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Income Tax Appellate Tribunal, BENCH “C”, MUMBAI
Before: SHRI B.R.BASKARAN & SHRI PAWAN SINGH
O R D E R PER PAWAN SINGH, JM:
1. 1. These two appeals are directed by the Revenue against the order by Commissioner of Income-tax (Appeals) [CIT(A)]-40 Mumbai for Assessment Year (AY) 2006-07 & 2010-11 for two separate orders dated 06.09.2013. The assessee has filed Cross Objection (C.O.) in appeal for AY-2006-07. As facts of the case are common, thus, both the appeal and C.O. were clubbed together, heard and are being decided by a common order to avoid the conflicting decision.
2. In the Revenue has raised the following Grounds of appeal: 1. “On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in allowing the assessee’s claim of deduction u/s.80-IB(10) of the IT Act 1961, equal to the Gross Total Income of Rs. 35,28,30,264/-; than restricting the same to Rs. 34,24,22,840/-, to the extent of income under the head Business and Profession.” 2. “On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in allowing excess deduction u/s.80-IB(10) to the assessee than available and allowable to it as per the law.”
3. In cross objection [CO No.05/M/2015] the assessee has raised following grounds of appeal. “Ld AO erred in law and in fact n issuing notice under section 148 of the Income Tax Act by mere change of opinion by relying the same fact and material which had been submitted by the assessee during the course of assessment proceedings under section 153C of the Act.”
4. Brief facts of the case are that the assessee-company is engaged in the Construction and property Development Business and belongs to Oberoi Groups, wherein search & seizure action carried out on 19.07.2007. Consequently, assessment u/s 153C r.w.s 143(3) of the Act was completed on 24.12.2009 determining the income of Rs. 6,00,40,620/-. While framing assessment, the Assessing Officer (AO) disallowed 3 & 6926/M/2013 M/s Oberoi Realty Limited deduction u/s 80-IB (10). However, the addition made by AO were deleted by the ld. CIT(A) in its order dated 08.05.2011. The assessment was again re-opened by issuing notice u/s 148 on 06.07.2012 on the ground that deduction claimed and allowed u/s 80-IB (10) was more than but was permissible and should have been restricted to business income of the assessee. The assessee contested the reopening of reassessment proceedings. The assessee in reply to the notice u/s 148 contended that the return filed on 16/01/2009 may be treated as the return of income filed. The re-opening was also objected. The AO not accepted the contention of the assessee and completed the assessment u/s 143(3) r.w.s. 147 of the Act, wherein deduction was restricted to Rs. 34,24,22,840/- being income from business and profession in its order dated 06.12.2012. On appeal before the ld. CIT(A), the assessee was allowed deduction of Rs. 35,28,30,264/- and directed the AO accordingly. Thus, being aggrieved of the order of ld. CIT(A), the Revenue has filed the present appeal before us. The assessee-company filed C.O. that issuance of notice u/s 148 was mere change of opinion by relying upon the same material which had been submitted by assessee during the assessment u/s 153C.
We have heard the ld. Departmental Representative (DR) for Revenue and ld. Authorized Representative (AR) of assessee and perused the material available on record. The ld DR for the revenue supported the order of AO and relied on the decision of Punjab and Haryana High Court in Bajaj Motors (P) Ltd Vs CIT [2011} 12 taxman.com 98 (Punj & Har). On the other hand the ld AR for the assessee argued that the notice of reopening dated 06.07.2012 was admittedly issued after expiry of four year from the end of assessment year. There was/ is no reference in the said notices that income escape assessment on the failure on the part of the assessee to disclose fully and truly all material facts. The ld AR for assessee further relied on the decision of Mumbai Tribunal in assessee’s own case for AY 2008-09 in ITA No.6044/M/2013 dated 08.06.2016.
We have considered the rival contention of the ld AR of the parties and gone through the material available on record. We have seen the reasons of reopening at page 5 of the P/B and the assessment order u/s 143(3) rws153C dated 31.03.2006. We have seen that the assessment for AY 2008-09 was also reopened on the identical grounds and the matter travelled up to this Tribunal. The Tribunal while 4 & 6926/M/2013 M/s Oberoi Realty Limited considering the appeal of the revenue and cross-objection of the assessee therein passed the following order: “14. A perusal of the aforesaid reasons revealed that belief of the escapement of income is founded on the ground that deduction under section 80 IB(10) of the Act has been allowed excessively to the extent that it is beyond the amount of income under the head ‘business or profession’. It is a trite law that ‘reason to believe’ referred to in section 147 of the Act is more which is prudent and plausible in law and not based on any misconception either in law or on facts. In the present case, the reasons recorded clearly suggest this assessing officer is under misconception of inferring that there is an excessive grant of deduction under section 80 IB(10) of the Act. Ostensibly, the proportion in the mind of the Assessing Officer is not borne out of the bare phraseology of the relevant provisions, as we have seen in the earlier part of this order, and rather, it is contrary to the legal position approved by the Honorable Bombay High Court in case of JB Boda & Co Private Ltd(supra). At this point, we may note that the aforesaid view of the Bombay High Court is also in consonance with the decision in case of K’N”IT (India) Ltd vide ITA No 184 of 2007 dated 25 March 2010 and in case of Tridoss laboratories Ltd 328 ITR 448 (Bombay).
