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II. Direct Taxes Case Laws:
1. PCIT Vs. Adani Gas Ltd., Tax Appeal No. 900 of 2016, Date of Order: 11.01.2017, High Court of Gujarat
Issue:
Where preliminary expenditure u/s 35D of the Income Tax Act, 1961 is
allowed for first two years, whether it can be disallowed in the
subsequent years?
Held: No
Brief facts:
The assessing officer has allowed the preliminary expenses claimed by
assessee u/s 35D of the Act for the first two years. However, the AO
has disallowed amount of Rs.10,28,028/- claimed u/s 35D of the Act in
the subsequent assessment year. The Hon’ble ITAT has deleted the
disallowance. Being aggrieved by that, the revenue has preferred an
appeal with the Hon’ble High Court.
Held:
The Hon’ble High Court has placed reliance on the case of Shasun
Chemicals & Drugs Ltd vs. CIT reported in (2016) 388 ITR 1 (SC),
where the Hon’ble Supreme Court had held that, the issue was with
respect to claim under Section 35 D of the Act and it was found that
expenses claimed by the assessee for first two assessments years were
allowed by the Assessing Officer, the Assessing Officer in the
subsequent assessment year could not have disallowed the same. Under the
circumstances, no error has been committed by the learned Tribunal in
deleting the disallowance of preliminary expenditure under Section 35 D
of the Act.
Relying on the above decision of the Hon’ble Supreme Court, the
Tribunal was correct in holding that, deleting the disallowance of
Rs.10,28,028 being the preliminary expenditure under Section 35 D of the
Act.
The appeal of revenue was dismissed.
(Please click here for judgment)
2. M/s. Mahavir Enterprises Vs. PCIT, I.T.A. No. 920/Mum/2016, Date of Judgment: 28.12.2016, ITAT - Mumbai
Issue:
Whether the construction of even one building constituting several
units would serve the purpose of definition of 'Housing Project' to
avail the deduction u/s 80IB(10)?
Held_Yes
Brief Facts:
The assessee is a partnership firm engaged in the business of
developing a housing project called ‘Balaji Gardern’ claiming deduction
under section 80IB(10) of the Act. The assessee had completed Buildings
No.2 & 5 in the above project and the resultant profit has been
subject to the claim of deduction under section 80 IB(10) of the Act.
CIT contended project ‘Balaji Garden’ consisted of total nine buildings
and that as per the provisions of section 80IB(10) of the Act, assessee
was required to complete the said project by 31/03/2012, but for some of
the buildings, the final completion certificate was not received
before this date.
Held:
A perusal of section 80IB(10) of the Act reveals that the expression
‘housing project’ has not been defined. The assessee firm is justified
in considering the group of Buildings No.2 & 5 in the ‘Balaji
Garden’ complex as a ‘project’ for the purposes of claim of deduction
under section 80 IB(10) of the Act by placing reliance on the judgement
of High Court of Bombay in case of Vandana Properties where it was
stated that the provisions of section 80 IB(10) of the Act envisage that
construction of even one building with several residential units of the
size not exceeding 1000 sq.fts would constitute a ‘housing project’ for
the purposes of availment of benefits under section 80 IB(10) of the
Act.
The CIT
misdirected himself on the issue as to whether the other buildings have
been completed within the time frame is not at all relevant to evaluate
assessee’s claim for deduction under section 80IB(10) of the Act in the
instant year. Moreover, in so far as the said project comprising of
Buildings No.2 & 5 is concerned, the same has been completed on
19/03/2010, when assessee’s architect submitted application to the local
authority for issuance of Occupancy Certificate. Considered in this
light, it has to be understood that the completion of construction of
the instant housing project is within the period stipulated in section
80 IB(10)(a)(iii) of the Act r.w. Explanation (ii) thereof. Thus, on
this aspect, no reason to uphold the stand of the CIT.
The appeal of the assessee was allowed.
(Please click here for judgment)
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