×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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06-03-2020, Gopalan Enterprises India, Section 14A, 8D(2)(ii),Tribunal Bangalore
This is an appeal by the Revenue against the order dated 20.5.2014 of CIT(Appeals)-1, Bangalore, relating to assessment year 2012-13.
2. Grounds No.1, 9 & 10 raised by the revenue are general in nature and calls for no specific adjudication. Grounds No.2 to 6 are with regard to the grievance of the revenue against the order of the CIT(A) whereby the CIT(A) allowed the claim of the Assessee for deduction u/s.80IAB(4)(iii) of the Income Tax Act, 1961 (Act). These grounds read as follows:-
“2. The CIT (A) erred in holding that the assessee is entitled for deduction u/s.80IA(4)(iii) by following his orders in ITA No.182/DC-11(3)/A-I/2009-10 dated 23/3/2013 for A.Y.2004-05, ITA No.283/DC-11(3)/A-I/13-14 dated 30-4-2014 for A.Y.2005- 06, ITA No.191/DC-11(3)/A-I/12-13 dated 30-08-2013 for A.Y.2007-08, ITA No.284/DC-11(3)/A-I/13-14 dated 30-04- 2014 for A.Y.,2011-12 in the assessee's own case without appreciating that the relied upon orders have not been accepted and appeals us/.253 have been preferred and the assessee had not fulfilled the conditions for the approval granted by the Ministry of Commerce and Industry.
3. The CIT(A) erred in not appreciating that there were three tenants. in the industrial park as against the first condition that 4 units should be located in the industrial park and super built up area of 1,38,000 sq. ft. was leased to M/s. I-Flex Solutions Ltd., which is more than 60% of the total allocab e area
4. The CIT(A) erred in not appreciating the fact that out of the three companies found to be available, M/s. Transworks Information Services Ltd. and M/s. Transworks IT services were actually one and the same ompany amalgamated by an order of Hon'ble High Court of Mumb i.
5. The CIT(A) err d in allowing relief without appreciating that in the relied upon order for the assessment year 2004-05 the CIT himself has made an observation that the assessee started with only one t nant in the period relevant to the assessment year 2004-05
6. The CIT(A) erred in directing to grant deduction 80IA(4)(i i) of the I.T. Act following the orders for the earlier years in view of the decision of the jurisdiction Bench of the ITAT in the case of Primal Projects Pvt. Ltd.(139-TTJ-233) without appreciating that the said decision has not yet reached a finality.”
3. As far as the aforesaid grounds of appeal are concerned, the facts are that the Assessee is a company engaged in property development including Information Technology Park (IT Park) and Special Economic Zone (SEZ). The Assessee filed return of income for AY 2012-13 declaring Nil income on30.9.2012. Subsequently, the Assessee filed revised return on 8.11.2013 and 5.3.2013 declaring nil income after claiming deduction u/s.80IAB amounting to Rs.1,57,57,266/-. The Assessee was carrying out projects which were eligible for deduction u/s.80IAB(4)(iii) of the Act i.e. Income from developing, operating and maintaining SEZ Park, as well as projects which were eligible for deduction u/s.80IA of the Act. In so far as the deduction u/s.80IAB(4)(iii) of the Act is concerned, in the past the Assessee claimed deduction under the said provision in respect of income derived from a SEZ project known as Millennium Towers. In AY 2012-13 the Assessee did not claim deduction u/s.80IAB(4)(iii) of the A t in respect of income derived from the said project but declared income from Millennium Towers project under the head “Income from House Property” and computed a loss of Rs.17,32,732/-. The said computation is as follows:
4. The AO treated income received from the project Millennium towers of Rs.4,08,22,924 as income from business declared as above as income from business and held that the interest expenditure of Rs.2,90,87,733 would be allowed as deduction from the said income and the remaining sum of Rs.1,17,35,191 would be treated as taxable income from business. In this regard AO observed in his order at paragraph-6.2 that if the Assessee takes a view before the appellate authorities that alternatively it is eligible to claim deduction u/s.80IAB(4)(iii) of the Act, such deduction should not be allowed for the reasons which he had given in his order of Assessment for AY 2011-12. In the grounds of appeal before the CIT(A) in ground No.3 the Assessee has raised a ground challenging the action of the AO in denying deduction u/s.80IAB(4)(iii) of the Act but hat ground of appeal mentions the sum of Rs.3,29,18,939/- which sum is the sum claimed as deduction in AY 2011-12. It should be read s Rs.1,17,35,191/- which was the sum treated by the AO as income from M llennium Project.
5. The CIT(A) in paragraph 4.3 of his order held that if the AO considers income from Millennium project as Business income then he should allow all the expenses claimed by the Assessee and therefore the income from Millennium project arrived at by the AO at Rs.1,17,35,191 was not proper. By reason of thi conc usion, there would be only loss from the project Millennium and therefore there is no occasion to allow deduction u/s.80IAB(4)(iii) of the Act. However there was also a disallowance of expenditure u/s.14A of the Act. The disallowance u/s.14A of the Act was sustained by the CIT(A) at a sum of Rs.65,65,245/-. The CIT(A) in para 6.10 of his orde observed that if the profit of the Assessee increases after the disallowance of expenses u/s.14A of the Act, the Assessee would be eligible for deduction u/s.80IAB(4)(iii) of the Act/80IA of the Act on such enhanced profit. There is no bifurcation of the sum of Rs.65,65,245 between the Millennium Towers project eligible for deduction u/s.80IAB(4)(iii) of the Act and the other project on which the Assessee claimed deduction u/s.80IA of the Act. The CIT(A) however in paragraph-7 of his order observed that the Assessee has negative income after setting