Finest Promoters (P.) Ltd. v. ACIT — ITAT Delhi Allows Deduction u/s 80IA and Upholds Consistency Principle.

The Delhi Bench of the Income Tax Appellate Tribunal held that once deduction under Section 80IA of the Income Tax Act has been allowed in the initial year of claim after due verification, the same cannot be denied in subsequent years unless there is a change in facts or legal position. The Tribunal allowed the assessee’s claim for deduction u/s 80IA relating to development and operation of an approved Industrial Park and dismissed Revenue’s appeals. The Tribunal also upheld deletion of penalty u/s 271(1)(c), observing that there was no concealment or furnishing of inaccurate particulars since the High Court had quashed the government’s withdrawal of the project’s approval.

1. The assessee, M/s Finest Promoters (P.) Ltd., was engaged in developing, operating, and maintaining an Industrial Park at Gurgaon approved under the Industrial Park Scheme, 2002, by the Ministry of Commerce & Industry.
2. The company claimed deduction of ₹7.15 crore u/s 80IA(4)(iii) for AY 2010–11 on income derived from the Industrial Park, duly supported by the audit report in Form 10CCB.
3. The approval was originally notified by the CBDT via Notification No. S.O. 462 dated 09.02.2007, but later withdrawn by the Central Government through order dated 24.01.2014, alleging deviation from approved specifications.
4. The Assessing Officer disallowed the deduction on the basis of this withdrawal, and the CIT(A) upheld the disallowance for AY 2010–11.
5. However, the assessee challenged the government’s withdrawal before the Delhi High Court in W.P.(C) No. 3162/2014, which by order dated 12.07.2018, quashed the withdrawal and restored the approval, directing a fresh reasoned consideration by the authority.

For the Assessee:

1. The deduction was granted in earlier years (AY 2008–09 and 2009–10) after scrutiny assessments under Section 143(3).
2. There was no change in facts or conditions warranting denial of deduction in subsequent years.
3. The High Court’s order quashing the withdrawal of approval rendered the disallowance unsustainable.
4. Invoked the principle of consistency as upheld in Radhasoami Satsang v. CIT (1992) 193 ITR 321 (SC).

For the Revenue:

1. The departmental representative argued that the High Court had merely remanded the matter to the CBDT for fresh consideration and that the withdrawal had not been conclusively set aside.
2. Hence, the disallowance of deduction was justified pending a fresh order.

1. The Tribunal noted that the deduction u/s 80IA was first allowed in AY 2008–09 after thorough verification, and the same should ordinarily be allowed in subsequent years absent any material change in facts.
2. The only ground for disallowance was the withdrawal of approval, which had since been quashed by the Delhi High Court, restoring the validity of the earlier notification.
3. The Revenue did not produce any evidence of a fresh order by the Government post–High Court judgment.
4. Accordingly, the Tribunal held that the assessee was entitled to deduction u/s 80IA, as the approval remained effective.
5. The Tribunal emphasized that once a deduction is allowed in the initial year, consistency must be maintained unless the foundational facts alter materially.

1. The CIT(A) had allowed the deduction in these years, relying on the Delhi High Court’s order quashing the withdrawal.
2. The ITAT upheld the CIT(A)’s decision, reiterating that the basis for disallowance (withdrawal of approval) no longer existed and that the AO had recorded no independent finding on eligibility.
3. All Revenue appeals for AYs 2011–12 to 2015–16 were dismissed.

1. The AO had levied penalty of ₹2.43 crore u/s 271(1)(c) on the alleged concealment relating to the disallowed deduction u/s 80IA.
2. Since the deduction itself was now allowed, the Tribunal upheld CIT(A)’s deletion of the penalty, observing that there was no concealment or furnishing of inaccurate particulars.
3. The Tribunal further noted that disallowance of a debatable claim cannot attract penalty once the claim is found bona fide.

1. Section 80IA(4)(iii), Income Tax Act, 1961: Deduction for profits from development, operation, and maintenance of industrial parks.
2. Section 271(1)(c): Penalty for concealment or inaccurate particulars of income.
3. Section 143(3): Scrutiny assessment.
4. Section 293C: Power to withdraw approvals or exemptions.

Citation: ITA Nos. 2736/Del/2014, 4277/Del/2019, 7814–7817/Del/2018 & 3662/Del/2019

Bench: Delhi “F” Bench, Income Tax Appellate Tribunal

Coram: Shri Satbeer Singh Godara (Judicial Member) & Shri Manish Agarwal (Accountant Member)

Date of Hearing: 17.07.2025