The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench ruled that the deduction under section 80IA(4) granted in first year cannot be denied in subsequent years, unless change in original terms and conditions.
The assessee company, K. Raheja IT Park engaged in the business of developing industrial and non-industrial parks, filed its return of income for the AY 2011-12 declaring total income of Rs. 15,30,02,887/- after claiming deduction under section 80IA(4) amounting to Rs. 14,97,83,693/-. Subsequently, the case was selected for scrutiny and the assessment was completed under section 143(3) by determining the total income at Rs. 28,18,46,030/-.
By exercising powers vested under section 263 of the Act, the Pr. CIT called for assessment records of the assessee and on perusal of the same, he observed that, prima facie, assessment order passed under section 143(3) is erroneous and prejudicial to the interests of revenue as the Assessing Officer while passing the impugned order allowing the deduction under section 80IA(4)(iii), has not verified all relevant facts in respect of satisfaction or otherwise of all conditions regarding its claim for deduction under section 80IA(4).
He further observed that while completing the assessment, the Assessing Officer treated the lease rentals received from industrial park as business income and allowed deduction under section 80IA(4) amounting to Rs.13,67,23,850 by relying on the decision of the ITAT, Hyderabad in the case of M/s Janapriya Properties Pvt. Ltd. Also he observed that assessment orders for the AYs 2006-07, 2007-08 and 2009-10 had been reviewed by the CIT-2, Hyderabad and orders under section 263 were passed wherein it was held that the income from lease rentals is income from business but not income from house property and also held in respect of AY 2009-10 that the assessee is not entitled for deduction under section 80IA for A.Y 2009-10 as it did not fulfill the eligibility conditions. The assessee claimed this deduction for the first time in AY 2009-10.
The coram of S.S. Godara and L.P.Sahu observed that This being the second year, unless there are distinguishing facts and circumstances for taking a different view and deny the claim of deduction, the A. O. cannot take a contrary stand.
The ITAT held that when deduction under section 80IA(4) has been granted in the first year of claim the same cannot be denied in subsequent years, unless the assessee has changed the original terms and conditions in the first year while fulfilling the granting deduction in the first year of operation.
On perusal of the documents, the Tribunal did not notice any deviation from the first year of operation. The revenue side also could not bring any such deviation to establish that the assessee has changed the original terms and conditions from the first year of operation.
Therefore, the ITAT quashed the order passed by the Pr. CIT u/s 263 of the Act in the impugned AY and restore the order of AO.
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