2016 (12) TMI 501 - HC - Income Tax

Deduction under Section 80IB 10 - whether Evidences found during the survey u/s. 133A of the Act shows that construction was not completed on 31/03/2012 ? - BUC for Tower A , B & F were issued by the local authority on 2/4/2012 - Held that - As more particularly when the housing project was already completed/ constructed prior to 31st March 2012 and BU permission was applied prior to 31st March 2012, but was granted by the local authority on 2nd April 2012, the assessee cannot be denied deduction under Section 80IB 10 of the Act. Under the circumstances, the learned CIT A has rightly allowed deduction under Section 80IB 10 of the Act with respect to such units/housing project and the same has been rightly confirmed by the learned Tribunal. - Decided in favour of assessee

Summary

Issues involved:
1. Interpretation of Section 80IB of the Income-tax Act, 1961 regarding project completion date and eligibility for deduction.
2. Validity of Building Use Permission (BU Permission) granted after the relevant date.
3. Disallowance of deduction under Section 80IB [10] of the Act due to sale of units to family members.

Analysis:

Issue 1: Interpretation of Section 80IB of the Income-tax Act
The case involved a dispute regarding the claim under Section 80IB of the Income-tax Act, specifically related to a project named "Palm Avenue" consisting of six towers. The Assessing Officer denied the deduction under Section 80IB[10] mainly because the BU Permission for Towers 'A', 'B', and 'F' was granted after the relevant date of 31st March 2012. The dispute centered around whether the project was completed before the specified date to qualify for the deduction.

Issue 2: Validity of Building Use Permission
The Commissioner of Income Tax [Appeals] found that although the BU Permission for some towers was granted after the specified date, the project was completed before 31st March 2012. The Commissioner held that the delay in granting BU Permission did not disqualify the assessee from claiming the deduction under Section 80IB [10] of the Act. The Tribunal upheld this decision, stating that completion before the deadline was crucial for eligibility, regardless of the date of BU Permission issuance.

Issue 3: Disallowance of Deduction
The Assessing Officer also disallowed the deduction under Section 80IB [10] due to the sale of units to family members who already owned properties elsewhere. However, the Commissioner of Income Tax [Appeals] overturned this decision after finding no merit in the argument. The Tribunal affirmed this decision, allowing the deduction as claimed by the assessee.

In conclusion, the High Court dismissed the Tax Appeal by the Revenue, stating that as the project was completed before the deadline, the delay in BU Permission issuance did not affect the eligibility for deduction under Section 80IB [10] of the Act. The judgment emphasized the importance of project completion within the stipulated time frame for claiming tax benefits under the relevant provisions.