The Tax Publishers2020 TaxPub(DT) 3778 (Bom-HC)

INCOME TAX ACT, 1961

Section 263

Where AO carried out detail enquiries relating to assessee's claim of deduction under section 80-IB(10) and thereafter granted such deduction to the assessee, the CIT was not justified in invoking jurisdiction under section 263 on the ground that the AO did not carry out proper enquiries and granted benefit of deduction under section 80-IB(10) to the assessee without fulfillment of conditions.

Revision under section 263 - Erroneous and prejudicial order - AO took a plausible view -

Assessee claimed deduction under section 80-IB(10) in relation to income arising out of a housing project developed by him. AO noticed that Revenue records suggested that the area of land on which the said housing project was developed, was less than 4050 sq. meters (i.e., approx. 1 acre). Assessee submitted that there was error in the Revenue records, which was later on rectified by virtue of which the land area was shown to be 4050 sq. meters. AO further noticed that though the area of land was stated to be 4050 sq. meters, but part of it was occupied for road widening and similar such other purposes leaving only a net of 3192 sq. meters of land available for development. Assessee submitted that even after the shrinkage in the plot size, the Floor Space Index (FSI) available for development remained the same. Accordingly, the AO framed assessment and granted deduction under section 80-IB(10). CIT invoked jurisdiction under section 263 on the ground that the AO did not carry out proper inquiries and granted benefit of deduction under section 80-IB(10) to the assessee without fulfillment of conditions. Held: It was found that the AO was conscious of the requirement of the area of the plot of land being not less than 1 acre. In that context, he issued show-cause notice to the assessee and called for his explanation. Further, the assessee's explanation was two-fold. First, there was error in the land documents, which was corrected later on and second that the reduction in the area of land for road widening and such other public purposes should be ignored, in view of the fact that the assessee was allowed to utilize the full FSI. Thus, it would be said that the AO accepted such explanations after carrying out detailed inquiries about the satisfaction of the relevant condition and thereafter granted deduction under section 80-IB(10) to the assessee. Further, the view adopted by the AO was at that time supported by various decisions of the Tribunal. Therefore, the AO having taken a plausible view, the CIT could not have exercised revisional power under section 263.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2005-06



IN THE BOMBAY HIGH COURT

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