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2017 (10) TMI 678 - AT - Income TaxAssessment proceedings u/s. 153A - deduction u/s 80IB (10) claim - JDA copy relied upon - Held that - The JDA copy found in the course of search was the basis of deduction claimed by the assessee u/s 80IB and this claim was very much examined by the AO by making belated enquiry as per the enquiry letter available in respect of the claim of the assessee for deduction u/s. 80IB. Hence in the present case, we are of the considered opinion that the JDA copy cannot be considered as an incriminating material found in the course of search and there is no reference to any other seized material in the assessment order and therefore, in the absence of any incriminating material found in the course of search, the assessment proceedings u/s. 153A of IT Act is bad in law as per this judgment of Hon ble Karnataka High Court rendered in the case of CIT Vs. Lancy Constructions (2016 (2) TMI 797 - KARNATAKA HIGH COURT) on which reliance is placed by the ld. AR of the assessee. Deduction u/s 80IB (10) eligibility - Held that - The assessee should be able to establish that the assessee was jointly engaged along with the other JDA partner in actual development activities also in addition to holding the land. Keeping this in mind, we examine the facts of the present case and we find that as per the JDA, several activities are to be done by the assessee but what is more important is the doing of actual activity and not that what was agreed to be done by the assessee. In this regard, we find that the assessee has brought on record the evidence regarding land leveling activity undertaken by the assessee. The assessee also had undertaken the activity of obtaining khata etc. Hence the only aspect which is not established by the assessee is regarding joint supervision of the construction activity but this is very important because mere certificate by JDA partner cannot be a basis to hold that the assessee was actually involved in joint supervision of the construction activity. Hence in our considered opinion, the matter should go back to the file of the AO for limited purpose of examining this claim of the assessee that the assessee was jointly supervising the construction activity along with SPL and if it is found that the assessee is able to establish this then the deduction u/s 80IB (10) should be allowed to the assessee to the extent it is allowable i.e. after excluding those flats where the area is more than 1500 sq. feet. We held so by respectfully following this judgment of Hon ble Karnataka High Court rendered in the case of CIT Vs. Shravanee Constructions (2012 (7) TMI 88 - KARNATAKA HIGH COURT ).
Issues Involved:
1. Validity of assessment under Section 153A of the Income Tax Act, 1961. 2. Allowability of deduction under Section 80IB(10) of the Income Tax Act, 1961. 3. Admissibility of the assessee's appeal despite voluntary withdrawal of the claim. Detailed Analysis: 1. Validity of Assessment under Section 153A: The assessee contended that the assessment made under Section 153A was beyond its scope as no incriminating materials were found during the search. The CIT(A) upheld the assessment relying on a statement, which was challenged by the assessee. The assessee cited the Karnataka High Court's judgment in CIT Vs. Lancy Constructions, which held that reassessment based on search without incriminating material is not permissible. The Tribunal agreed with the assessee, noting that no incriminating material was found during the search, and the original assessment had already considered the relevant documents. Consequently, the Tribunal quashed the assessment orders for the years 2006-07, 2007-08, and 2008-09. 2. Allowability of Deduction under Section 80IB(10): For the assessment year 2009-10, the revenue challenged the CIT(A)'s decision to allow the deduction under Section 80IB(10). The revenue argued that the assessee, being merely a landowner, did not qualify for the deduction. The CIT(A) had relied on the Karnataka High Court's decision in Shravanee Constructions, which allowed such deductions if the landowner was involved in development activities. The Tribunal found that the CIT(A) had not sufficiently verified the factual involvement of the assessee in the construction. Therefore, the Tribunal remanded the matter back to the AO to verify if the assessee was indeed involved in the supervision and development activities as claimed. 3. Admissibility of the Assessee's Appeal: The revenue raised additional grounds, arguing that the assessee's appeal should not have been admitted as the assessee had voluntarily agreed to withdraw the claim. The Tribunal, however, upheld the CIT(A)'s decision to admit the appeal, citing a precedent that allowed appeals on legal grounds even if the claim was initially withdrawn voluntarily. Conclusion: - The Tribunal quashed the assessment orders for the years 2006-07, 2007-08, and 2008-09 due to the absence of incriminating material found during the search. - The Tribunal remanded the issue of deduction under Section 80IB(10) for the year 2009-10 back to the AO for factual verification of the assessee's involvement in development activities. - The Tribunal upheld the CIT(A)'s decision to admit the assessee's appeal despite the initial voluntary withdrawal of the claim. Outcome: - The cross objections of the assessee for the years 2006-07 to 2008-09 were allowed. - The revenue's appeals for the years 2006-07 to 2008-09 were dismissed. - The revenue's appeal for the year 2009-10 was partly allowed for statistical purposes, with the matter remanded for further verification.
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