The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench passed a ruling that the deduction as per section 80IA(4) that is granted in the first year could not be denied in the subsequent years until and unless there is a change in the original/initial terms and conditions.
The assessee company, K. Raheja IT Park, which is involved in the business of building industrial and non-industrial parks, had filed its return of income for AY 2011-12 declaring a total/combined income of Rs. 15,30,02,887/ and that too after claiming deduction as per section 80IA(4) that amounted to Rs. 14,97,83,693/. Thereafter, the case was picked for scrutiny and the assessment had been completed under section 143(3) by calculating and arriving at the total income at Rs. 28,18,46,030/.
By exercising the powers vested under section 263 of the Income Tax Act 1961, the Pr. CIT decided for assessment of records of the assessee and after perusal of the same, he found that prima facie, the assessment order that was passed under section 143(3) is wrong and has a bias to the interests of revenue. The Reason is the Assessing Officer whilst passing the impugned order allowed the deduction made under section 80IA(4)(iii) of the Income Tax Act 1961, has not verified all the relevant facts and figures with respect to the satisfaction or otherwise of all terms and conditions relating to its claim for deduction under section 80IA(4).
Moreover, he found that whilst completing the assessment, the Assessing Officer considered the lease rentals that was received from the industrial park as business income and permitted a deduction under section 80IA(4) that amounted to Rs.13,67,23,850 by depending on the ruling of the Income Tax Appellate Tribunal, Hyderabad in the case of Messrs Janapriya Properties Pvt. Ltd. Further, he observed and pointed out orders for the assessment of AYs 2006-07, 2007-08 and 2009-10 had been examined by the CIT-2, Hyderabad and orders as per section 263 were given wherein it was held that the income earned from the lease rentals is considered income from the business but not the income from house property and further held that for AY 2009-10 the assessee is not authorised for deduction under section 80IA of the Income Tax Act 1961 for A.Y 2009-10 as it did not fulfill the eligibility conditions. And The assessee had claimed this deduction for the first time in AY 2009-10.
The coram of L.P.Sahu and S.S. Godara observed and passed a ruling that this year being the second year, so unless there are distinguishing facts and circumstances for considering a different view and for denying the claim of deduction, the A. O. could take an opposite stand.
Further, The ITAT ruled that when deduction under section 80IA(4) of the Income Tax Act 1961, has been granted in the first year of claim, the same ought not to be denied in subsequent years, until and unless the assessee has modified the original terms and conditions in the first year whilst fulfilling the granting of deduction in the first year of operation.
After perusal of the documents, the Tribunal did not found any deviation from the first year of operation. Consequently, the ITAT quashed the order that was passed by Pr. CIT u/s 263 of the Income Tax Act in the impugned AY and restored the order of AO.
