. 80IA Held that - Admitted fact that no approval for assessee s project On date of application made by assessee, no scheme in operation under Industrial Park Policy, 2002 2002 scheme lapsed as it was ineffective Benefit u/s. 80IA(4)(iii) could be availed only after approval by DIPP under scheme Following the decision of Regency Soraj Infrastructures vs. Union of India & Ors. 2012 (4) TMI 331 - DELHI HIGH COURT and SSPDL Ltd. vs. DCIT 2013 (7) TMI 18 - ITAT HYDERABAD , decided against the assessee.

Summary

Issues:
Claim of deduction u/s. 80IA(4)(iii) of the IT Act.

Analysis:
The appeal was against the CIT(A)'s order disallowing exemption u/s. 80IA of the Act for A.Y. 2008-09. The assessee, a builder and developer of housing projects, filed its return of income on 30.09.2007. The Assessing Officer disallowed the exemption u/s. 80IA, stating the company was not approved u/s. 10CCB of the Act. The AR argued that the company had obtained permission for two IT Parks and applied for Industrial Park Scheme approval. The AR contended that notional profits recorded in the books should not be considered as actual profits for tax purposes. The AR cited the Supreme Court's decision in Tuticorin Alkali Chemicals case regarding taxable receipts. The AR claimed that the company reduced notional profits under deductions u/s. 80IA(4)(iii) anticipating future benefits upon project completion.

The DR argued that there was no valid approval as required u/s. 80IA of the Act. The Tribunal noted the absence of approval u/s. 10CCB for the assessee's project. The AR acknowledged applying for approval but highlighted the pending approval from the Ministry of Commerce, Government of India. The Tribunal referred to a similar case involving SSPDL Ltd. where deduction u/s. 80IA was denied due to lack of Ministry approval. The Tribunal emphasized the necessity of approval from the Ministry under the Industrial Park Scheme for claiming deductions. The Tribunal rejected the assessee's plea, stating that the 2002 scheme had lapsed, and a new scheme was implemented from 2008. The Tribunal held that without approval under the scheme, the assessee couldn't claim the deduction u/s. 80IA(4)(iii). The Tribunal cited a Delhi High Court judgment supporting their decision.

The AR attempted to distinguish the Tribunal's order by highlighting the timely application for approval in the assessee's case. However, the Tribunal rejected the plea, stating that each assessment is independent, and a pending search action didn't warrant reconsideration. The Tribunal dismissed the appeal, stating that if the assessee obtained approval from the Ministry, they could file for restoration of the appeal.

In conclusion, the Tribunal upheld the disallowance of the deduction u/s. 80IA(4)(iii) due to the absence of approval from the Ministry of Commerce, Government of India under the Industrial Park Scheme, emphasizing the mandatory nature of such approval for claiming deductions. The appeal was rejected, with the possibility of restoration upon obtaining the required approval.