The Pr. Commissioner Of Income Tax (Central) Pune6[Th] Floor, Ayakar Sadan, Bodhi Towersalisbury Park, Pune 411 037 v. Punit Chettiar Alias Punit Balanunit

Digitallysigned byASHVINIASHVINIBAPPASAHEBBAPPASAHEBKAKDEKAKDEDate:2023.07.1417:50:37+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1943 OF 2017WITHINCOME TAX APPEAL NO.523 OF 2018 The Pr. Commissioner of Income Tax (Central) Pune6[th] Floor, Ayakar Sadan, Bodhi TowerSalisbury Park, Pune 411 037...Appellant VERSUS Punit Chettiar alias Punit BalanUnit No.605, Sai Chambers, 5[th] Floor,Wakdewadi, Pune Mumbai Road,Pune-411003.AALPC5158J ...Respondent --------- Mr.Suresh Kumar for the Appellant.Mr. Prayag Jha a/w. Mr. Prateek Jha for the Respondent. CORAM :K. R. SHRIRAM &FIRDOSH P. POONIWALLA, JJ.DATE :05TH JULY 2023 JUDGMENT (Per Firdosh P. Pooniwalla, J.) : 1.The present Appeals challenge a Common Order dated 25[th] November 2016 passed by the Income Tax Appellate Tribunal (“ITAT”). Income Tax Appeal (ITA) No. 1943 of 2017 challenges apart of the said Order passed by the ITAT in ITA No.1306 of 2013 in respect of Assessment Year 2009-10 and Income Tax Appeal No.523 of 2018 challenges a part of the said Order passed by the ITATin ITA No. 1307 of 2013 in respect of Assessment Year 2010-11. 2.The facts in Income Tax Appeal No.1943 of 2017 are thatthe Assessing Officer (“AO”), during the course of the assessmentproceedings, found that the Assessee had claimed deduction underSection 80IA(4)(iii) of the Income Tax Act, 1961 (“the Act”) to thetune of Rs.3,70,52,575/- for its Sai Trinity project situated atSurvey No. 146, Hissa No.2/1A+2B/1+2/1B, Pashan, Pune. Duringthe course of the survey action under Section 133A of the Act at theoffice premises of M/s. Sai Constructions Pvt. Ltd. at 604, 605, SaiChambers, Wakdewadi, Pune, on 20[th] January 2010, certain loosepapers and documents were impounded wherein page No. 102 ofBundle No.B was a copy of the letter dated 4[th] March 2009 from theUnder Secretary, Ministry of Commerce and Industry, Governmentof India, to the Assessee which stated that, on the basis of the StateGovernment’s Report dated 23[rd] April 2008, the building in whichthe Industrial Park was being developed by the Assessee’sproprietary concern, M/s. S Balan, did not belong to an individualbut belonged to a partnership firm named M/s. S Balan & Co. Further, the said letter mentioned that the building was divided intothree different wings and only a part of that building (Central Wing)was being developed as an Industrial Park, thus it could not bestated that an Industrial Park was being developed as a whole andaccordingly the case of the Assessee was not eligible under theIndustrial Park Scheme, 2002. Further, during the course of surveyaction, in the Statement recorded on 20[th] January 2010, theAssessee stated that he was withdrawing the claim for deductionunder Section 80IA(4)(iii) subject to the outcome of the ReviewApplication filed before the Ministry of Commerce and Industry. 3.The AO found that, in the Return filed under Section153A for Assessment Year 2009-10 and Assessment Year 2010-11,the Assessee had claimed deduction under Section 80IA(4)(iii). TheAO sought the explanation of the Assessee and found theexplanation to be not acceptable because on the basis of the saidletter from the Under Secretary, Ministry of Commerce andIndustry, the Assessee was not eligible for the said deduction. TheAO also found that the pendency of the Review Application of theAssessee before the concerned authority did not make the Assesseeeligible for the said deduction. The AO further noted that the 4 ITA-1943-17 @523-2018.doc 3.The AO found that, in the Return filed under Section153A for Assessment Year 2009-10 and Assessment Year 2010-11,the Assessee had claimed deduction under Section 80IA(4)(iii). TheAO sought the explanation of the Assessee and found theexplanation to be not acceptable because on the basis of the saidletter from the Under Secretary, Ministry of Commerce andIndustry, the Assessee was not eligible for the said deduction. TheAO also found that the pendency of the Review Application of theAssessee before the concerned authority did not make the Assesseeeligible for the said deduction. The AO further noted that the 4 ITA-1943-17 @523-2018.doc Assessee had retracted his Statement dated 20[th] January 2010 byfiling an Affidavit dated 25[th] November 2011 stating that theadmission was not made by him. However, the AO held that, thoughthe Assessee had retracted the Statement, the same bore hissignature, the retraction was not made immediately after thesearch and was made after 22 months. The AO further held that theAssessee could not prove any threat or coercion while recording theStatement on 20[th] January 2010. In view of the above, the AO, by anOrder dated 30[th] December 2011, disallowed the deduction claimedunder Section 80IA(4)(iii). 