INCOME TAX OFFICER, WARD-1 vs. UNITY CONSTRUCTION CO

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TAXAP/1/2012HC GujaratGJHC24042710201205 March 2018Author: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court terminated the first question concerning the allowability of deduction under Section 80IB(10) in relation to approval and completion certificates issued to the landowner. Regarding the second and sole surviving question, which pertains to the assessee's claim for deduction under Section 80IB(10) on the sale of unused FSI, the High Court noted that the tax effect was extremely small, not exceeding Rs. 1.39 lacs. On this ground alone, the High Court decided not to entertain the tax appeal. Therefore, the appeal was disposed of without a decision on the merits of the second issue. No specific finding was given on the merits of the second issue, and the ratio decidendi is based on the de minimis principle for tax effect.

What were the facts?

The Revenue, Income Tax Officer, Ward-1, filed an appeal before the High Court of Gujarat against an order of the Income Tax Appellate Tribunal (ITAT) dated July 28, 2011. The appeal concerned assessment year(s) not explicitly stated. The ITAT had decided two questions. The first question, regarding the allowability of deduction under Section 80IB(10) of the Income Tax Act, 1961, in relation to approval and completion certificates issued by local authorities to the landowner and not the assessee, was terminated by the High Court while issuing notice. The second and sole surviving question pertained to the assessee's claim for deduction under Section 80IB(10) on the sale of unused FSI. The High Court noted that the tax effect on this issue was extremely small, with a possible addition not exceeding Rs. 1.39 lacs.

What were the issues?

1. Whether the deduction under Section 80IB(10) of the Income Tax Act, 1961, is allowable when approval and completion certificates are issued to the landowner and not the assessee? (Question of law/mixed law and fact, concerning Section 80IB(10)). 2. Whether the assessee is entitled to a deduction under Section 80IB(10) of the Income Tax Act, 1961, on the sale of unused FSI? (Question of law/mixed law and fact, concerning Section 80IB(10)). Assessee's contentions: Not recorded in the judgment. Revenue's contentions: For the first issue, the Revenue contended that the approval and completion certificates were issued to the landowner and not the assessee, which should disentitle the assessee to the deduction under Section 80IB(10). For the second issue, the Revenue argued for the disallowance of deduction under Section 80IB(10) on the sale of unused FSI. The judgment notes that the High Court has given varying judgments on similar issues depending on the facts of the case.

Which sections of the Income-tax Act were involved?

Section 80IB(10)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/1/2012 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1 of 2012 ========================================================== INCOME TAX OFFICER, WARD-1 Versus UNITY CONSTRUCTION CO ========================================================== Appearance: MR VARUN K PATEL for the PETITIONER(s) No. 1 MR VIJAY S RANJAN for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA Date : 05/03/2018

ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI)

Revenue is in appeal against the judgment of the Income Tax   Appellate   Tribunal   dated   28.7.2011. Two   questions   were framed.   While   issuing   notice,   we   had   terminated   the   first question concerning the allowability of deduction under section 80IB(10) of the Income Tax Act, 1961 in context of approval and completion   certificate   granted   by   the   local   authorities.   The Revenue's objection was that such certificates were issued to the landowner and not the assessee.

The sole surviving question pertained to  assessee's claim of deduction under section 80IB(10) of the Act on sale of unused FSI. This Court has taken such an issue into consideration and given judgements depending on facts of the case. However in the present case, we notice that issue involves extremely small tax effect. Possible addition is not more than Rs. 1.39 lacs. Only on C/TAXAP/1/2012 ORDER this   ground   therefore,   tax   appeal   is   disposed   of   and   not entertained. (AKIL KURESHI, J.) (B.N. KARIA, J.) raghu

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