HINDUMAL BLMUKUND INVESTMENT CO. PVT. LTD.,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX,

आदेश आदेश / ORDER आदेश आदेश

PER D. KARUNAKARA RAO, AM :

There are two appeals filed by the assessee involving assessment years 2010-11 and 2011-12. They are filed against the separate orders of CIT(A)-1, Pune commonly dated 27-02-2015.

“1. The Ld.CIT(A) erred in law and facts in not granting a proper opportunity of being heard.

2 ITA Nos. 266 & 267/PUN/2015 Hindumal Balmukund Investment Co. Pvt. Ltd.,

From the above, it is evident that the core issue for adjudication relates

to the allowability of claim of deduction u/s.80IA(4) of the Act in respect of

the eligible profits earned by the assessee from IT park and related activities.

company engaged in the business of Builders and Developers, operating a

business centre and IT park and trading in shares. Assessee filed the return

of income on 15-10-2010 declaring total income of Rs.1,51,06,479/- after

claiming deduction of Rs.1,51,06,508/- u/s.80IA(4)(iii) of the Act. AO noticed

that as per completion certificate issued by the PMC on

29-03-2006, only 7 units have been completed. The remaining units were

been completed by 07-11-2007. There is no fresh approval obtained by the

assessee for delay of more than one year. Assessee has given 7 units on rent

to Iflex Solutions Ltd. and 7 units to IIFL Reality Ltd. AO opined that each

unit has to be allocated to each distinct party as per the condition mentioned

in Industrial Park Scheme 2002 unit which means separate and distinct

entity for the purpose of one or more state or central tax laws. However, the

assessee has given its park for two entities only. Assessee submitted its

elaborate submissions and relied on various decisions apart from its own

case for the A.Y. 2009-10 where deduction u/s.80IA(4) was allowed for the

first time. Rejecting the explanation as well as the decisions relied on by the

assessee, the AO denied claim made by the assessee u/s.80IA(4) of the Act.

3 ITA Nos. 266 & 267/PUN/2015 Hindumal Balmukund Investment Co. Pvt. Ltd.,

The above facts indicate that assessee made a claim for the first time in

the A.Y. 2009-10. After due verification of the claim in the A.Y. 2009-10, the

same was allowed. However, in the A.Yrs. 2010-11 and 2011-12, the

allowability of the claim was again scrutinized by the AO and the same was

disallowed. The date of completion of the eligible undertaking and approval

from the competent authority were the reasons for the denial. Contents of

Para No. 8 of the assessment order are relevant. It is the claim of the AO that

only 7 units out of the 14 units were completed, as per the completion

certificate issued by the PMC dated 29-03-2006. The CIT(A) confirmed the

said decision of the AO. Aggrieved with the same, the assessee is in appeal

for both the years with identical issues arising from the grounds extracted

above.

assessment proceedings for the A.Y. 2009-10 and submitted that the claim of

the assessee for this A.Y. 2009-10 stands allowed both in the regular

assessment proceedings as well as in the re-assessment proceedings.

Referring to the Writ Petition No.1899/2016, dated 17-02-2016 before the

Hon’ble Bombay High Court, Ld. Counsel for the assessee submitted that the

re-assessment proceedings, being change of opinion, stands quashed in the

interim proceedings of the writ. In this regard, he read the contents of Para

No.5 and the same reads as under :

“5. We find that the issue which arises here is the question of jurisdiction of the Assessing Officer to issue a notice. The petitioner has satisfied us that prima- facie this is a clear case of change of opinion. In such circumstances, the petitioner is not to be relegated to seeking the statutory alternative remedy.”

From the above, it is evident that the Hon’ble High Court has observed

that “the petitioner has satisfied the court that prima-facie it is a clear case of

change of opinion”. This observation was given in the context of notice dated

4 ITA Nos. 266 & 267/PUN/2015 Hindumal Balmukund Investment Co. Pvt. Ltd.,

20-03-2014 issued u/s.148 of the Act. As per the Ld. Counsel, the re-

assessment proceedings initiated by the AO stands dismissed and in effect,

the claim of deduction u/s.80IA(4) of the Act stand allowed in the initial of the

undertaking. In effect, this is a case where deduction in the first year of the

undertaking stands undisturbed or not withdrawn within the meaning of the

ratio of the judgment in the case of CIT Vs. Paul Brothers (supra). Under

such circumstances, the claim of the assessee need not be disturbed

considering the fact that there are no changes on the facts in the subsequent

assessment years, i.e. A.Yrs. 2010-11 and 2011-12. For this proposition, Ld.

Counsel brought our attention to various decisions including the judgment of

Hon’ble Bombay High Court in the case of CIT Vs. Paul Brothers reported in

216 ITR 548.

Supreme Court judgment in the case of DCIT Vs. M/s. Ace Multi Axes

Systems Ltd. in Civil Appeal No.20854/2017 and others, dated 05-12-2017

(reported in 88 taxmann.com. 69 (SC). Ld. DR submitted that this judgment

is given in the context of denial deduction u/s.80IB of the Act in respect of a

small scale industry maturing into large unit.

of the binding judgment of Hon’ble Jurisdiction High Court in the case of CIT

Vs. Paul Brothers (supra). The said judgment is relevant for the following

proposition :

“6. Either in section 80HH or in section 80J, there is no provision for withdrawal of special deduction for the subsequent years for breach of certain conditions. Hence unless the relief granted for the assessment year 1980-81 was withdrawn, the Income-tax Officer could not have withheld the relief for the subsequent years.”

