2016 (6) TMI 452 – ITAT MUMBAI – TMI – Reopening of assessment – Deduction under section 80IB(10) allowed excessively to the extent that it is beyond the amount of income under the head ‘business or profession’ – CIT(Appeals) allowing assessee’s claim for deduction under section 80IB(10) to the extent of gross total income and not restricting the same to extent of income under the head ‘business and profession’ – Held that:- It is a trite law that ‘reason to believe’ referred to in Sec. 147 of the Act is one 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 that Assessing Officer is under a misconception in inferring that there is an excessive grant of deduction u/s 80IB(10) of the Act. Ostensibly, the proposition 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 rathe
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turn arises out of an order passed by Assessing Officer under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short the Act ) dated 06/12/2012. 2. In its appeal the solitary grievance of the Revenue is against the action of the CIT(Appeals) in allowing assessee s claim for deduction under section 80IB(10) of the Act to the extent of gross total income of ₹ 71,99,25,721/- and not restricting the same to ₹ 68,18,56,583/- i.e. to extent of income under the head business and profession . 3. In brief, the relevant facts are that assessee is a company incorporated under the provisions of the Companies Act, 1956 and is, inter-alia, engaged in the business of construction and property development. In an assessment finalized under section 143(3) of the Act dated 24/12/2009, the total income was determined at ₹ 10,59,17,950/- which, inter-alia, included relief under section 80IB(10) of the Act amounting to ₹ 71,99,25,721/-. Consequently, the Assessing Officer re
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ction under section 80IB(10) of the Act. There is no dispute between assessee and the Revenue that the quantum of deduction under section 80IB(10) of the Act is ₹ 71,99,25,721/-. In its return of income, assessee claimed a deduction of ₹ 71,99,25,721/- under section 80IB(10) of the Act as it was within the limit of its gross total income amounting to ₹ 82,58,43,666/-. However, in the impugned assessment the Assessing Officer restricted the claim of deduction to ₹ 68,18,56,583/-, i.e., to the extent of income under the head income from business and profession instead of allowing deduction/s. 80IB(10) of the Act to the extent of the gross total income. 5. Before us, the Ld. Departmental Representative contended that the deduction allowable under section 80IB(10) of the Act is with respect to the business income and not against the income assessable under the other heads. It is sought to be pointed out that profit from the housing project was to the extent of ͅ
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77; 71,99,25,721/-. In the impugned assessment finalized u/s 143(3) r.w.s. 147 of the Act, the gross total income (before allowing deduction under Chapter VI-A) was arrived at ₹ 82,55,23,592/- which comprised of (i) income from house property – ₹ 13,51,076/-, (ii) income from business – ₹ 68,18,56,583/-; and, income from other sources – ₹ 14,23,15,933/-. The total taxable income has been computed by the Assessing Officer at ₹ 14,36,67,009/- after allowing deduction u/s 80IB(10) of the Act of ₹ 68,18,56,583/-. The dispute between the assessee and the Revenue is in respect of the claim allowed by the Assessing Officer of ₹ 68,18,56,583/- instead of ₹ 71,99,25,721/- sought by the assessee. The point raised is as to whether the claim u/s 80IB(10) of the Act is to be restricted to gross total income as contended by the assessee or it is to be restricted to the extent of income from business or profession. 7. Sec. 80IB of the Act prescribes for
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llowable. For that matter, sub-section (1) of Sec. 80A prescribes that in computing the total income there shall be allowed from the gross total income, deductions specified in Sec. 80C to 80U of the Act subject to the conditions prescribed therein. The claim of the assessee is u/s 80IB(10) which is also liable to be governed by the prescription of Sec. 80A(1) of the Act. Sub-section (2) of Sec. 80A further prescribes that the aggregate amount of deductions under Chapter VI-A shall not, in any case, exceed the gross total income of the assessee. Furthermore, the gross total income has also been defined in Chapter VI-A by way of Sec. 80B(5) to mean the total income computed in accordance with the provisions of the Act before making any deductions under Chapter VI-A. The aforesaid clearly implies that in order to deduce the amount of deduction entitled to the assessee u/s 80IB(10) of the Act, the starting point is the determination of the gross total income. Along with it, the eligible a
