2019 (3) TMI 898 - HC - Income Tax

Court affirms assessee's deduction under Income Tax Act for 2007-2008, stresses statutory compliance

The court dismissed the appeal and ruled in favor of the assessee regarding the interpretation of Section 80IB(10) of the Income Tax Act, 1961 for the ... Deduction u/s 80-IB(10)- completion certificate was issued by Kolkata Municipal Corporation on 12th May, 2007 - Assessee claimed deduction in AY 2007-2008 - Department contention that deduction allowable in FY 2007-2008 - C.B.D.T. circular - instruction no.4 – 2009 dated 30th June, 2009 - The deduction can be claimed on a year to year basis where the assessee is showing profit from partial completion of the project in every year - assessee wanted the benefit only once. So, it could be given to him in any one of the four years in which the construction was under way till the year of obtaining the completion certificate - HELD THAT:- So, if it has been given in one of those years, no loss or prejudice has been caused to the revenue. We are least minded to entertain appeals which have theoretical significance and no practical significance -decided in favour of the assessee. Issues Involved:1. Interpretation of Section 80IB(10) of the Income Tax Act, 1961 for the assessment year 2007-2008.2. Timing of deduction eligibility under Section 80IB in relation to the completion certificate issued by the local authority.3. Compliance with municipal building rules in allowing claims under Section 80IB.Analysis:1. The primary issue in this case revolves around the interpretation of Section 80IB(10) of the Income Tax Act, 1961 for the assessment year 2007-2008. The court deliberated on whether the Income Tax Appellate Tribunal erred in allowing the deduction under this section, specifically in relation to the development and building of housing projects approved before March 31, 2007 by a local authority. The key consideration was the completion of construction within the stipulated time frame as per the section's provisions.2. The timing of the deduction eligibility under Section 80IB was a critical aspect analyzed by the court. The completion certificate issued by the Kolkata Municipal Corporation on May 12, 2007, raised a question regarding the assessment year in which the benefit should be availed. The Revenue objected to the benefit being taken in the financial year 2006-2007, while the respondent-assessee argued that the completion certificate was obtained within the required time frame, thus fulfilling the conditions of Section 80IB(10).3. Another issue addressed in the judgment pertained to the compliance with Rule 27 and 28 of the Kolkata Municipal Corporation Building Rules 2009 in allowing claims under Section 80IB. The court examined whether the Income Tax Appellate Tribunal erred in permitting the claims of the respondent/assessee in violation of these municipal rules, thereby questioning the sustainability of the Tribunal's order.In conclusion, the court dismissed the appeal and answered all formulated questions in the negative and in favor of the assessee. The judgment emphasized practical significance over theoretical considerations, highlighting the importance of adherence to statutory provisions and timelines in claiming deductions under Section 80IB of the Income Tax Act, 1961.