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Income Tax Appellate Tribunal, VIRTUAL COURT
Before: SHRI S. RIFAUR RAHMAN, HONBLE & SHRI AMARJIT SINGH, HONBLE
IN THE INCOME TAX APPELLATE TRIBUNAL (VIRTUAL COURT) “H” BENCH, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, HON'BLE JUDICIAL MEMBER ITA.NO. 1315/MUM/2020 (A.Y: 2012-13) Hamlet Constructions (India) Pvt. Ltd., v. DCIT – Circle – 1(1)(2) 111-A, Mahatma Gandhi Road 5th Floor, Aayakar Bhavan Fort, Mumbai - 400001 M.K. Road, Mumbai - 400020 PAN: AABCH1677E (Appellant) (Respondent) Assessee by : Shri Percy J. Pardiwalla Department by : Shri P.R. Ghosh
Date of Hearing : 11.01.2022 Date of Pronouncement : 31.03.2022
O R D E R PER S. RIFAUR RAHMAN (AM)
This appeal is filed by the assessee against order of Learned Commissioner of Income-tax (Appeals)-4, Mumbai [hereinafter for short "Ld. CIT(A)] dated 24.01.2020 for the A.Y. 2012-13.
Assessee is in appeal before us raising following grounds: - 1. (a) The learned Commissioner of Income-tax (Appeals) - 4, Mumbai (CIT-A) erred in upholding the action of the learned Deputy Commissioner of Income-tax — Circle 1(1)
2 ITA.NO. 1315/MUM/2020 (A.Y: 2012-13) Hamlet Constructions (India) Pvt. Ltd., (2), Mumbai (hereinafter referred to as “the Assessing Officer”) in disallowing its claim of deduction amounting to Rs. 35,80,13,629/under section 80IA (4) of the Income tax Act, 1961 (the Act) on the ground that the appellant has offered income from operating and maintaining of Industrial Park under head “Income from house property” and no deduction under section 80IA(4) of the Act is allowable against head “income from house property”. (b) The learned CIT-A erred in upholding the action of the Assessing Officer in not appreciating the fact that under section 80IA of the Act, the deduction is available to an undertaking from eligible business computing net taxable income and income of an undertaking can be under any heads of income. (c) The learned CIT-A erred in upholding the action of the Assessing Officer in not appreciating the fact that it is because of the mandatory provisions of section 14 of the Act, rental income received by the appellant was offered under the head “Income from House Property”. (d) Without prejudice to what has been stated above, the appellant submits that the learned CIT-A erred in not appreciating the fact that the contention of the appellant that it is eligible to claim deduction under section 80IA of the Act even if the income is offered under head “Income from house property”, has been accepted by the department in earlier assessment years and hence the deduction ought to have been granted for assessment year under appeal. 2. Without prejudice to what has been stated above, the appellant submits that, if the above contention of the appellant is not acceptable, CIT-A ought to have directed the Assessing Officer to consider its income under head “profit or gains of business or profession”, and to grant claim of deduction under section 80IA of the Act in consonance with the stand taken by the Department in respect of the immediately preceding assessment year 2011-12 and accepted by the appellant. 3. (a) Without prejudice to what has been stated above, the learned CIT-A erred in upholding the action of the Assessing Officer in not granting tax credit for Minimum Alternate Tax (MAT) under section 115JAA of the Act on the ground that the same is not claimed at the time of filing of return of income and hence the appellant is not eligible to MAT credit amounting to Rs. 24,18,71,133/of earlier assessment years.
3 ITA.NO. 1315/MUM/2020 (A.Y: 2012-13) Hamlet Constructions (India) Pvt. Ltd., (b) The learned CIT-A erred in upholding the action of the Assessing Officer in not appreciating the fact that at the time of filing return of income for the assessment year under consideration, the appellant was liable to pay tax under section 115JB of the Act and hence claim for tax credit under MAT could not have been made while filing its return of income. (c) The learned CIT-A erred in not appreciating the fact that MAT was applicable due to appellant’s claim of deduction under section 80IA(4) and hence, provisions for normal tax were not applicable and no claim for tax credit under MAT could be made. 4. The appellant submits that the Assessing Officer be directed: (a) to grant deduction under section 80IA(4) of the Act amounting to Rs. 35,80,13,629/- even though the income is offered to tax under head “Income from house property”; (b) Without prejudice to what has been stated above, if the above contention of the appellant is not acceptable, to treat the income under the head “Profits and gains of business or profession” and grant deduction under section 80IA of the Act; (c) Without prejudice to what has being stated in (a) above, to grant tax credit for MAT as per provisions of section 115JAA of the Act, if the above contention of the appellant are not acceptable; and to modify the assessment in accordance with the provisions of the Act. 5. Each of the above grounds of appeal are independent and without prejudice to each other. 6. The appellant craves liberty to add, to alter and/or amend the grounds of appeal as and when expedient.”
