2014 (6) TMI 258 - AT - Income Tax

Deletion of penalty u/s 271(1)(c) of the Act Claim of deduction u/s 80IB of the Act Addition in quantum appeal set aside - Held that - Following Kamleshkumar Gandalal Shah C/o. Mehta Lodha & Company Versus ITO, Ward-9(2) Ahmedabad 2013 (11) TMI 726 - ITAT AHMEDABAD - CIT(A) observed that the assessee has not properly utilized the area of the land and has not developed the area of land, because, as per permissible FSI, more number of residential units in multistoried buildings could have been constructed Relying upon CIT Vs. Radhe Developers 2011 (12) TMI 248 - GUJARAT HIGH COURT - lower authorities were not justified in disallowing the claim of deduction u/s 80IB of the Act the AO is directed to allow deduction u/s 80IB(10) of the Act - in the quantum appeal the addition has been deleted, thus, the penalty does not survive Decided against Revenue.

Summary

Issues:
Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act for Assessment Years 2006-07 & 2007-08.

Analysis:
The appeals by the Revenue were directed against the orders of the Commissioner of Income Tax (Appeals) for the same assessee, both dated 03/08/2012 for AYs 2006-07 & 2007-08. The Revenue challenged the deletion of penalties under section 271(1)(c) of the Act. The counsel for the assessee argued that since the Tribunal had already deleted the additions in the quantum appeals, the penalties should not stand. The Tribunal had previously ruled in favor of the assessee regarding the disallowance of deduction under section 80IB of the Act, citing land ownership and development issues. The Tribunal held that the lower authorities were not justified in disallowing the deduction and directed the AO to allow the deduction claimed by the assessee. As a result, the penalties were deemed not applicable due to the deletion of additions in the quantum appeals.

The Tribunal referred to previous decisions and established that the assessee was the rightful owner of the land for the housing project and had fulfilled the requirements for deduction under section 80IB of the Act. The Tribunal emphasized that the proper utilization of the land as per FSI regulations was not a mandatory requirement for claiming the deduction. The Tribunal overturned the lower authorities' decisions and directed the AO to allow the deduction under section 80IB(10) as claimed by the assessee. Consequently, the penalties imposed by the Assessing Officer were deemed unwarranted due to the Tribunal's ruling in the quantum appeals.

In conclusion, the Tribunal dismissed the Revenue's appeals for AYs 2006-07 & 2007-08, as the penalties under section 271(1)(c) were no longer applicable following the Tribunal's decision in the quantum appeals. The Tribunal upheld the assessee's position regarding the deduction under section 80IB of the Act, based on land ownership and development considerations, thereby rendering the penalties invalid in light of the quantum appeal outcomes.