5 ITA Nos. 266 & 267/PUN/2015 Hindumal Balmukund Investment Co. Pvt. Ltd.,

From the above, it is evident that unless the relief claimed in the first

year of undertaking is withdrawn, the AO cannot withhold the relief for the

subsequent years. In the present case, though an attempt is made to

withdraw the claim of deduction through the invoking of the provisions of

section 148 of the Act, the same did not fructify for one reason or the other

and the judgment of the Hon’ble High Court in the writ proceedings evidences

the same. In effect, the claim of the assessee u/s.80IA(4) of the Act stands

allowed in the first year of undertaking.

Considering the fact that the same is allowed in the first year of

undertaking, the AO cannot withdraw the deduction when the facts are

identical. Therefore, we are of the opinion that the judgment of Hon’ble

Jurisdictional High Court in the case of CIT Vs. Paul Brothers (supra) stands

applicable to the facts of the present case legally.

judgment in the case of CIT Vs. Western Outdoor Interactive Pvt. Ltd.

reported in 349 ITR 309 (Bom.) wherein the Hon’ble High Court held as

under:

“6) We have considered the submissions. We find that the submissions made by Mr. Pardiwalla on the basis of the decision of this Court in the matter of Paul Brothers (supra) and Director of Information Pvt. Ltd. (supra) merits acceptance. Therefore, in this case, it is not necessary for us to decide whether SEEPZ unit was set up/formed by splitting up of the first unit. In both the above decisions, this Court has held that where a benefit of deduction is available for a particular number of years on satisfaction of certain conditions under the provisions of the Income Tax Act, then unless relief granted for the first assessment year in which the claim was made and accepted is withdrawn or set aside, the Income Tax officer cannot withdraw the relief for subsequent years. More particularly so, when the revenue has not even suggested that there was any change in the facts warranting a different view for subsequent years. In this case for the assessment years 2000-01 and 2001‐02 the relief granted under Section 10A of the Act to SEEPZ unit has not been withdrawn. There is no change in the facts which were in existence during the assessment year 2000‐01 vis a vis the claim to exemption under section 10A of the Act. Therefore, it is not open to the department to deny the benefit of Section 10A for subsequent assessment years i.e. assessment years 2002‐03 and 2003‐04 and 2004‐05. Besides that, on consideration of the facts involved both the Commissioner of Income Tax

6 ITA Nos. 266 & 267/PUN/2015 Hindumal Balmukund Investment Co. Pvt. Ltd.,

(Appeals) and the Tribunal have recorded a finding of fact that the SEEPZ unit is not formed by splitting up of the first unit.”

No.65/PUN/2015 dated 13-10-2017, the Pune Bench of the Tribunal

observed as under :

“6. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The first ground raised in appeal by assessee is with respect to assessee's eligibility for claiming deduction u/s. 10A of the Act. It is an undisputed fact that the assessee company was incorporated in the year 1991. The documents on record show that the assessee was granted STPI approval on 30-03-2000. Before grant of approval the assessee could not have claimed deduction u/s. 10A of the Act. The ld. AR has stated at the Bar that first year for claiming deduction u/s. 10A was assessment year 2001-02. Though the ld. AR could not place on record assessee's return of income in assessment year 2001-02 and the assessment order for the said assessment year, however, the assessee has furnished a copy of assessment order for assessment year 2004-05. A perusal of the said assessment order at pages 30 to 40 of the paper book clearly indicate that the assessee has claimed deduction u/s. 10A in respect of profits from STPI unit and the same has been allowed by the Assessing Officer in scrutiny assessment. Once having accepted the claim of assessee, the Revenue cannot question assessee's eligibility for claiming such deduction in subsequent assessment years. The Hon'ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Paul Brothers (supra) has observed that there is no provision for withdrawal of special deduction for the subsequent years for breach of certain conditions. Unless the relief ITA No. 65/PUN/2015, A.Y. 2005-06 granted for the initial assessment year is withdrawn, the ITO could not have withheld the relief for the subsequent years.

Thus, in view of the fact that the assessee's claim of deduction u/s. 10A was never questioned by the Revenue in initial assessment year, the Assessing Officer cannot raise question over assessee's eligibility for claiming deduction in any of the subsequent assessment years. The ld. DR has also accepted the fact that in assessment year 2004-05, assessee's claim of deduction u/s. 10A was allowed by Assessing Officer in scrutiny assessment proceedings. Thus, in view of the facts of the case and the law laid down by the Hon'ble Jurisdictional High Court, ground No. 1 raised in appeal by the assessee is allowed.”

Considering the above, we are of the considered opinion, in view of the

binding ratio in the case of CIT Vs. Paul Brothers (supra) that the assessee is

entitled to relief for both the years on this legal issue alone. Considering the

relief granted to the assessee on technicalities, we are opinion that

adjudication of the grounds on merits becomes an academic exercise.

Accordingly, the relevant grounds are dismissed.

7 ITA Nos. 266 & 267/PUN/2015 Hindumal Balmukund Investment Co. Pvt. Ltd.,

Order pronounced on 24th day of August, 2018.

Sd/- Sd/- िवकास अव�थी /VIKAS AWASTHY) (डी डी डी. क�णाकरा राव डी (िवकास अव�थी िवकास अव�थी िवकास अव�थी क�णाकरा राव क�णाकरा राव/D. KARUNAKARA RAO) क�णाकरा राव �याियक सद�य �याियक सद�य/JUDICIAL MEMBER लेखा सद�य लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य �याियक सद�य लेखा सद�य लेखा सद�य

पुणे / Pune; �दनांक / Dated : 24th August, 2018. Satish

आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT (Appeals)-1, Pune. 4. The CIT-1, Pune. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “ए” ब�च, 5. पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // True Copy //

व�र� िनजी सिचव / Sr. Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.