At the time of hearing, Ld. AR of the assessee submitted that assessee owns, operates and maintains Industrial Park at Malad(W), Mumbai, it is an IT Park. The assessee has leased out the premises in
4 ITA.NO. 1315/MUM/2020 (A.Y: 2012-13) Hamlet Constructions (India) Pvt. Ltd., the park to various tenants, the receipts from whom are credited to the Profit and Loss Account as Lease Rent, Leave and Licence Fees and compensation or maintenance expenses recovery. The amount of leave and licence fees is ₹.55,23,56,814/-. The operating and maintaining the park is the only business of the assessee. The Industrial Park run by the assessee is notified and approved by the Central Government under the Industrial Park Scheme, 2002. This park is eligible for deduction u/s.80IA(4) of the Income-tax Act, 1961 (in short “Act”). During assessment proceedings Assessing Officer reviewed the eligibility of deduction u/s.80IA(4) of the Act and came to the conclusion otherwise. Assessing Officer rejected the computation made by the assessee and observed that the scheme of the Act is very clear about the activity of the business and profit and gains derived from such a business. He observed that the assessee earned the income from the head “house property” and therefore it has no provision for allowing deduction u/s.80IA of the Act. The deduction u/s.80IA of the Act can be computed only against the profits from business. Accordingly, he disallowed the claim made by the assessee u/s.80IA(4) of the Act.
Ld. AR of the assessee submitted that facts in this appeal are exactly similar to the facts in the case of K.Raheja IT Park (Hyderabad) Pvt. Ltd.,
5 ITA.NO. 1315/MUM/2020 (A.Y: 2012-13) Hamlet Constructions (India) Pvt. Ltd., v. DCIT in ITA.No. 1774/HYD/2014 dated 11.07.2016 and he brought to our notice finding in the above case which is reproduced below:- “18. In all the above decisions, it has been held that even though the income of the assessee is computed under different heads of income, in effect, they are all part of the business profits. Classification of income under different heads of income will not entitle or disentitle the same to be considered as part of business income and its allowability as deduction. Therefore, we find strength in the contentions of the assessee that even though the income has been returned and assessed under the head “Income from house property”, the assessee is eligible for deduction u/s 80IA (4) of the Act as the business of the assessee is only to develop and maintain infrastructural facilities and though the income from such facility has been offered under the income from house property, it is in fact business income of the assessee. The project from which the assessee has realized lease rentals has also been approved by the Government of India as an eligible project under section 80IA(4)(iii) of the I.T. Act. Therefore, we are of the opinion that the deduction under section 80IA is allowable to the assessee. 19. Further, we also find that this is the second year of the claim of deduction under section 80IA of the I.T. Act. The Coordinate Bench of this Tribunal in the cases of ACIT vs. Annapurna Builders and Janapriya Properties P. Ltd., vs. DCIT (cited supra), has held that as long as the approval given by the Central Government is valid and not withdrawn by it, the assessee would be entitled to deduction under section 80IA(4)(iii) of the Act. Further, various High Courts such as Gujrat High Court, Bombay High Court and Delhi High Court in the cases relied upon by the Ld. Counsel for the assessee (cited supra) have held that where deduction has been allowed under sections 80HH and 80J in the earlier year, there is no provision for withdrawal of such deduction for the subsequent years for breach of certain conditions. 20. In the case before us, the assessee has been allowed deduction in the first year and it is the bounden duty of the A.O. to examine the eligibility of the assessee to claim the deduction under section 80IA(4) of the Act at the time of allowing such deduction. Since the claim has been allowed, it is to be presumed that the A.O. is satisfied about the allowability of the claim. This being the second year, unless there are distinguishing facts and circumstances for taking a different view and deny the claim of deduction, the A.O. cannot take a contrary stand. The CIT(A) has in fact, directed the A.O. to examine the assessment order for A.Y. 2009-2010 and to see whether the A.O. has examined the eligibility of the assessee and to
6 ITA.NO. 1315/MUM/2020 (A.Y: 2012-13) Hamlet Constructions (India) Pvt. Ltd., take suitable action. This direction, in our opinion, is not sustainable. The CIT(A) can only deal with the appeal before him and cannot give a direction with regard to another assessment year not before him. Therefore, such direction is not sustainable and is hereby quashed.”
Further, he brought to our notice that in A.Y. 2008-09 the Assessing Officer has allowed the claim made by the assessee, he brought to our notice Page No. 51 of the factual Paper Book in which the Assessment Order passed u/s. 143(3) of the Act is placed on record, in which the then Assessing Officer has allowed the claim made by the assessee. Further, he submitted that similar deductions were allowed by the then Assessing Officers in A.Y. 2009-10 and 2010-11.
On the other hand, Ld.DR submitted that assessee has earned income only from house property and accordingly declared the same as gross income in the profit and loss. He submitted that the assessee cannot claim u/s. 80IA(4) of the Act on the income earned from the “house property”. In this regard he heavily relied on the orders passed by the lower authorities.
