TaxTMI 
TaxTMI 
2016 (5) TMI 332
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....e assessee in its return for the A.Y 2008-09 be apportioned and made chargeable to tax in the AYs 2005-06, 2006-07 and 2007-08 at Rs. 24,96,993/-, Rs. 1,13,94,494/- and Rs. 2,56,97,153/- respectively. 3) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is correct in law in allowing the assessee to claim deduction u/s 80IB during the proceedings taken up by the AO for the AYrs 2005-06, 2006-07 and 2007- 08 4) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is correct in holding that there was no income chargeable to tax for the year under consideration with the direction of recomputation of book profit u/s. 115JB." 2. Grounds No. 1 to 3 are common in this appeal of Revenue, hence, we club them together to pass a consolidate order. Facts of the case are that assessee in the present case is a Private Limited Company and engaged in the business of development of housing complexes at different sites under the jurisdiction of Jamshedpur since the financial year 2004-05. During the year under consideration, assessee has declared profit at NIL after claiming the deduction under section 80IB(10) of the Act for an amount....
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....not yet fully completed and completion certificate is not available although the project is duly completed and completion certificate is obtained at a later date within the specified period of five years. Obviously the very purpose of Sec. 80IB is defeated if these profits do not qualify for deduction. Therefore, it can be said that Sec. 80IB envisages a situation where profit is considered to be arising only after the project is completed. Please note that Department Instruction No. 4/2009 has been introduced on 30.06.2009 much after the accounts were finalized and income tax return for the AY 2008-09 was submitted. As per the said departmental instruction where profit is booked on year-to-year basis on partial completion of the project, deduction is granted but to be withdrawn if found later that the project is not completed within the specified period. As per Sec. 145 of the Act, income chargeable under the head "profits & gains of business" shall be subject to accounting standards notified by the Central Government from time to time. RELIEF SOUGHT THROUGH THIS APPEAL 1. Profit declared in the profit & loss account be considered as notional profit or book profit subj....
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....geable to tax in the assessment years 2005- 06, 2006-07 and 2007-08 at Rs. 24,96,993/-, Rs. 113,94,494/- and Rs. 2,56,97,153/- respectively being the prior period items as a result of errors or omissions ins preparation of financial statements of respective previous years. I, therefore, direct the Assessing Officer to re-compute the income of the assessment year 2008-09 based on the allocation stated above. Section 80AC of the Act has come into force w.e.f. assessment year 2006-07. The Appellant has not disputed the disallowance of claim u/s. 80-IB due to application of Section 80AC for not filing the return in time and hence no claim of deduction u/s. 80-IB will be allowed in respect of the income assessable for the assessment year 2008-09. However, the AO is giving liberty to take appropriate action in assessment years 2005-06, 2006-07 and 2007-08 in accordance with IT Act, 1961 for the income of Rs. 24,96,993/- Rs. 1,13,94,494/- and Rs. 2,56,97,153/- respectively and a similar liberty is granted to assessee to make any legal claim regarding admissibility of deduction under sec. 80IB during the proceedings taken up by the AO in AYs 2005-06, 2006-07 & 2007-08 as per law. The Appel....
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....arding the administrative instructions issued for the guidance of the Income Tax Officers on the matters pertaining to the assessments. The assessee has relied on the following decisions in support of his claim. The law is well settled that tax authorities entrusted with the power to make assessment of tax discharge quasi judicial functions and they are bound to observe principles of natural justice in reaching their conclusions State of Kerala v. K.T. Shaduli Yusuff (1977) 39 STC 478, 481 (SC). The, demands of natural justice are not met even if the very person proceeded against has furnished the information on which the action is based, if it is furnished in a casual way or for some other purpose S.L.Kapoor v. Jagmohan AIR (1981) 136, 145 (SC). Principles of natural justice demand that there should be a fair determination of a question by quasi-judicial authorities. Arbitrariness will certainly not ensure fairness. If giving a mere opportunity to show cause and to explain would satisfy the principles of natural justice, the notice to show cause becomes an empty formality signifying nothing, for, after issuing the notice to show cause, the authority can decide according to his whi....