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2016 (2) TMI 304 - HC - Income Tax


Issues:
1. Interpretation of provisions of section 80 IB(10) of the Income Tax Act.
2. Validity of project completion method of accounting for deduction under Section 80IB(10).

Analysis:

Issue 1: Interpretation of provisions of section 80 IB(10) of the Income Tax Act:
The Appeals by the Revenue challenge the order passed by the Income Tax Appellate Tribunal concerning Assessment Years 2005-2006 and 2006-2007. The main issues raised by the Revenue pertain to the eligibility of the assessee for deduction under section 80 IB(10) of the Act. The Tribunal was questioned for not considering evidence of residential units exceeding the stipulated limit and for upholding the order of the CIT(A) regarding project completion method. The Court referred to a similar case and observed that the project being approved before 1.4.2005 falls under the judgment of M/s.Happy Home Enterprises, making the assessee eligible for the deduction. Consequently, Question (A) did not give rise to any substantial question of law and was not entertained.

Issue 2: Validity of project completion method of accounting for deduction under Section 80IB(10):
In this issue, the respondent-assessee, a builder and developer, claimed deduction under Section 80IB(10) based on the Project Completion Method of accounting. The Assessing Officer disagreed and computed profit using the percentage completion method. However, the CIT(A) allowed the appeal, stating that the project completion method was regularly employed by the assessee. The Tribunal upheld this finding, emphasizing that the Assessing Officer had not shown any defects in the accounting method chosen by the assessee. The Court noted that the project completion method is an accepted accounting practice, and since the Assessing Officer did not reject the books of account or point out any defects, the Tribunal's decision was upheld. Therefore, Question (B) was also deemed not to raise any substantial question of law and was not entertained.

In conclusion, both Appeals were dismissed, and no costs were awarded.

 

 

 

 

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