2016 (10) TMI 53 - HC - Income Tax

Disallowance of claim of the assessee under section 80IB - ITAT allowed the claim - Held that - Having heard learned counsel for the Revenue we notice that the Assessing Officer had material at his command to suggest that the two societies were situated at distance of nearly half a kilometer apart from each other, both at different locations and going by the material, at the command of the Assessing Officer were certainly not situated on a land forming common block. The Commissioner, without referring to such evidence, went by the recording of the land development permission which contained a condition that the owner would not be allowed to divide the land. Though this would be a relevant consideration it is not unknown that such conditions imposed by the Revenue authorities come in printed proforma and are in cyclostyled manner. Whether that by itself established that both the housing projects were developed on a land forming composite block building would be a matter of appreciation of materials on record which, in the present case, would also include the evidence at the command of the Assessing Officer suggesting that physically societies were situated far apart from each other. The Commissioner and the Tribunal did not advert to this evidence at all and thus, committed a serious error. Under the circumstances, let the matter be re-examined by the Appellate Commissioner, for which purpose, both the impugned orders are set aside and the appeals are placed back for fresh consideration and disposal in accordance with law before the Commissioner (Appeals).

Summary

Issues:
1. Interpretation of Section 80IB of the Income Tax Act for deduction claims.
2. Determination of whether two housing projects constitute a single project for tax purposes.
3. Assessment of evidence regarding the physical proximity and commonality of housing projects.
4. Evaluation of decisions by the Assessing Officer, Appellate Commissioner, and Tribunal in tax appeals.

Analysis:
1. The appeals involved a common background and the same assessee claiming deduction under Section 80IB of the Income Tax Act. The substantial question of law was whether the Appellate Tribunal correctly deleted the addition made on account of disallowance of the claim under section 80IB.
2. The respondent-assessee, engaged in construction, claimed deduction for two housing projects as a single project under Section 80IB(10). The Assessing Officer considered the projects separate based on a spot verification report, noting their physical distance and separate locations.
3. The Appellate Commissioner and Tribunal ruled in favor of the assessee, emphasizing common permissions and the inability to divide the land. However, the High Court found that the physical proximity of the projects, as evidenced by the Assessing Officer, was not adequately considered in the decisions.
4. The High Court set aside the previous orders, directing a fresh examination by the Appellate Commissioner to consider all evidence, including the physical separation of the housing projects. The appeals were dismissed, highlighting the need for a thorough review based on all available materials.

This detailed analysis of the judgment highlights the key legal issues, arguments presented, and the court's decision, providing a comprehensive overview of the case.