Considered the rival submissions and material placed on record, we observed from the submissions made by the Ld. AR that similar issue was addressed by the Hyderabad Bench on exactly similar facts in which the assessee has claimed deduction U/s. 80IA(4) of the Act on the income
7 ITA.NO. 1315/MUM/2020 (A.Y: 2012-13) Hamlet Constructions (India) Pvt. Ltd., earned from rent/leave and licence fees collected, the Industrial Park which is approved by the approving authority. The Hyderabad Bench in the case of K.Raheja IT Park (Hyderabad) Pvt. Ltd., v. DCIT (supra) has addressed this issue in detail and accordingly, allowed the claim of the assessee. Since the facts in this appeal is exactly similar to the facts in the above case, we deem it fit and proper, respectfully following the above said decision, we are inclined to allow the claim made by the assessee. Accordingly, Ground No. 1 raised by the assessee is allowed.
Coming to the Ground No. 2 which is alternative plea made by the assessee and since we already allowed the Ground No. 1 this alternative plea is not adjudicated, accordingly, we keep this ground open.
With regard to Ground No. 3 Ld. AR submitted that during the assessment proceedings assessee has submitted before Assessing Officer that in case the deduction u/s. 80IA of the Act is disallowed, still assessee would be entitled for MAT credit available on the record. The assessee has brought to the notice of the tax authorities that assessee has carried forward MAT credit to the extent of ₹.24,18,71,133/- which assessee has carried forward from A.Y. 2008-09 onwards. The Assessing Officer rejected the claim of the assessee and he observed that assessee has
8 ITA.NO. 1315/MUM/2020 (A.Y: 2012-13) Hamlet Constructions (India) Pvt. Ltd., failed to claim the same in the return of income and he can entertain the claim of the assessee only when assessee files revised return of income. When the same was claimed before the Ld.CIT(A), the Ld.CIT(A) also rejected the contention of the assessee with the following observations: “5.2. I have carefully gone through the Assessment Order as well as the written submission of the appellant. The moot question here is whether the the provision of Sec 115JB and consequently the provision of section 115JAA is available to an assessee which is computing its income under the head House property The very basis of computation of MAT is the situation where the income tax payable on the total income is less than 18.5% of its book profit. The operating word here is Book Profit. Thus, the question to be asked is whether there would be a concept of Book Profit if the income offered to tax is computed under the head house property. For the computation of house property income, the only thing which is required to be determined is the annual value of property which is described in Sec 23 of the Income tax Act. On the other hand, from a plain reading of Sec 115JB, it can be seen that for the purpose of Sec 115JB, an assessee has to prepare its annual accounts including profit and loss account in accordance with the accounting policies and accounting standards. Further, as per Explanation 1 of Sec 115JB, the requirement for computation of Book profit makes it clear that the entire discussion on book profit is related to Business Income and not to income under any other head. It is an undisputed fact that for an assessee deriving income under the head house property, there is no requirement to maintain elaborate books of accounts and to prepare profit and loss account and balance sheet. On the basis of above discussion, it is obvious that Sec 115JAA will not be applicable to the case of the Appellant even when it has to pay taxes according to normal provision of the I.T. Act because the income of the Appellant has been shown under the head house property income. After considering the totality of facts, | have come to a conclusion that credit of MAT cannot be allowed to the Appellant. The grounds of appeal No. 4 is accordingly, dismissed.”
Ld. AR, at the time of hearing, submitted that Ld.CIT(A) did not appreciate the fact that assessee has regularly claiming the deduction u/s.80IA and considering the fact that assessee’s case falls invariably
9 ITA.NO. 1315/MUM/2020 (A.Y: 2012-13) Hamlet Constructions (India) Pvt. Ltd., u/s.115JB of the Act, therefore, assessee has to pay the tax u/s. 115JB of the Act. However, in this assessment year assessee has submitted a statement of computation of total income for this assessment year in which assessee has declared net taxable income of ₹.44,46,770/- after claiming the deduction u/s. 80IA of the Act. Even in this assessment year the tax payable u/s. 115JB of the Act is more than the regular tax payable, it has paid the tax u/s. 115JB of the Act. Since Assessing Officer has disallowed the claim made u/s.80IA of the Act, in such situation only the adjustment of u/s. 115JB credit necessitated, hence assessee made the submissions as an alternate plea. . He prayed that direction may be given to the Assessing Officer in this respect.
Ld.DR vehemently supported the orders of the authorities below.
Considered the rival submissions and material placed on record, we observed that Assessing Officer has rejected claim made by the assessee u/s. 80IA(4) of the Act, therefore, the taxable income under normal provisions is more than the tax payable u/s. 115JB of the Act during the assessment year. It is only an alternate plea made by the assessee before the Assessing Officer in case deduction u/s. 80IA of the Act is rejected the assessee already carries MAT credit which should be allowed to set off
10 ITA.NO. 1315/MUM/2020 (A.Y: 2012-13) Hamlet Constructions (India) Pvt. Ltd., against the tax liabilities. After considering the overall situation, we observed that in Ground No. 1 we have already allowed claim of the assessee that assessee is eligible to claim deduction u/s. 80IA of the Act. Therefore, the necessity to adjudicate this ground will only lead to academic interest. Accordingly, we keep this ground also open. In the result, appeal filed by the assessee is partly allowed.
Order pronounced in the open court on 31.03.2022
Sd/- Sd/- (AMARJIT SINGH) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 31/03/2022 Giridhar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file.
//True Copy// BY ORDER
(Asstt. Registrar) ITAT, Mum