2015 (8) TMI 856 - HC - Income Tax

Entitlement to claim deduction under Section 80IB(10) - Tribunal allowed the assessee s appeal by inter-alia holding that the sanction obtained by the local authority on 23 June 2003 was in respect of a project different from the sanction obtained, called revised sanction, of the local authority on 31 July 2004 - Held that - The impugned order of ITAT records that the housing project, reflected in the sanction dated 31 July 2004, was different from the housing project approved on 23 June 2003 by the local authority. The sanction dated 31 July 2004, the impugned order finds, was in relation to area 104-R reflected by Survey No.61/2 3 4 5 6, whereas the earlier sanction on 23 June 2003 was in respect of area 84-R of land area consisting of Survey No.61/2 3 5 6. This by itself would indicate that the sanction which has been obtained on 31 July 2004 is in respect of distinct and separate project, then the approval obtained on 23 June 2003 for the housing project. The mere use of the revised sanction by the local authority in the sanction given on 31 July 2004, would not by itself make it an amendment or a change to a earlier sanction when in fact it is a sanction for a materially different housing project. Reliance on Commissioner of Income Tax v/s Vandana Properties 2012 (4) TMI 54 - BOMBAY HIGH COURT in support of its conclusion that the project sanctioned on 21 July 2004 is different from the project sanctioned on 23 June 2003 is true. The finding recorded by the impugned order is a pure finding of fact. The revenue has not been able to show that this finding of fact recorded by the Tribunal is, in any manner, perverse and/or arbitrary. - Decided against revenue.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal regarding deduction under Section 80IB(10) of the Income Tax Act, 1961 for Assessment Years 2006-07 and 2007-08.

Analysis:
The appeals by the revenue contested the Tribunal's order concerning the entitlement of the assessee for a deduction under Section 80IB(10) of the Income Tax Act, 1961. The main question raised was whether the Tribunal was justified in accepting the date of approval by the local authority for a housing project as 31.07.2004, even though the project initially received approval on 23.06.2003. The respondent claimed the deduction under Section 80IB(10) for housing projects, but the Assessing Officer denied it due to the project not being completed within the specified time frame as per the Explanation to Section 80IB(10)(a) of the Act. The project was required to be completed by 31 March 2008 since it obtained its first approval on 23 June 2003 and a revised sanction on 31 July 2004.

The Commissioner of Income Tax (Appeals) upheld the Assessing Officer's decision, but the Tribunal, in the impugned order, allowed the respondent's appeal. The Tribunal found that the sanction obtained on 31 July 2004 was for a different project than the one approved on 23 June 2003. The Tribunal highlighted that the projects were distinct based on the land areas and survey numbers, concluding that the 31 July 2004 sanction was not an amendment but for a materially different housing project. The Tribunal's decision was supported by a previous court ruling in Commissioner of Income Tax v/s Vandana Properties.

The High Court noted that the Tribunal's finding was a factual one, supported by reasons showing the difference between the projects approved in 2003 and 2004. The court found no evidence to suggest the Tribunal's decision was unreasonable or arbitrary. Consequently, the court dismissed the revenue's appeals, stating that the proposed question did not raise any substantial legal issue. Thus, the appeals were rejected without any costs being awarded.