THE PRINCIPAL COMMISSIONER OF INCOME TAX 2 vs. GANESH HOUSING CORPORATION LTD.

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TAXAP/733/2019HC GujaratGJHC24065981201913 January 2020Bench: HONOURABLE MR. JUSTICE J.B.PARDIWALA,HONOURABLE MR. JUSTICE BHARGAV D. KARIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court of Gujarat dismissed the Tax Appeal. The Court stated that for the reasons recorded in a related Tax Appeal No. 734 of 2019, which was dismissed on the same day, this appeal also fails. The judgment does not provide specific reasoning for each issue raised, but the dismissal of the appeal implies that the Court found no substantial question of law warranting interference with the Tribunal's order. The operative direction was the dismissal of the appeal.

What were the facts?

This Tax Appeal was filed by the Revenue (The Principal Commissioner of Income Tax 2) against the order dated 15.05.2019 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench 'B', Ahmedabad. The appeal pertains to the assessment year 2007-2008 and challenges the deletion of disallowances made by the Assessing Officer. The disallowances in question were Rs. 23,11,02,617/- on account of deduction under Section 80IB(10) and Rs. 7,97,90,760/- on account of proportionate interest expense. The assessee is Ganesh Housing Corporation Ltd. The High Court of Gujarat at Ahmedabad heard the appeal.

What were the issues?

1. Whether the Appellate Tribunal erred in law and facts in upholding the order of the CIT(A) deleting the disallowance of Rs. 23,11,02,617/- made by the Assessing Officer on account of deduction under Section 80IB(10) of the Act, despite the Assessing Officer establishing with concrete evidence that the assessee did not fulfill the requisite conditions for claiming the deduction? (Assessee's contention: The Tribunal correctly upheld the deletion of disallowance. Revenue's contention: The assessee failed to fulfill the conditions for Section 80IB(10) deduction, and the Assessing Officer had evidence to support this. 2. Whether the Appellate Tribunal erred in law and facts in upholding the order of the CIT(A) deleting the disallowance made by the Assessing Officer on account of proportionate interest expense of Rs. 7,97,90,760/-, despite the assessee company incurring substantial interest expenses while giving interest-free loans? (Assessee's contention: The Tribunal correctly upheld the deletion of disallowance. Revenue's contention: The assessee incurred substantial interest expenses while providing interest-free loans, warranting the disallowance.)

Which sections of the Income-tax Act were involved?

Section 260A,Section 80IB(10)

AI-generated summary — verify with the full judgment below

C/TAXAP/733/2019 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 733 of 2019 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME TAX 2 Versus GANESH HOUSING CORPORATION LTD. ========================================================== Appearance: MRS MAUNA M BHATT(174) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA

Date : 13/01/2020

ORAL ORDER

(PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1. This Tax Appeal is filed under Section 260A of the Income Act, 1961 (for short the “Act”) at the instance of Revenue and it is directed against the order   dated   15.05.2019   passed   by   the   Income   Tax Appellate Tribunal, Ahmedabad Bench 'B', Ahmedabad in the   ITA   No.2898/Ahd/2013   for   the   assessment   year 2007­2008. 2. The Revenue has proposed the following questions as the substantial questions of law involved in this appeal:­ “2(A)  Whether  the Appellate  Tribunal  had erred in law and on facts in upholding the order of the   CIT(A)   deleting   the   disallowance   of Rs.23,11,02,617/­ made by the Assessing Officer on account  of deduction  under  Section  80IB(10) of   the   Act   without   appreciating   the   fact   that Page 1 of 2

C/TAXAP/733/2019 ORDER the   Assessing   Officer   had   established   with concrete   evidences   that   the   assessee   did   not fulfill   the   requisite   conditions   for   claiming deduction under Section 80IB(10) of the Act? ?” (B) Whether Appellate Tribunal has erred in law and   on   facts   in   upholding   the   order   of   the CIT(A)   deleting   the   disallowance   made   by   the Assessing   Officer   on   account   of   proportionate interest   expense   of   Rs.7,97,90,760/­   without appreciating fact that the assessee company has incurred   substantial   interest   expenses   while giving interest free loans?” 3.   For   the   reasons   recorded   by   us   today   while dismissing the Tax Appeal No.734 of 2019, this Tax Appeal also fails and is hereby dismissed. (J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) GIRISH Page 2 of 2

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