4.The Assessee challenged the said Order dated 30[th]December 2011 by filing an Appeal before the Commissioner ofIncome Tax (Appeals) [CIT (A)]. The Assessee submitted that hehad challenged the decision of the Empowered Committee of theconcerned Ministry and the said Committee vide its Order dated11[th] June 2012, after considering the issue, granted approval to theAssessee’s project. The Assessee filed a letter dated 12[th] May 2012,received from the Ministry of Commerce and Industry, under Rule46A(1) (c) of the Income Tax Rules, with a prayer for admission ofthe same as additional evidence stating that the said letter could not be produced before the AO as it was not in existence at that time.The said additional evidence was forwarded by the CIT (A) to the AOfor rebuttal with respect to the claim of the Assessee for deductionunder Section 80IA(4)(iii) for Assessment Years 2009-10 and2010-11. The AO forwarded his Remand Report which wascontroverted by the Assessee. 5.The Assessee, in its Reply to the Remand Report,submitted that the observation of the AO that the Assessee had notcompleted the Industrial Park even upto the date of scrutinyassessment was factually not correct as the Assessee startedearning income from the Industrial Park from Financial Year 2006-07, relevant to Assessment Year 2007-08, but due to losses incurreddid not have positive gross total income for Assessment Years 2007-08 and 2008-09 due to which the said deduction was not claimed.The Assessee further submitted that it claimed the said deductionfor the first time in Assessment Year 2009-10 when positive grosstotal income was available. As regards the objections of the AO thatthe building in which the Industrial Park was being developed bythe Assessee’s proprietary concern did not belong to an individualbut belonged to a partnership firm named M/s. S Balan & Co., the Assessee submitted that the same was factually not correct. It wasstated that the Sai Trinity building was originally completed as abare shell and, thereafter, wings B & C of the building were takenover by the partner S. Balan from the firm and in his individualcapacity he incurred the entire cost of completion of the building. Itwas further submitted that the Industrial Park was situated inthese two wings only which belonged to Mr. S. Balan as an individualand not to the said firm. Assessee submitted that the same was factually not correct. It wasstated that the Sai Trinity building was originally completed as abare shell and, thereafter, wings B & C of the building were takenover by the partner S. Balan from the firm and in his individualcapacity he incurred the entire cost of completion of the building. Itwas further submitted that the Industrial Park was situated inthese two wings only which belonged to Mr. S. Balan as an individualand not to the said firm. 6.As regards the objection of the AO that fresh approvalhad to be taken, as required under the Industrial Park Scheme,2002, was concerned, the Assessee submitted that the park hadbecome operational within the extended period of one year availableupto 21[st] September 2006 and the Assessee had already startedoffering income from the Industrial Park since Financial Year2006-07, relevant to Assessment Year 2007-08 onwards. 7.Based on the submissions advanced by the Assessee theCIT(A), by an Order dated 28[th] February 2013, allowed the claim ofdeduction made by the Assessee under Section 80(IA)(4)(iii). 8.Aggrieved by the said Order passed by the CIT(A), theRevenue filed the said Income Tax Appeal No. 1306 of 2013 beforethe ITAT. By the said Order dated 25[th] November 2016, the ITATdismissed the said Appeal of the Revenue. 