2025 (7) TMI 1743 - AT - Income Tax

Section 80IB(10) Deduction Denied as Res Judicata Doesn't Apply Across Assessment Years

C.G Buildcon Private Limited Versus The Income Tax Officer, Ward-3 (1), Raipur

The ITAT Raipur upheld the disallowance of deduction under section 80IB(10) for A.Y. 2009-10, rejecting the assessee's plea to apply res judicata based on ... Disallowance u/s 80IB(10) - Effect of principles of res-judicata - assessee has contended that just because the allowability of deduction was examined by the A.O for A.Y.2008-09, therefore such allowablity was also applicable for A.Y.2009-10 as well - HELD THAT:- Once a substantive view has been taken by the Tribunal denying the benefit of Section 80IB (10) of the Act to the assessee and confirming the order of the Ld.CIT(Appeals), the assessee cannot impose the principles of res-judicata by submitting that just because for A.Y.2008-09 such allowability of deduction was examined by the A.O, therefore, also for A.Y.2009-10, it has to be also allowed to the assessee. Such contention raised by the assessee is absolutely misplaced, devoid of merit, perverse and does not contain any legal validity. As in the case of BSNL [2006 (3) TMI 1 - SUPREME COURT] it is held that res-judicata shall not apply to the matter pertaining to tax for different assessment year. There are catena of cases wherein it has been held that rationale for non-applicability of principles of res-judicata to Income Tax proceedings as the fact is that there cannot be any estoppel against a statute and tax laws are subject to change annually. Therefore, the legal scenario is that the facts and circumstances in each of the assessment year has to be examined and dealt with separately. In a very initial case of Delhi Golf Club Limited Vs. New Delhi Municipal Corporation [1997 (7) TMI 706 - DELHI HIGH COURT] it was held that public interest would be better served by by-passing the rule of res-judicata and taxing the property in a year of assessment if the incidence of tax be rightly attracted under the law and ignoring the factum of its having escaped in an earlier year though by a conscious and deliberate decision. It was the decision wherein the Hon’ble Court had observed that so far as the tax laws are concerned, public interest is involved and, in such scenario, even if in any year certain chargeability was not brought to tax, however, in the subsequent year it can be brought to tax thereby by-passing the principles of res-judicata since it would be the decision taken in the greater interest of the country as a whole. In a famous decision of Radhasoami Satsang Vs. CIT [1991 (11) TMI 2 - SUPREME COURT] it has been held that the principles of res-judicata does not apply in the Income Tax proceedings since each assessment year is independent unit in itself and therefore, what decided in one year may not apply in the following year. The observation of the Ld. CIT(Appeals) was correct for the fact that the assessee company had wrongly claimed that it had filed with Municipal Corporation, Raipur, an application for obtaining a “completion certificate” of its housing project vide letter dated 25.08.2007. That finally the Tribunal upheld the view taken by the CIT(Appeals) holding that since the “completion certificate” issued for the housing project of the assessee company, viz., “C.G. Heights” was beyond the prescribed period for completion of the project for getting benefit u/s. 80IB(10) of the Act, therefore, the Ld.CIT(Appeals) had rightly held that the assessee company was ineligible for claim of deduction under the said statutory provision. Decided against assessee. ISSUES: Whether the reopening of assessment under Section 147 of the Income Tax Act was justified on the basis of fresh and tangible material, or was it a mere change of opinion'Whether the Assessing Officer (AO) had valid jurisdiction to reopen the assessment, including proper authority approval under Section 151 and correct AO assuming jurisdiction'Whether the conditions for claiming deduction under Section 80IB(10) were satisfied, specifically regarding the timing and issuance of the completion certificate by the competent local authority'Whether principles of res judicata apply to allow deduction under Section 80IB(10) for one assessment year based on allowability in a different assessment year'Whether the CIT(A) erred in confirming the disallowance of deduction under Section 80IB(10) based on the AO's examination in an earlier assessment year? RULINGS / HOLDINGS: The reopening under Section 147 was upheld as justified since the AO had 'undoubtedly a fresh and tangible material' in the form of information gathered during assessment for AY 2012-13 and the Inspector's report indicating non-availability of the completion certificate within the prescribed period, negating the contention of 'mere change of opinion.'The AO's jurisdiction to reopen and reassess was valid, including the assumption of jurisdiction by ITO Ward 3(1) Raipur pursuant to relevant notifications and instructions, and there was no valid objection on record regarding lack of approval under Section 151; hence, no infirmity in jurisdiction was found.The conditions for claiming deduction under Section 80IB(10) were not met because the completion certificate issued by the Municipal Corporation was dated 24.08.2016, well beyond the prescribed time limit. The date of completion certificate is the operative date for completion under Section 80IB(10), not the date of application or other certificates. The project was approved on 18.03.2005, requiring completion by 31.03.2009, which was not complied with.The claim that allowability of deduction under Section 80IB(10) for AY 2008-09 should apply to AY 2009-10 was rejected as principles of res judicata do not apply to income tax proceedings, since each assessment year is a separate unit and facts and circumstances vary annually.The CIT(A) did not err in confirming the disallowance of deduction under Section 80IB(10) as the AO had examined the allowability in the first year of claim and subsequent facts for AY 2009-10 warranted denial of deduction. RATIONALE: The Court applied the provisions of the Income Tax Act, specifically Sections 80IB(10), 143(3), 147, and 151, and relevant judicial precedents including the Supreme Court's ruling in GKN Driveshafts (India) Ltd. vs. ITO regarding procedure for reopening and approval requirements.The statutory framework under Section 80IB(10) mandates that the 'date of completion of construction' is the date on which the completion certificate is issued by the local authority, making the timing of issuance critical for eligibility of deduction.The Court relied on documentary evidence including the Municipal Corporation's completion certificate and correspondence to determine the actual date of completion certificate issuance, rejecting earlier claimed dates unsupported by independent evidence.The Court reaffirmed the settled legal principle that reopening assessments cannot be based on mere change of opinion but must be supported by fresh and tangible material, which was satisfied here by facts discovered during AY 2012-13 assessment and corroborated by inspection reports.The Court emphasized that principles of res judicata do not apply to income tax assessments due to the independent nature of each assessment year and the public interest in correct taxation, citing authoritative Supreme Court decisions.No procedural infirmity was found in the AO's jurisdiction or approval process for reopening, as the objections regarding lack of approval under Section 151 were not raised in the proper manner or at the proper stage, and jurisdiction was vested by relevant notifications.