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estricted to the extent of income from business or profession. 8. We find that the aforesaid conclusion of the CIT(Appeals) is in consonance with the parity of reasoning laid down by the Hon'ble Bombay High Court in the case of M/s. J.B. Boda & Co. P. Ltd. in Income Tax Appeal No. 3224 of 2009 dated 18.10.2010. In the said case, the amount of eligible deduction u/s 80-O of the Act (which is also a part of Chapter VI-A) was determined at ₹ 1,29,41,830/- but the Assessing Officer restricted the claim to ₹ 69,70,000/- being the income under the head business or profession . The assessee, on the other hand, sought the deduction to the extent of the gross total income referred to in Sec. 80B(5) of the Act. The Tribunal noted that Sec. 80-O of the Act or Sec. 80A did not provide for any such restriction and allowed the claim of the assessee for deduction u/s 80-O of the Act to the extent of gross total income. The Hon ble Bombay High Court affirmed the view of the Tribuna
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se property – ₹ 13,51,076/-, (ii) income from business – ₹ 68,18,56,583/-; and, income from other sources – ₹ 14,23,15,933/-. While computing the total income at ₹ 10,59,17,945/-, the Assessing Officer allowed deduction u/s 80IB(10) of the Act to the extent of ₹ 71,99,25,721/-, as claimed by the assessee. Subsequently, the Assessing Officer recorded reasons and issued notice u/s 148 of the Act dated 6.7.2012 reopening the assessment on the ground that certain income chargeable to tax had escaped assessment inasmuch as the deduction u/s 80IB(10) of the Act was liable to be restricted to ₹ 68,18,56,583/- being the income under the head business or profession . In the ensuing assessment the claim for deduction was scaled down, which we have dealt with on merits in the earlier part of this order. 11. Apart from assailing the action of the Assessing Officer on merits, the assessee company also canvassed before the CIT(Appeals) that issuing of notice of re
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o be pointed out that the impugned reassessment would tantamount to a mere change of opinion, which is impermissible in law. Further, the learned representative also pointed out that the reasons recorded by the Assessing Officer are on a wrong footing and therefore there is no justification for initiation of proceedings u/s 147/148 of the Act. In the course of arguments, reliance has been placed on the following decisions to assail the initiation of proceedings u/s 147/148 of the Act :- i) Sharp Designers and Engineers India Pvt. Ltd., ITA No. 525/PN/2013 dated 24.11.2014 (ITAT, Pune) ii) Shri Amitabh Bachchan, 349 ITR 76 (Bom) 13. On the other hand, the Ld. DR appearing for the Revenue has pointed out that there is no infirmity in the initiation of proceedings by issuance of notice u/s 147/148 of the Act inasmuch as the reasons have been duly recorded and further, at the stage of recording of reasons, the Assessing Officer has only to formulate a prima facie opinion. 14. We have caref
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r.w. s. 153C of the I. T. Act 1961, on 24.12.2009, assessing the total income of ₹ 10,59,17,950/- after allowing the deduction u/s 801B(10) of ₹ 71,99,25,721/-. The assessee has claimed deduction of ₹ 71,99,25,721/- u/s 80IB(10) of the Income Tax Act 1961 in the return. The assessee had income of ₹ 68,18,56,583/- under the head Business and Profession. Therefore the assessee has claimed and has been allowed deduction in excess of its business income. The amount of the excess deduction is ₹ 3,80,69,138/-. The total income of the assessee has therefore been underassessed by the same amount. The deduction u/s 80IB(10) of the I.T. Act 1961, is allowable only against the business income of the assessee. The said deduction is allowable in the case of undertaking, developing & building housing projects approved before the 31st day of March 2008 by local authority subject to compliance of specific terms and conditions as provided in sub-clauses of the said se
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r profession . It is a trite law that reason to believe referred to in Sec. 147 of the Act is one 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 that Assessing Officer is under a misconception in inferring that there is an excessive grant of deduction u/s 80IB(10) of the Act. Ostensibly, the proposition 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 Hon ble Bombay High Court in the case of J.B. Boda & Co. Pvt. Ltd. (supra). At this point, we may note that the aforesaid view of the Hon ble Bombay High Court is also in consonance with its decisions in the case of Eskay K N IT (India) Ltd. vide ITA No. 184 of 2007 dated 25.3.2010 and in the case of Tridoss Laboratories Ltd., 328 ITR 448 (Bom). 15. In vie
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