Commissioner of Income Tax vs Ackruti City Ltd.

In this appeal by the Revenue for assessment year 2005-06, following questions of law have been proposed for our consideration.

(a) Whether, on the facts and in the circumstances of the case and in law, the Tribunal is right in law in holding that amended provisions of Section 80-IB(10), as amended by Finance Act, 2004, will not apply to project approved before 31-3-2005 and, hence, deduction u/s 80-IB(10) cannot be disallowed on profits of Gawan Pada project on the ground that commercial component of the project is more than 2000 square feet?

(b) Whether, on the facts and in the circumstances of the case and in law, the Tribunal is right in law in holding that deduction u/s 80-IB(10) on Gawan Pada project cannot be disallowed on the basis that area on standalone basis under eligible component of project is less than one acre as long as total area of the plot is more than one acre?

(c) Whether, on the facts and in the circumstances of the case and in law, the Tribunal is right in law in holding that provision that Section 2(22)(e) are not applicable on deposits received by the assessee from M/s. City Gold Management Services Private Limited on the ground that these deposits received are inter corporate deposits whereas real nature of amounts received by the assessee is interest free loans and deposits?

(d) Whether, on the facts and in the circumstances of the case and in law, the Tribunal is right in law in holding that assessee is entitled to deduction u/s 80-IA(4)(iii) of the income tax Act on profits on industrial park at Marol Andheri when assessing officer made disallowance as per Rule 18-C of the income tax Rules and project of the assessee was not notified by the CBDT in the assessment year 2005-06 and assessee has not shown relevant income as business income in the original return of income filed?

Insofar as question (b) is concerned, counsel for the parties state that the same is covered in favour of the assessee and against the Revenue by the decision of this Court in the respondent-assessee''s own case being Income Tax Appeal No. 777 of 2001 rendered on 9th January 2013. In the above decision, this Court has followed its earlier decision in the matter of The Commissioner of Income Tax 25, C/11, Room No. 209, 2nd Floor, Pratyaksha Kar Bhavan, Bandra Kurla Complex, Bandra (East), Mumbai - 400051 Vs. M/s. Vandana Properties, 602B, Prem Nagar, Off. SV P Road, Borivali (West), Mumbai - 400092, . In view of the above, we see no reason to entertain question (b).

Insofar as question (d) is concerned, the Tribunal by the impugned order upheld the order of the Commissioner of Income Tax (A) holding that the respondent-assessee is entitled to the benefit of deduction u/s 80-IA(4)(iii) of the income tax Act, 1961 ("Act" for short). The objection of the Revenue that the deduction u/s 80-IA(4)(iii) of the Act is available to an industrial park only on CBDT notifying the industrial park under Rule 18C of the income tax Rules, 1962 (''the Rules'' for short). This the CBDT did only on 5th June 2006. Therefore, according to the Revenue the benefit of Section 80-IA of the Act in terms of sub-section (4)(iii) thereof would be available as from Assessment Year 2007-08 and not earlier. The Commissioner of Income Tax (A) as well as the Tribunal have held that the Ministry of Commerce and Industry had finally by letter dated 31st December 2004 approved the industrial park and a copy of the same was forwarded to the CBDT. In terms of Rule 18C(4) of the Rules, once the industrial park is approved by the Ministry of Commerce & Industry, the CBDT has to suo motu issue the notification. The Tribunal, on examination of all facts concluded that all the requisite conditions for claiming benefit u/s 80-IA(4)(iii) of the Act has been complied with by the respondent-assessee during the assessment year in question. Further, there is no reason to hold the benefit u/s 80-IA(4)(iii) of the Act is available only prospectively from the date of the issue of Notification by the CBDT. In these circumstances, as the decision of the Tribunal is based on finding of fact and mere delay on the part of the Central Board of Direct Taxes in issuing the notification would not warrant the respondent-assessee being denied the benefit of Section 80-IA(4)(iii). This is so, particularly when the Revenue has not been able to point out any infirmity in the approval as granted by the Ministry for Commerce and Industry recognizing the respondent-assessee as industrial park. The view of the Commissioner of Income Tax (A) and the Tribunal is a reasonable view in the facts of the case and thus we see no reason to entertain question (d).

The appeal is admitted on questions (a) and (c). To be heard along with Income Tax Appeal Nos. 1316 of 2009 and 779 of 2011.