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| The Tax Publishers2020 TaxPub(DT) 1878 (Bang-Trib) : (2020) 184 ITD 0814 INCOME TAX ACT, 1961
Section 154
Where AO withdrew deduction under section 80-IAB in rectification proceedings as regards lease rental income offered under the head income from house property, rectification was struck down since in view of CBDT Circular No. 16/2017 dt. 25-4-2017 and case law referred to by assessee, the issue was not totally free of any debate.
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Rectification - Mistake apparent - Issue not being free of any debate - AO withdrew deduction under section 80-IAB in rectification proceedings as regards lease rental income offered under the head income from house property
Assessee offered lease rent from developed space in SEZ for taxation under the head 'income from house property'. Deduction under section 80-IAB was claimed on such lease income and was allowed by AO thereafter, AO sought to withdraw deduction in rectification proceeding under section 154 on the ground that deduction under section 80-IAB was allowable only with reference to business income and in the absence of any business income from SEZ offered in ROI, assessee had wrongly claimed deduction under section 80-IAB and AO had wrongly admitted claim of deduction in the assessment completed under section 143(3). Assessee challenged rectification action of and claimed that in view of narrow sphere of section 154, rectification of assessment order was not permissible unless such order suffered from apparent mistake. In its defense, assessee claimed that lease rent from developed space in SEZ carried the trapping of business income, regardless of its wrong declaration under the head 'income from house property' by assessee. For advancing such proposition, a reference to CBDT Circular No. 16/2017, dt. 25-4-2017 squarely on the point was made and relied upon together with judicial precedents. Held: Having regard to CBDT Circular and judicial precedents referred to and relied upon by assessee, it was manifest that eligibility of deduction under section 80-IAB is governed by the true character of lease rental income derived. CBDT circular albeit in the context of section 80-IAB has expressed its concern on litigation towards taxability of lease income under the appropriate head and granted relief to assessee for eligibility of deduction. The issue thus could not be said to be totally free of any debate. On the contrary, debate, if any, leaned in favour of assessee. Thus, rectification carried out under section 154, was beyond the mandate of law and was struck down.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2011-12 to 2014-15
INCOME TAX ACT, 1961
Section 154
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