In view of the aforesaid discussion, in our view, the reasons recorded by Assessing Officer suffer from an infirmity of being misconceived in law and, therefore, initiation of proceeding thereupon is bad in law. Consequently the assessment finalized by Assessing Officer under section 143(3) rws 147 of the Act dated 6 December 2012 is held to be invalid and bad in law, and is hereby set aside. Thus, the assessee succeeded in its cross objection.”
In view of above discussion, we find that the AO nowhere mentioned in the reasons of reopening that income escape assessment on the failure on the part of the assessee to disclose fully and truly all material facts, thus reasons recorded by Assessing Officer suffer from infirmity as the same is not in consonance with the requirement of section 147 of the Act. Thus we hold that the reopening proceeding is bad in law, and the same is set-aside. In the result the Cross Objection filed by assessee is allowed. As we have allowed the cross objection of the assessee and resultantly the appeal filed by the Revenue is dismissed. for AY 2010-11.
The revenue has raised following grounds of appeal:
1. “On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in allowing the assessee’s claim of deduction u/s.80-IB(10) of the IT Act 1961, of Rs.9,16,96,784/- being income of the assessee from the 5 & 6926/M/2013 M/s Oberoi Realty Limited housing project, than restricting the same to Rs.Nill which is extent of loss under the head Business and Profession.” 3. “On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in allowing excess deduction u/s.80-IB(10) to the assessee than available and allowable to it as per the law.”
9. The brief facts of the case are that the assessee filed return of income for the relevant assessment year on 12 Oct 2010 declaring total income of Rs.12,42,46,302/-. In the return of income assessee claimed deduction under section 80 IB(10). The assessment was completed under section 143(3) on 17 December 2012 determining the income of assessee at Rs. 21,58,94,012/-. In the assessment the AO disallowed assessee’s claim of deduction under section 80 IB(10) of Rs. 9 696784/-holding that deduction under the section has to be restricted to the income under the head business and profession and as during the year the assessee had a business loss of Rs. 2,08,76,198/- no deduction under section 80 IB(10) is allowable. On appeal the claim of assessee was allowed by ld CIT(A). Thus being aggrieved by the order of Commissioner (Appeals) the revenue has filed present appeal before us.
We have heard ld DR for revenue and the ld AR of assessee and perused the material available on record. The ld DR for the revenue supported the order of AO and further relied upon the decision of Punjab & Haryana High Court in Bajaj Motors Private Ltd versus CIT [2011] 12 taxman.com 98(Punj& Har). On the other hand ld AR of the assessee supported the order of ld CIT(A) and would argue that the issue raised by Revenue is covered by the decision of Hon’ble jurisdictional High Court in CIT Vs J.B. Boda and Company Private Ltd in ITA No. 3224 of 2009 dated 18 October 2010 and the decision of Bombay High Court in CIT Vs Hindustan Cconstruction Company (368 ITR 733).
We have considered the rival contention of the parties and gone through the order of authorities below and the decision cited by ld AR of the respective parties. The decision cited by ld DR for revenue in Bajaj Motors Vs CIT (supra) is not binding as the ld AR for the assessee relied on the decision of Jurisdictional High Court in CIT Vs J.B.Boda & Co. P. Ltd (supra) which is binding precedent on us. In CIT Vs J.B.Boda & Co. P. Ltd( supra) the Hon’ble Bombay High Court held:
6 & 6926/M/2013 M/s Oberoi Realty Limited “ 2. The question sought to be raised in this appeal relates to the deduction under section 80-O of the Income Tax Act. The Tribunal has considered this question taking into account the calculations made by the Assessing Officer, wherein he has determined the deduction under section 80-O in the sum of Rs. 1,29,41,830/-being the 50% of the income so received or brought into India. This figure is not disputed by the learned counsel for the Revenue. The only question is sought to be canvassed is that out of these deductions the admissible deduction under section 80-O ought to be limited to the extent of Rs. 69,70,127/- which represents business income. In other words, the income from interest and dividend shall not form part of Gross total income as defined under section 80B(5) of the Act. The submission is misconceived if one turns to the definition of “ Gross total income” under section 80B(5) it reads as under:
“ 80B(5) “ gross total income” means the total income computed in accordance with the provisions of this Act, before making any deduction under this chapter.”
Considering the definition of the gross total income, it is difficult to hold that the interest income and the dividend income would not form part of the gross total income computed in accordance with the provisions of this Act. The view taken by the Tribunal, in our considered view, is in consonance with what is stated herein. No substantial question of law is involved. In the result appeal is dismissed in limine with no order as to cost.”
In view of the above legal position held by Honorable jurisdictional High Court we do not find any illegality or infirmity in the order passed by ld Commissioner (Appeals) holding that assessee is eligible for deduction under section 80 IB(10) of Rs. 96,96,784/-. Thus the grounds of appeal raised in the present appeal by the Revenue are dismissed. In the result they appeal of the revenue is dismissed. Order pronounced in the open court on this 23rd November, 2016.