2022 (3) TMI 533 - HC - Income Tax

Deduction u/s 801B (10) - housing project is approved, with or without commercial user to the extent permissible under the Rules/Regulations - as per revenue deduction under Section 801B(10) is allowable only for a housing project and when the appellant had constructed a commercial cum residential blocks, they are not entitled for deduction - Whether Tribunal is right in law in holding that the appellant was not entitled to deduction under Section 80 IB of the Income Tax Act in respect of the housing project undertaken and constructed by it? - HELD THAT - Appellant submitted that the questions of law raised in these appeals were already decided in favour of the appellant by case CIT Vs. Sarkar Builders 2015 (5) TMI 555 - SUPREME COURT as held that when a housing project is approved, with or without commercial user to the extent permissible under the Rules/Regulations, then, deduction under Section 801B (10) would be allowed - if a project could be approved as a housing project having residential units with permissible commercial user, then it is not open to the income tax authorities to contend that the expression 'housing project' in Section 801B(10) is applicable to projects having only residential units. Also in Umakant Leasing and Financing Company vs. Deputy Commissioner of Income Tax 2012 (12) TMI 867 - GUJARAT HIGH COURT wherein it was observed, the assessee withdrew the appeal filed before Tribunal on the ground that they have already obtained relief by way of rectification order passed by the Commissioner of Appeal. Subsequently, the Tribunal allowed the appeal filed by the Department and set aside the rectification order The impugned orders passed by the Tribunal are set aside. The matters are remanded to the Tribunal for passing appropriate orders on merits and also in the light of the decisions referred hereinabove. Such exercise shall be completed by the Tribunal as expeditiously as possible, after providing opportunity of hearing to the appellant.

Summary

Issues Involved:
1. Correctness and validity of orders of the Income Tax Appellate Tribunal regarding deduction under Section 80 IB of the Income Tax Act for a housing project.
2. Restoration of an appeal withdrawn by the appellant before the Income Tax Appellate Tribunal.
3. Setting aside of the order of the Commissioner of Income-Tax (Appeals) by the Income Tax Appellate Tribunal regarding relief under Section 80IB(1) of the Income Tax Act.

Issue 1: Correctness and validity of orders of the Income Tax Appellate Tribunal regarding deduction under Section 80 IB of the Income Tax Act for a housing project:
The Appellant, a public limited company engaged in land development and construction, filed tax case appeals challenging the disallowance of deduction under Section 80IB(10) of the Income Tax Act for a housing project. The respondent Assessing Officer disallowed the deduction as the project included commercial and residential blocks. The Commissioner of Income Tax (Appeals) dismissed the appeal, but on a rectification petition, allowed the deduction. However, the Tribunal later set aside this order, stating that rectification was not permissible after dismissing the appeal. The Appellant argued that the project met the criteria for deduction as per Supreme Court and High Court decisions. The Court set aside the Tribunal's orders and remanded the matter for fresh consideration.

Issue 2: Restoration of an appeal withdrawn by the appellant before the Income Tax Appellate Tribunal:
The Appellant withdrew an appeal before the Tribunal after the Commissioner of Income Tax (Appeals) allowed a rectification petition. Subsequently, the Tribunal dismissed the appellant's plea to recall the withdrawal order. The Appellant relied on a High Court decision allowing the recall of withdrawal orders in similar circumstances. The Court did not dispute the applicability of the decision but remanded the matter to the Tribunal for further consideration.

Issue 3: Setting aside of the order of the Commissioner of Income-Tax (Appeals) by the Income Tax Appellate Tribunal regarding relief under Section 80IB(1) of the Income Tax Act:
The Tribunal set aside the Commissioner of Income Tax (Appeals) order granting relief under Section 80IB(1) of the Income Tax Act, stating that rectification post-appeal dismissal was impermissible. The Appellant filed a review petition, which was dismissed. The Appellant sought to recall the withdrawal of the appeal, but the Tribunal refused. The Court set aside the Tribunal's orders and directed a fresh consideration in light of relevant decisions.

In conclusion, the High Court of Madras remanded all appeals to the Tribunal for reconsideration, emphasizing the need to evaluate the cases in accordance with applicable legal precedents.