9.So far as Income Tax Appeal No. 523 of 2018 isconcerned, the facts therein are almost identical to the facts inIncome Tax Appeal No. 1943 of 2017, except that the same was inrespect of Assessment Year 2010-11 and the claim for deduction,under Section 80IA(4)(iii) of the Act, was in a sum of Rs.3,85,15,218/-. 10.In both the Appeals before us, Mr. Suresh Kumar, thelearned Counsel for the Revenue, has proposed the followingsubstantial question of law:- “Whether on the facts and in cirumstances of the case andin law, the Hon’ble ITAT has erred in ignoring theprovisions of section 80IA(2) while adjudicating the issueof claim of deduction u/s 80IA(4) in favour of the assesseefor the impugned assessment year?” 11.From the aforesaid facts it can be seen that the AO had disallowed the claim of deduction under Section 80IA(4)(iii) of theAct primarily on the basis of the said letter dated 4[th] March 2009,from the Under Secretary, Ministry of Commerce and Industry, andthe Assessee’s admission of the aforesaid fact in the Statementrecorded during the survey action under Section 133A of the Act.The said letter had referred to Registration No. 63/S1A/IP/2006dated 12[th] May 2006 and noted that, on the basis of the StateGovernment’s Report dated 23[rd] April 2008, the building in whichthe Industrial Park was located belonged to a partnership firm, i.e.M/s. S Balan & Co, and not to an individual, and that the IndustrialPark was not developed as a whole as only a part of the building wasbeing developed and hence the same was not eligible under theIndustrial Park Scheme, 2002. It can also be seen that the Assesseehad stated that the Review Application filed by him was pendingwith the Ministry of Commerce and Industry and subject to thesame had withdrawn his claim for deduction. However,subsequently, the Assessee filed an Affidavit denying the said claimas being withdrawn as the matter was subjudice before theEmpowered Committee. 12. We are of the view that the Asseessee had fulfilled the specified by Section 80IA(4)(iii) are as follows:- “(1) The assessee develops, develops and operates ormaintains and operates an industrial park. (2)The industrial park should be notified by theCentral Government. (3)The notification should be in accordance with thescheme framed and notified by that Government for thespecified period.” 12. We are of the view that the Asseessee had fulfilled the specified by Section 80IA(4)(iii) are as follows:- “(1) The assessee develops, develops and operates ormaintains and operates an industrial park. (2)The industrial park should be notified by theCentral Government. (3)The notification should be in accordance with thescheme framed and notified by that Government for thespecified period.” 13.Section 80IA(4)(iii) thus provides for deduction of theprofit derived by the Assessee from development or operation of anIndustrial Park notified by the Central Government. The eligibilityperiod of development of such an Industrial Park was initiallybetween 1[st] April 1997 to 31[st] March 2006. However the FinanceAct, 2006 extended the period to 31[st] March 2011. Theresponsibility of verifying the authenticity of the Assessee’s claimvested in the concerned Ministry of the Central Government andthe role of the Assessing Officer in that regard is limited. TheIndustrial Park Scheme, 2002, as notified from time to time by theCentral Government, is a code in itself and lays down the criteria ofeligibility, procedure of approval, conditions to be specified by thedeveloper etc. and once the concerned ministry grants theapproval, it is incumbent on the part of the AO to grant thededuction. The AO may look into the other technical requirements of the provisions contained in Section 80IA, i.e., the deduction is to becomputed if the eligible business, i.e., the Industrial Park, is the onlysource of income for the Assessee, the Assessee must submit anAudit Report and if the income from eligible business is arising fromconnected parties, then the AO can rework the deduction. 14.In the present case, the eligible business, as per Section80IA(5), i.e. the Industrial Park, is the only source of income for theAssessee. The Assessee has submitted the Audit Report as requiredunder Section 80IA(7). The AO has not disputed these aspects as isevident from the Assessment Order dated 30[th] December 2011. Inthe light of the same, the letter of approval dated 11[th] June 2012filed by the Assessee assumes importance as the EmpoweredCommittee has accepted the representation made by the Assesseeand approved the project as an Industrial Park, which entitles theAssessee for the deduction. 