2011 (2) TMI 1236 - HC - Income Tax

Whether the calculations have to be made on completion of the project after registering the plots in favour of the intended purchasers or customers, who had invested the amount from time to time, or as and when the amount is paid and accrued to the benefit of the petitioner for each assessment years and, also to consider the deductions available as per Section 80IB(10) of the Act grievance of the petitioner is, neither the Assessing Officer nor the Revisional Authority namely, the Commissioner of Income Tax have taken into consideration the tax holidays and the exemption granted as per Section 80IB(10) of the Income Tax Held that - to pass appropriate orders in accordance with law, the matter is remanded to the Assessing Officer, Petitions are accordingly allowed

Issues:
1. Quashing of impugned order under Section 264 of the Income Tax Act
2. Reinstatement of project completion method in income computation
3. Allowance of deduction under Section 80-IB(10) of the Act
4. Set aside of assessment order by Deputy Commissioner of Income Tax
5. Permission for appeal against original assessment orders
6. Consideration of tax holidays and exemptions under Section 80IB(10)
7. Calculation method for project completion and deductions
8. Remand of the matter to the Assessing Officer

Analysis:
The petitioner sought to quash the order passed by the respondent under Section 264 of the Income Tax Act and reinstate the project completion method in income computation to allow deduction under Section 80-IB(10) of the Act. The petitioner, an Association of persons engaged in development and construction of apartments, filed income tax returns for the years 2006-2007 and 2007-2008. Revised statements were filed for these years, and the Assessing Officer passed assessment orders. The petitioner, aggrieved by the orders, sought revision before the Commissioner of Income Tax under Section 264, which was declined. The Revisional Authority refused to interfere with the assessment orders, citing petitioner's decision to adopt proportionate completion method in revised statements to avoid litigation. The petitioner's contention that the revised statements were filed at the instance of the Assessing Officer was not accepted.

The main grievance of the petitioner was the non-consideration of tax holidays and exemptions under Section 80IB(10) by both the Assessing Officer and the Revisional Authority. The petitioner argued that registration after completion should have been considered, along with exemptions for plots/residential buildings below 1500 sq. ft. The petitioner claimed to have filed revised assessment statements after calculating all exemptions and tax holidays. The court, after hearing the submissions, decided to remand the matter to the Assessing Officer by quashing the impugned orders. The court directed the Assessing Officer to consider whether calculations should be made on project completion after registering plots or as and when amounts are paid, taking into account deductions available under Section 80IB(10) and to pass appropriate orders in accordance with the law. All contentions were left open to be urged, and the petitions were allowed, with the petitioner instructed to appear before the Assessment Officer on a specified date.

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