2020 (12) TMI 59 - HC - Income Tax

High Court affirms denial of deduction under Section 80IB; emphasizes compliance with prescribed conditions

Devashri Nirman LLP., Devashri Nirman Ltd. Versus The Assistant Commissioner of Income-Tax, Panaji Goa Union of India,

Devashri Nirman LLP., Devashri Nirman Ltd. Versus The Assistant Commissioner of Income-Tax, Panaji Goa Union of India, - [2020] 429 ITR 597 (Bom) Issues:1. Common issue in multiple appeals related to the denial of deduction under Section 80IB of the Income Tax Act.Analysis:The judgment delivered by the High Court of Bombay pertained to various Tax Appeal cases involving the denial of deduction under Section 80IB of the Income Tax Act. The appeals were consolidated as the issue was common across different Assessment Years. The primary challenge was against the judgment and order of the Income Tax Appellate Tribunal (ITAT) regarding the denial of deductions for specific residential units in housing projects. The appellants and the Revenue both filed appeals, with some of the Revenue's appeals being withdrawn due to tax effect considerations.The core issue revolved around the interpretation of Section 80IB(10) of the IT Act, specifically regarding the compliance of residential units with the prescribed conditions. The appellants argued that approvals were obtained for the housing projects with units under 1500 square feet, and any subsequent combination of units should not affect the deduction eligibility. The Revenue contended that certain units exceeded the specified area, leading to a breach of conditions for deduction under Section 80IB(10).The Commissioner (Appeals) had directed a proportionate deduction, which was challenged by both parties before the ITAT. The ITAT ultimately dismissed all appeals, prompting further arguments before the High Court. The appellants relied on various High Court decisions supporting the concept of proportionate deductions under Section 80IB(10), emphasizing compliance with primary conditions.The High Court upheld the decisions of the Commissioner (Appeals) and the ITAT, citing consistency with rulings from other High Courts. It highlighted the deliberate omission of specific language in the legislation, indicating the allowance of proportionate deductions. The judgment distinguished previous cases cited by the Revenue, clarifying their inapplicability to the current matter.Consequently, the High Court dismissed the Revenue's appeals and accepted the appellants' statement not to press their appeals, subject to retaining rights for collateral proceedings. The final order dismissed specific appeals, clarified the appellants' rights for future contentions, and made no ruling on costs. The judgment provided a comprehensive analysis of the legal interpretations and precedents, resolving the issues raised in the Tax Appeals effectively.