2018 (6) TMI 754 - AT - Income Tax

Disallowing the claim of deduction u/s. 80IB(10) - income derived from Development of housing project - Gram Panchayat was not the local authority competent for sanction of plans of housing project - Held that - Following the judgement of High Court in case of PR. COMMISSIONER OF INCOME TAX, NAGPUR-1 VERSUS SWAPNASHILP DEVELOPERS 2016 (10) TMI 1031 - BOMBAY HIGH COURT approval granted by the Village Panchayat for the housing project to be as one granted by the local authority in accordance with the provisions of Section 80IB (10) of the Act - the approval by the gram panchayat was in order and suffices the need of approval by the competent authority - Decided in favor of assessee.

Summary

Issues:
1. Disallowance of deduction u/s.80IB(10) of IT Act, 1961.
2. Assessment of interest u/s 234A, 234B & 234C of Income Tax Act, 1961.

Issue 1: Disallowance of deduction u/s.80IB(10) of IT Act, 1961:

The appeal concerns the disallowance of a deduction under section 80IB(10) of the Income Tax Act, 1961. The assessee, engaged in civil construction for housing projects, claimed the deduction but faced disallowance by the Assessing Officer due to defects in Form No. 10CCB and the lack of proper sanction from the competent authority. The Assessing Officer contended that the Gram Panchayat was not the competent authority for approving the housing project, leading to the disallowance. The Commissioner of Income Tax (Appeals) upheld this decision. However, the assessee argued that the Gram Panchayat was the local authority and competent for sanctioning the project, citing various legal precedents and decisions in support. The Tribunal noted that the assessee fulfilled all conditions for the deduction, with approvals from the Gram Panchayat, similar to a previous case where such approval was deemed sufficient by the Hon'ble jurisdictional High Court. Consequently, the Tribunal set aside the lower authorities' orders and ruled in favor of the assessee, allowing the appeal.

Issue 2: Assessment of interest u/s 234A, 234B & 234C of Income Tax Act, 1961:

The assessee also contested the assessment of interest under sections 234A, 234B, and 234C of the Income Tax Act, 1961. The Assessing Officer levied interest, which the assessee denied liability for, arguing that the interest was unjustified and unwarranted. However, the judgment does not delve into this issue in detail, as the focus primarily remained on the disallowance of the deduction under section 80IB(10) of the Act.

In summary, the Appellate Tribunal, Nagpur, in the cited judgment, addressed the disallowance of a deduction under section 80IB(10) of the Income Tax Act, 1961. The Tribunal ruled in favor of the assessee, emphasizing that the approval from the Gram Panchayat sufficed as the competent authority's sanction. The decision was supported by legal precedents and the judgment of the Hon'ble jurisdictional High Court. The judgment did not extensively cover the issue of interest assessment under sections 234A, 234B, and 234C of the Act.