Principal Commissioner of Income Tax Vadodara 1 V. Shreeji Associates

TAXAP/864/2018

AI Insights

The case revolves around the disallowance of a deduction claimed under Section 80IB(10) of the Income Tax Act, 1961 by Shreeji Associates for the Assessment Year 2010-2011. The Assessing Officer initially disallowed the deduction, citing violations of clauses (e) and (f) of Section 80IB(10), which pertain to the allotment of residential units. The CIT (Appeals) later restricted the disallowance to five residential units where breaches were confirmed. However, the ITAT completely deleted the disallowance, leading to the Revenue's appeal to the Gujarat High Court. The main legal contention was whether the amendments to Section 80IB(10) applied to the transactions in question, which occurred before these amendments were enacted.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 798584 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 17-07-2018
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: VARUN PATEL
• Keywords: Deduction; Income Tax; Residential Units; Violation; Finance Act, 2009
• Section: 80IB(10)

Judgement Text

"C/TAXAP/864/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 864 of 2018 With R/TAX APPEAL NO. 865 of 2018 ================================================================ PRINCIPAL COMMISSIONER OF INCOME TAX VADODARA 1 Versus SHREEJI ASSOCIATES ================================================================ Appearance: MR.VARUN K.PATEL(3802) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE M.R. SHAH Sd/- and HONOURABLE MR.JUSTICE A.Y. KOGJE Sd/- Date : 17/07/2018 COMMON ORAL ORDER (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1. As common question of fact and law arises in both the Appeals and as such arise out of the impugned common order passed by the learned Tribunal, both the Appeals are decided and disposed of by this common order. 2. Feeling aggrieved and dissatisfied with the impugned common order passed by the learned Income Tax Appellate Tribunal (ITAT), Ahmedabad “A” Bench dated 28.06.2017 passed in ITA No.2187/AHD/2014 (Assessee’s Appeal) and ITA No.1788/Ahd/2013 Page 1 of 6 C/TAXAP/864/2018 ORDER (Revenue’s Appeal) for the Assessment Year : 2010- 2011, by which the learned Tribunal has disallowed the said Appeal preferred by the Assessee and dismissed the Appeal preferred by the Revenue and has deleted the entire disallowance for deduction under Section 80IB(10) of the Income Tax Act, 1961 (hereinafter referred to in short as ‘the Act’), the Revenue has preferred the present Tax Appeals with the following proposed question of law :- “(a) Whether on the facts and in circumstances of the case, the learned ITAT has erred in law and on facts in deleting the entire disallowance of deduction under section 80IB(10) of the Act even though the assessee had violated the provisions of clause (e) & (f) of section 80IB(10) of the Income Tax Act by allotting more than residential units to an individual and also to members of the same family?” 3. The Assessee filed the return of income for the Assessment Year : 2010-2011 declaring the total income at Nil after claiming deduction of Rs.1,66,58,005/= under Section 80IB(10) of the Act. That during the assessment proceedings, the Assessing Officer noticed that more than one residential unit was alloted to an individual. It was further noticed that many residential units were alloted to members of the same family. Page 2 of 6 C/TAXAP/864/2018 ORDER Therefore, the Assessing Officer was of the opinion that the assessee had violated the provisions of sub-sections (e) and (f) of Section 80IB(10) of the Act. Therefore, a show-cause notice was issued to the assessee and the assessee was directed to show-cause as to why their claim of deduction under Section 80IB(10) of the Act should not be disallowed? The assessee responded to the same stating that most of the units were booked prior to the insertion of the clauses (e) and (f) which were inserted vide Finance Act, 2009 with effect from 01.04.2010. However, the Assessing Officer did not accept the said submission mainly on the ground that most of the amount towards sale consideration was paid during the year under consideration more particularly, after the insertion of clauses (e) and (f) of Section 80IB(10) of the Act. Therefore, the Assessing Officer disallowed the deduction claimed under Section 80IB(10) of the Act of the assessee and accordingly, added Rs.1,66,58,005/= to the total income of the assessee. 4. Feeling aggrieved and dissatisfied with the disallowance of the deduction claimed under Section 80IB(10) of the Page 3 of 6 C/TAXAP/864/2018 ORDER Act, the assessee preferred an Appeal before the learned CIT (Appeals). Assuming that amendment under Section 80IB(10) of the Act and more particularly, insertion of clauses (e) and (f) of Section 80IB(10) of the Act shall be made applicable in that case also, the breach was with respect to five residential units and therefore, the learned CIT (Appeals) restricted the disallowance under Section 80IB(10) of the Act with respect to those 5 residential units for which, the breach was found and therefore, restricted the disallowance to the aforesaid extent. 5. Feeling aggrieved and dissatisfied with the order of the learned CIT (Appeals), both the Revenue as well as the Assessee were before the learned Tribunal. That by the impugned order, the learned Tribunal allowed the Appeal preferred by the Assessee and has dismissed the Appeal preferred by the Revenue by deleting the entire disallowance of the deduction claimed under Section 80IB(10) of the Act and hence, the Revenue is before this Court by way of the present Appeals with the aforesaid proposed question of law. Page 4 of 6 C/TAXAP/864/2018 ORDER 6. We have heard learned Advocate Mr. Varun K. Patel appearing on behalf of the appellant – Revenue, at length. 7. It is mainly contended on behalf of the Revenue that most of the amount of the sale consideration were paid during the year under consideration and more particularly, after insertion of clauses (e) and (f) of Section 80IB(10) of the Act. Therefore, sub-sections (e) and (f) of Section 80IB(10) of the Act shall be applicable and therefore, the assessee shall not be entitled to deduction as claimed under Section 80IB(10) of the Act. However, considering the material on record it appears that the residential units were sold prior to the insertion of clauses (e) and (f) of Section 80IB(10) of the Act. 8. It may be that the part sale consideration might have been received during the year under consideration, more particularly, after insertion of clauses (e) and (f) of Section 80IB(10) of the Act, however, as rightly observed by the learned Tribunal, at the time, when the residential units were sold by the Assessee, i.e. prior to insertion of clauses (e) and (f) of Section 80IB(10)of the Page 5 of 6 C/TAXAP/864/2018 ORDER Act, the assessee did not visualize the amendment which is likely to come and/or insertion of sub-sections (e) and (f) of Section 80IB(10) of the Act. 9. Under the circumstances, the learned Tribunal has rightly deleted the disallowance of the claim under Section 80IB(10) of the Act. We are in complete agreement with the view taken by the learned Tribunal and in the facts of the case, no interference of this Court is called for. 10. Therefore, the present Appeals deserve to be dismissed and are accordingly dismissed. Sd/- (M.R. SHAH, J) Sd/- (A.Y. KOGJE, J) Caroline Page 6 of 6 "