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2017 (4) TMI 401 - AT - Income TaxClaim of deduction u/s 80IB (10) - delay in getting BU permission - Held that - Although the assessee has filed for issuance of completion certificate to the local authority well before the stipulated dates i.e. 31.03.2008 except in assessment years 2009-10 wherein the relevant date is 31.03.2009 pertaining to the fourth project (supra), the same is held up because of technical reasons. We refer to hon ble jurisdictional high court s decision in Tarnetar Corporation (2012 (10) TMI 803 - GUJARAT HIGH COURT ) upholding this tribunal s order for assessment year 2006-07 wherein the project in question had been approved before 01.04.2004, the said assessee applied for BU permission to the local authority before 31.03.2008 which stood rejected followed by subsequent revised permission on 19.04.2009. Their lordships observe in said factual backdrop that delay in getting BU permission cannot be held to be fatal to Section 80IB(1) deduction claim as not every condition of the statute can be seen as mandatory in case the same stands substantially complied with. We are of the opinion in this factual and legal backdrop that we have to necessarily follow hon ble jurisdictional high court s decision even if the Revenue finds strong support of any hon ble non jurisdictional high court deciding the very issue against the assessee. We follow our detailed discussion on the issue of completion of assessee s residential projects in all the remaining for assessment years involving Revenue s as many appeals and assessee s cross objections hereinabove. We thus find no reason to reverse ld. CIT(A) s identical conclusion extracted in preceding paragraphs holding the assessee to have completed the residential projects before 31.03.2008 and 31.03.2009; as the case may be (supra). The Revenue s appeal fail.
Issues Involved:
1. Disallowance of Bombay Stock Exchange payment as penalty. 2. Treatment of assets written off as capital loss. 3. Rejection of Section 80IB(10) deduction claim. 4. Completion of residential projects before the stipulated dates for Section 80IB(10) deduction. Detailed Analysis: 1. Disallowance of Bombay Stock Exchange Payment as Penalty: The assessee challenged the CIT(A)’s order affirming the Assessing Officer’s disallowance of ?60,000/- paid to the Bombay Stock Exchange as a penalty. The CIT(A) held that if the assessee succeeded on the Section 80IB(10) deduction issue, the disallowance would only increase business income otherwise eligible for deduction. However, the tribunal found no merit in this contention and upheld the disallowance. 2. Treatment of Assets Written Off as Capital Loss: The assessee contested the CIT(A)’s confirmation of the Assessing Officer’s treatment of assets written off amounting to ?59,35,105/- as capital loss. The CIT(A) recorded the assessee’s concession, treating it as an instance of capital loss not eligible for the deduction. The tribunal upheld this treatment, finding no merit in the assessee’s contention. 3. Rejection of Section 80IB(10) Deduction Claim: The primary issue for adjudication was the assessee’s claim of Section 80IB(10) deduction amounting to ?2.79 crores for the assessment year 2005-06. The Assessing Officer had disallowed this deduction, arguing that the assessee was neither the owner of the land nor developed the projects itself. The CIT(A) affirmed this disallowance, citing that the assessee was merely a contractor and not a developer, and that the projects were not completed before the statutory deadline. The tribunal noted that the assessee's projects were approved before the amendments to Section 80IB(10) effective from 01.04.2005. The tribunal referred to multiple judgments, including those from the jurisdictional high court and the Supreme Court, which held that the amended provisions were prospective and not applicable to projects approved before 01.04.2005. The tribunal reversed the CIT(A)’s findings on the first five reasons, following the jurisdictional high court’s judgment. 4. Completion of Residential Projects: The tribunal addressed the issue of whether the assessee completed the projects before the stipulated dates. The assessee argued that the projects were completed before the deadlines, supported by the auditor’s certificates and other documents. The delay in obtaining completion certificates from the local authority was due to technical reasons beyond the assessee’s control. The tribunal referred to the jurisdictional high court’s decision in Tarnetar Corporation, which held that substantial compliance with the completion requirement was sufficient, and delays due to technical reasons should not disqualify the deduction. The tribunal found that the assessee had substantially complied with the completion requirement and allowed the deduction. Conclusion: - The assessee’s appeal ITA No.1787/Ahd/2011 was partly allowed, accepting the Section 80IB(10) deduction claim. - The Revenue’s appeals IT(SS)A Nos. 122 to 124 & 127/Ahd/2013 were dismissed. - The assessee’s cross objections CO Nos. 118 to 120 & 123/Ahd/2013 were dismissed as not pressed. [Pronounced in the open Court on this the 31st day of March, 2017]
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