2016 (10) TMI 503 - HC - Income Tax

Benefit of deduction under Section 80IB - Held that - In the present case, the Revenue does not dispute the entitlement of respondent assessee to the benefit of deduction under Section 80IB of the Act. In the result, even if, the stand of the Revenue is accepted in this case and the expenditure claimed is disallowed for not having deducted tax at source, the only result would be that the disallowed expenditure would be added to the total income of the respondent assessee. However, this additional income (arising on disallowance of expenditure) undisputedly would also be entitled to 100% deduction from tax under Section 80IB(10) of the Act.

Summary

Issues Involved:
1. Challenge to the order of the Income Tax Appellate Tribunal for Assessment Year 2006-07 under Section 260A of the Income Tax Act, 1961.
2. Interpretation of provisions related to deduction under Section 80IB(10) of the Income Tax Act, 1961.
3. Application of amended provisions under Section 80IB(10)(d) w.e.f. 01.04.2005.
4. Disallowance made under Section 40A(ia) as part of eligible profit for computing deduction under Section 80IB(1).

Analysis:
1. The appellant challenged the Tribunal's order regarding the deduction under Section 80IB(10) of the Income Tax Act. The first issue raised was whether the terrace and canopy should be included as part of the residential unit for the deduction. It was concluded that the issues were decided against the Revenue in previous cases, and hence, no substantial question of law arose.
2. The second issue was related to the application of amended provisions under Section 80IB(10)(d) from 01.04.2005. The Tribunal held that the amended provisions would not be applicable if the construction was commenced before that date with approved plans. As the Revenue did not dispute the entitlement of the respondent to the deduction, the question was deemed academic and not entertained.
3. The third issue concerned the disallowance made under Section 40A(ia) for computing the deduction under Section 80IB(1). It was clarified that even if the disallowed expenditure was added to the total income, it would still be entitled to 100% deduction under Section 80IB(10). As the Revenue did not dispute the respondent's entitlement to the deduction, this issue was also not entertained.
4. Ultimately, the appeal was dismissed with no order as to costs, as the questions raised did not give rise to any substantial question of law based on the facts and circumstances of the case.