THE PR. COMMISSIONER OF INCOME TAX, GURGAON vs. M/S ORBIT INFRASTRUCTURE PVT. LTD.

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ITA/332/2019HC Punjab & HaryanaPHHC01075649201921 January 2020Author: MR. JUSTICE AJAY TEWARI,MR. JUSTICE AVNEESH JHINGAN3 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose from the order of the ITAT. The Tribunal had confirmed the finding of the CIT(A), who had meticulously examined the evidence presented by the assessee. This evidence, including certification from the Ministry of Tourism, customer lists, and banking transactions, successfully demonstrated that the hotel was functional and operational. The ITAT, after considering this entire evidence, agreed with the CIT(A) that the assessee had proven its eligibility for the deduction under Section 80ID. Consequently, the High Court found no error in the ITAT's decision to delete the addition made by the AO. The appeals filed by the Revenue were dismissed.

What were the facts?

The Revenue, represented by the Pr. Commissioner of Income Tax, Gurgaon, filed two appeals (ITA-332-2019 and ITA-312-2019) against the order of the Income Tax Appellate Tribunal (ITAT), Delhi Bench "E", New Delhi, dated 25.9.2018. These appeals pertain to assessment years 2008-09 and 2009-2010. The core issue revolves around a deduction claimed by the assessee, M/s. Orbit Infrastructure Pvt. Ltd., under Section 80ID of the Income Tax Act, 1961. The Assessing Officer (AO) disallowed a deduction of Rs. 5,51,66,956/- because the hotel was shown as 'under construction' in the balance sheet and the completion certificate was deemed not genuine. The Commissioner of Income Tax (Appeals) [CIT(A)] reversed the AO's decision after reviewing evidence like Ministry of Tourism certification, customer lists, and banking transactions, concluding the hotel was operational.

What were the issues?

1. Whether, on the facts and circumstances of the case and in law, the Hon'ble ITAT was right in deleting an addition of Rs. 5,51,66,956/- made by the AO on account of disallowance of deduction claimed under Section 80ID of the IT Act, 1961? Assessee's contentions: The assessee argued that despite the hotel being shown as 'under construction' in the balance sheet, it was fully operational and therefore entitled to the deduction under Section 80ID. Evidence presented included certification from the Ministry of Tourism, a list of customers, and payment receipts through banking channels. Revenue's contentions: The Revenue, through the AO, disallowed the deduction primarily because the hotel was reflected as 'under construction' in the balance sheet and the completion certificate issued by the Municipal Corporation, Gurgaon, was considered not genuine. The Revenue's appeal to the High Court challenges the ITAT's confirmation of the CIT(A)'s decision.

Which sections of the Income-tax Act were involved?

Section 80ID,Section 260A

AI-generated summary — verify with the full judgment below

ITA-332-2019 (O&M) and 1 ITA-312-2019 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 104 Date of Decision : 21.1.2020 ITA-332-2019 (O&M) The Pr. Commissioner of Income Tax, Gurgaon

...... Appellant Versus M/s. Orbit Infrastructure Pvt. Ltd. ...... Respondent ITA-312-2019 (O&M) The Pr. Commissioner of Income Tax, Gurgaon

...... Appellant Versus M/s. Orbit Infrastructure Pvt. Ltd. ...... Respondent CORAM : HON'BLE MR.JUSTICE AJAY TEWARI : HON'BLE MR.JUSTICE AVNEESH JHINGAN *** Present : Mr. T.K.Joshi, Senior Standing counsel with Mr. Vikram Bali, Junior Standing counsel for the appellant. *** AJAY TEWARI, J. (Oral)

Vide this common order we shall dispose of above said two appeals since common question of law is involved therein.

For the sake of convenience facts have been taken from ITA-332-2019. 3. This appeal has been filed by the Revenue under Section 260A of the Income Tax Act, 1961 (for short 'the Act) against the order ANURADHA 2020.01.23 17:22 I attest to the accuracy and integrity of this document

ITA-332-2019 (O&M) and 2 ITA-312-2019 (O&M) dated 25.9.2018 passed by the Income Tax Appellate Tribunal Delhi Bench “E” New Delhi whereby the disallowance which was claimed by the assessee under Section 80ID has been confirmed. The appeals pertain to the assessment years 2008-09 and 2009-2010, claiming following substantial question of law :- i. Whether, on the facts and circumstances of the case and in law, the Hon'ble ITAT was right in deleting and addition of Rs. 5,51,66,956/- made by the AO on account of disallowance of deduction claimed u/s 80ID of the IT Act, 1961?

Brief facts are that the assessee had constructed a hotel and engaged in running of the hotel and claimed the benefit of Rs.5,51,66,956/- deduction under Section 80ID of the Act. The Assessing Officer came to the conclusion that since in the balance sheet the hotel was shown as 'under construction' and since he was of the opinion that completion certificate issued by Executive Engineering Municipal Corporation, Gurgaon was 'not genuine', he disallowed the claim.

Aggrieved against the order of Assessing Officer the assessee moved to Commissioner of Income Tax (A) and submitted various pieces of evidence to show that in fact despite the assertion that the hotel was under construction yet it was fully operational. These evidence included inter alia certification from the Ministry of Tourism, list of customers, payment received from the customer through banking channels etc. On the scrutiny of these pieces of evidence the CIT (A) came to the conclusion that in fact the assessee had successfully proved that the hotel ANURADHA 2020.01.23 17:22 I attest to the accuracy and integrity of this document

ITA-332-2019 (O&M) and 3 ITA-312-2019 (O&M) was functional and therefore entitled to deduction under Section 80ID of the Act. The Tribunal has discussed the entire evidence and has confirmed the finding of the Commissioner.

Accordingly, no substantial question of law arises. Consequently, the appeals stand dismissed.

Since the main cases have been dismissed, the pending application, if any, also stands disposed of.

(AJAY TEWARI)

JUDGE (AVNEESH JHINGAN) JUDGE 21.1.2020 anuradha

Whether speaking/reasoned - Yes/No Whether reportable - Yes/No ANURADHA 2020.01.23 17:22 I attest to the accuracy and integrity of this document

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