15.Further, by virtue of the provisions of sub-section (4) ofSection 250 of the Act, the CIT (A) had the power to acceptadditional evidence in the form of the said letter dated 11[th] June2012, especially since the same was not available when the AO had passed the said Order dated 30[th] December 2011. 16.Further, the Empowered Committee had reconsidered itsearlier rejection and granted approval for the units on 11[th] June2012 with reference to the date of the application, i.e., 12[th] May2006. The Assessee had also clarified the issue regarding thedevelopment of the Industrial Park by an individual and not by thepartnership firm, which is also evident from the approval grantedby the Ministry of Commerce and Industry. It is further seen fromthe record that the Assessee applied for approval of the IndustrialPark in Sai Trinity building under ‘non automatic’ approval route on8[th] December 2005 and received the approval on 9[th] December2005. The Asseessee had thereafter applied for reduction in numberof units on 26[th] April 2006. The Industrial Park was commissionedin September 2006. The material on record indicates that, on thebasis of an erroneous State Government Report about theownership of the property in which the Industrial Park wasconstituted, the Ministry of Commerce and Industry rejected theapproval vide its letter dated 4[th] March 2009. It was the same letterwhich was found during the survey action and on the basis of whichthe claim for deduction made by the Assessee was rejected by theAO. However, prior to the search and survey action, the Assessee had applied for a Review of the rejection to the EmpoweredCommittee on 24[th] April 2009. The Empowered Committee, afterreconsideration of the earlier rejection, had granted approval forthree units on 11[th] June 2002 to Mr. S. Balan, the Assessee, whichwas effective from 12[th] May 2006. The objection of the AO that theIndustrial Park was being developed by the partnership firm is alsonot factually correct, in view of the explanation offered by theAssessee and also the letter issued by the Competent Authority.Once the Central Government grants the approval, it is incumbenton the part of the AO to grant the claim of deduction. 17.We find that the ITAT has correctly arrived at theaforesaid findings. Further, in its Order, the ITAT has referred to itsprevious decision on a similar issue in the case of M/s. Kolte PatilDevelopers Ltd. Vs. DCIT[1]. Mr. Jha, the learned Counsel for theAssessee, pointed out to us that the said decision referred to by theITAT was challenged by the Revenue in this Court by filing IncomeTax Appeal No.838 of 2016 and by an Order dated 11[th] February2019[2] this Court had dismissed the said Appeal. The relevantportion of paragraph 5 of the said Order dated 11[th] February 2019 of 1ITA Nos.1411 to 1415/PN/2013 and ITA Nos.1478 to 1483/PN/2023. 22019 SCC Online Bom 7251 this Court reads as under:- “ … Section 80IA(4) of the Act recognizes deductions to theassessee who is an undertaking which develops andoperates or maintains and operates and Industrial Park.The assessee fulfilled the said requirement as also the otherprocedural requirement laid down in the scheme. Rule18C(i) itself as noted provided that the benefit would beavailable to an undertaking which begins to develop suchIndustrial Park. In the present case, the assessee hadalready developed the Industrial Park and as many as21units were already operational as admitted by therevenue. These units were sold during the assessment yearin question. The profit arising out of such sale wasaccounted for in the said year and offered to tax. It wastherefore, that the assessee was entitle to deduction inrespect of such profit….” 18.For all the aforesaid reasons, we are of the view that the present Appeals do not raise any substantial question of law andthat no interference is called for in those parts of the Common Orderdated 25[th] November 2016 which are impugned in the presentAppeals. 19.Hence, the Appeals are hereby dismissed. (FIRDOSH P POONIWALLA., J.) (K. R. SHRIRAM, J.)