PR COMMISSIONER OF INCOME TAX PATIALA vs. M/S AMBEY DEVELOPER PVT LTD

ITA/263/2016HC Punjab & HaryanaPHHC01110461201620 July 2017Author: MR. JUSTICE SURINDER GUPTA,MR. JUSTICE ARUN MONGA9 pages
AI SummaryDismissed

What were the facts?

The assessee, M/s Ambey Developer Pvt. Ltd., a builder, claimed a deduction of ₹92,14,936/- under Section 80IB of the Income Tax Act, 1961, for the assessment year 2010-11. The housing project was approved on 1.4.2005 and was required to be completed within five years, i.e., by 31.3.2010. The assessee applied for a completion certificate on 29.3.2010, within the stipulated period. However, the Municipal Corporation, Patiala, issued the completion certificate on 30.12.2011, citing procedural delays. The Assessing Officer disallowed the deduction, adding it back to the assessee's income. The CIT(A) allowed the appeal, holding that the delay was beyond the assessee's control. The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)'s order, relying on the Gujarat High Court's decision in CIT vs. Tarnetar Corporation. The Revenue appealed to the High Court.

What did the High Court hold?

The High Court held that the appeals did not raise any substantial question of law and dismissed them. The Court interpreted Explanation (ii) to Section 80IB(10)(a) of the Act, considering whether the word 'shall' was mandatory or directory. It concluded that the intent of the legislature was to safeguard revenue where construction was not completed within the stipulated period, but not to disentitle an assessee who had completed construction within time and applied for the certificate within the prescribed period. The Court found that the assessee had completed construction before the due date (31.3.2010) and applied for the completion certificate on 29.3.2010. The delay in issuance was beyond the assessee's control and the Municipal Corporation had granted the approval later without objection. Therefore, the assessee could not be denied the benefit of Section 80IB(10)(a). The CIT(A) and the Tribunal had rightly adjudicated the issue in favour of the assessee. The Court found no illegality or perversity in their findings. The judgment in CIT vs. Punjab Financial Corporation was distinguished as not advancing the revenue's case.

What were the issues?

1. Whether, on the facts and circumstances of the case, the ITAT was justified in holding that the approval granted at a later date, without objection, related back to the application date, despite the completion certificate being issued after the expiry of five years from the date of approval, thereby allowing the deduction under Section 80IB(10) of the Act? (Question of law and fact, concerning Section 80IB(10) and Explanation (ii) thereto). Assessee's contentions: - The assessee applied for the completion certificate within the stipulated five-year period (29.3.2010). - The delay in issuing the completion certificate was due to procedural stages within the Municipal Corporation's control and not attributable to the assessee. - The project was substantially completed within the due date, evidenced by possession certificates, sale deeds, and NOCs from other departments. - The Gujarat High Court's decision in CIT vs. Tarnetar Corporation supports the assessee's claim. Revenue's contentions: - Reliance on Explanation (ii) to Section 80IB(10)(a) of the Act, which states the completion date is the date of issuance of the completion certificate by the local authority. - Reliance on the Full Bench judgment of this Court in CIT vs. Punjab Financial Corporation, arguing that the word 'shall' implies a mandatory requirement.

Which sections of the Income-tax Act were involved?

Section 80IB,Section 80IB(10),Section 260A,Section 32AB,Section 32AB(1),Section 32AB(5)

AI-generated summary — verify with the full judgment below

ITA No.263 of 2016(O&M)

1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT

CHANDIGARH

ITA No.263 of 2016 (O&M)

Date of decision: 20.7.2017

The Pr. Commissioner of Income Tax, Patiala

.…Appellant

Vs.

M/s Ambey Developer Pvt. Ltd.

…..Respondent

CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL

HON’BLE MR. JUSTICE AMIT RAWAL

Present: Mr. Zora Singh Klar, Sr. Standing Counsel for the appellant.

Mr. Jagmohan Bansal, Advocate for the respondent.

Ajay Kumar Mittal,J.

1.

This order shall dispose of ITA No.263, 271 of 2016 and 177 of 2017 as according to the learned counsel for the appellant-revenue, the issue involved in all these appeals is identical. However, the facts are being extracted from ITA No.263 of 2016. 2. ITA No.263 of 2016 has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 14.3.2016 passed by the Income Tax Appellate Tribunal, Division Bench, Chandigarh (in short, “the Tribunal”), in ITA No.852/

The order continues below.

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