2020 (2) TMI 270 - HC - Income Tax

Deduction u/s 80IB - breach of principles of natural justice - HELD THAT - There is a CBDT Notification No. 2 of 2011 dated 05.01.2011 which clarifies that projects covered by section 80IB(10) of the Income Tax Act, 1961 would be eligible for deduction under the said provision from the assessment year 2005-06 on-wards. In Ramesh Gunshi Dedhia s case 2014 (8) TMI 1190 - BOMBAY HIGH COURT this notification was not available before the Tribunal as it was issued afterwards. That was the reason why the Appeal has been admitted by this court. He further submits that in later assessment years Tribunal has relied upon the said notification of the CBDT and granted relief to the Appellant. Having heard learned counsel for the parties and having perused the impugned order passed by the Tribunal, we are of the view that the impugned order is required to be set aside for re-hearing of the appeal in accordance with law after giving further opportunity of hearing to the parties.

Summary

Issues:
1. Appeal against the order of the Income Tax Appellate Tribunal for the assessment year 2007-08.
2. Questions of law regarding the approval date of projects, retrospective nature of amendment to section 80-IB(10)(b), adherence to case laws, and principles of natural justice.
3. Allegation of breaching natural justice principles by the Tribunal.
4. Consideration of CBDT Notification No. 2 of 2011 regarding eligibility for deduction under section 80IB(10).

Analysis:
1. The appellant challenged the Tribunal's order for the assessment year 2007-08 under section 260A of the Income Tax Act 1961. The substantial questions of law raised included the approval date of projects, the retrospective nature of an amendment to section 80-IB(10)(b), adherence to case laws, and principles of natural justice. The High Court noted the grievance of the appellant regarding the Tribunal's handling of the appeal, indicating a prima facie view that the disposal of the appeal was improper.

2. The High Court observed that the Tribunal's order seemed to breach principles of natural justice as decisions relied upon were not brought to the appellant's notice, resulting in an adverse order without allowing the appellant to address the Tribunal. The failure to deal with decisions relied upon by the appellant led to concerns about the order lacking proper reasoning. Consequently, the Court suggested remanding the matter back to the Tribunal for a fresh hearing and disposal in accordance with the law.

3. During the proceedings, the appellant's counsel highlighted that the Tribunal referred to over 50 judgments not relied upon by either party, causing prejudice to the appellant. The standing counsel for Revenue mentioned a similar case admitted by the court on a related issue. The appellant's counsel pointed out a CBDT Notification clarifying eligibility for deduction under section 80IB(10) from a specific assessment year, which was not available during a previous case, leading to the admission of the appeal.

4. After hearing both parties and examining the impugned order, the High Court decided to set aside the Tribunal's order and remand the matter for a fresh hearing, emphasizing the importance of giving further opportunity for hearing to the parties. The Court clarified that no opinion on merit was expressed, keeping all contentions open. Finally, the appeal was disposed of accordingly, with the order dated 09.12.2016 being set aside for re-hearing and decision by the Tribunal.