2015 (8) TMI 511 - HC - Income Tax

Benefit of Section 80IA - as per Tribunal the initial assessment year for the purpose of Section 80IA is the assessment year 1999-2000 - Held that - In Section 80IA itself, the term initial assessment year has been defined as the assessment year relevant to the previous year in which the hotel has started functioning its business. Admittedly, the hotel has started business in the previous year relevant to the assessment year 1999-2000. Therefore, even if the approval of the authority is with effect from 12.4.1999, the Tribunal could have decided the issue only in the light of the definition of the term initial assessment year contained in Section 80IA. If that be so, the view taken by the Tribunal that the initial assessment year is 1999-2000 cannot be faulted. True, the assessee could have claimed the benefit of Section 80IA only after approval has been granted by the prescribed authority and that approval is only with effect from 12.4.1999. However, that does not enable the assessee or the Tribunal to postpone the initial assessment year which term is statutorily prescribed and fixed. On the other hand, if the prescribed authority had wrongly fixed the date of commencement of the business, it was for the assessee to get that error committed rectified in appropriate proceedings, which has not been done in this case. Appeal dismissed.

Summary

Issues:
1. Correctness of the finding of the Tribunal in determining the initial assessment year for Section 80IA of the Income Tax Act.

Analysis:
The appeal in question raised a significant issue regarding the determination of the initial assessment year for availing the benefits under Section 80IA of the Income Tax Act. The appellant argued that the Tribunal erred in considering the assessment year 1999-2000 as the initial assessment year, contending that approval for the benefit was granted only from 12.4.1999 relevant to the assessment year 2000-2001. However, the Court noted that the term 'initial assessment year' is defined in Section 80IA as the assessment year relevant to the previous year in which the business started functioning. As the hotel commenced its business in the previous year relevant to the assessment year 1999-2000, the Tribunal's decision to consider 1999-2000 as the initial assessment year was deemed appropriate.

Moreover, the Court emphasized that the approval from the prescribed authority, granted with effect from 12.4.1999, did not permit the assessee or the Tribunal to alter the statutorily prescribed initial assessment year. The Court highlighted that any error in the prescribed authority's determination of the business commencement date should have been rectified by the assessee through appropriate proceedings, which was not done in this case. Consequently, the Court found no illegality in the Tribunal's decision and dismissed the appeal accordingly.

In conclusion, the Court upheld the Tribunal's determination of the initial assessment year for the purpose of Section 80IA of the Income Tax Act, emphasizing the statutory definition of the term and the importance of adhering to the prescribed legal framework. The judgment serves as a reminder of the significance of statutory definitions and the necessity for timely rectification of errors in administrative decisions to ensure compliance with legal requirements.