2022 (5) TMI 369 - AT - Income Tax

Deduction u/s 80IB - sale of housing project/unit as per corresponding joint venture agreement - HELD THAT - We make it clear that the learned counsel could hardly rebut the fact that the assessee had not raised any impugned 80IB deduction claim by filing Section 139(1) return within the due date prescribed in light of Section 80A(5) r.w.s. 80(a)(c) of the Act. We make it clear that Section 80A(5) postulates that no deduction under Chapter VI shall be allowed wherein the assessee concerned fails to make a claim in its return of income. This is coupled with the latter provision envisaging such a return is to be filed on or before the due date specified under Section 139(1) of the Act. There is further no issue that both these statutory provisions incorporate the clinching expression shall only. Meaning thereby that filing of a return on or before the date specified under Section 139(1) raising the impugned deduction claim very much forms a mandatory condition for the purpose of claiming Section 80IB(10 ) deduction. We thus adopt stricter interpretation in light of the Commissioner of Customs vs. Dilip Kumar 2018 (7) TMI 1826 - SUPREME COURT to affirm the learned lower authorities action disallowing the assessee s Section 80IB(10) deduction in principle. Hon ble jurisdictional high court s recent decision in EBR Enterprises vs. Union of India 2019 (6) TMI 484 - BOMBAY HIGH COURT has also decided the instant issue against the assessee and in department s favour that no deduction under Chapter VI-C is admissible in absence of a Section 139(1) return raising the corresponding claim. Mr. Hari Krishan further made a very valiant attempt to buttress the point that when the Assessing Officer raises a particular issue in scrutiny in seeking to add an additional head of income/disallowance, as the case may be, the concerned assessee can very well raise its fresh deduction claim, if admissible in law. We find no merit in assessee s instant argument as its case is hit by the foregoing statutory embargo ie Section 80A(5) r.w.s. 80C of the Act having overriding effect over all general provisions. We accordingly reject the assessee s foregoing arguments to hold that its impugned Section 80IB(10) deduction is not allowable in law. Income derived from the foregoing housing project ought to be assessed under the head capital gains wherein the cost of acquisition is nil only - The same is going against the assessee s stand adopted all along that he is a developer having borne 20% risk in the housing project in the nature of adventure in real estate business. His computation has also treated this income as business income only. That being the case, we fail to understand as to how the assessee would be assessed as merely an investor in the land giving rise to the corresponding capital gains as prayed before us in the additional grounds. We accordingly reject assessee s instant additional ground as well as evidence since not relevant to the issue of assessment of its alleged business income sought to be claimed as eligible for Section 80IB(10) deduction. The assessee fails in all of his latter arguments as well

Summary

Issues:
1. Denial of Section 80IB(10) deduction for income from a housing project.
2. Claiming the income under the head "capital gains" with a cost of acquisition of "Nil".

Issue 1: Denial of Section 80IB(10) Deduction:
The appellant's primary grievance was the denial of Section 80IB(10) deduction amounting to Rs.3,76,98,194 derived from a housing project/unit under a joint venture agreement with M/s. Raviraj Realties. The appellant argued that the income should be treated as capital gains with a cost of acquisition of "Nil" due to ancestral land granted under an "Inam" by the ruling clan. The Assessing Officer disallowed the deduction under Section 80IB(10) citing non-compliance with conditions and lack of supporting documents. The appellant contended that the deduction should be allowed based on the claim made by M/s. Raviraj Realties under the same provision. However, the Tribunal upheld the lower authorities' decision, emphasizing the mandatory requirement of filing a return within the due date specified under Section 139(1) for claiming Section 80IB(10) deduction. The Tribunal referred to relevant legal precedents and dismissed the appellant's arguments, affirming the disallowance of the deduction.

Issue 2: Claiming Income as Capital Gains:
The appellant sought to assess the income from the housing project under the head of capital gains with a cost of acquisition of "Nil." The appellant's argument was based on being a developer with a stake in the project, akin to a business income treatment. However, the Tribunal rejected this argument, noting the appellant's consistent portrayal as a developer with business income. The Tribunal found the appellant's attempt to reclassify the income as capital gains contradictory to their previous stance and rejected the additional ground and evidence presented. The Tribunal held that the appellant's claim for assessment under the head of capital gains was not relevant to the issue of business income eligible for Section 80IB(10) deduction. Consequently, the Tribunal dismissed the appeal on these grounds.

In conclusion, the Appellate Tribunal upheld the denial of Section 80IB(10) deduction and rejected the appellant's attempt to assess the income from the housing project as capital gains. The Tribunal emphasized the mandatory requirement of filing a return within the due date for claiming deductions and found no merit in the appellant's arguments. The appeal was ultimately dismissed on the basis of these findings.