2015 (10) TMI 2631 - AT - Income Tax

Disallowance of deduction u/s 80IB(10) - no approval from the local authority for the housing project seeked - whether the Gram Panchayat is local authority or not - Held that - There was a discussion of Bombay Village Panchayat Act 1958 and as per section 52 sanction of construction of building within the limit of village has to be granted by the Panchayat. On the said basis it was held that the village Panchayat is a local authority . As far as the issue whether the Gram Panchayat is local authority or not the decision of ITAT Pune Bench has been cited before us n the case of Hiraman Nivrutti Bhujal 2014 (5) TMI 1137 - ITAT PUNE wherein other decisions were discussed and finally came to the conclusion that the concerned Gram Panchayat was a competent local authority for the purpose of issuing approval and completion certificate for claiming deduction u/s 80IB(10) of I.T. Act. Moreover the respondent-assessee has also placed reliance on a decision of CIT vs. Gwalior Rayon Silk Manufacturing Co. Ltd. 1992 (4) TMI 3 - SUPREME Court for the legal proposition that the provisions for deductions and exemptions should be construed reasonably and in favour of the assessee. In our considered opinion since all the issues in hand have been covered either by the orders of the Tribunal in assessee s own case or by respected coordinate Benches therefore we find no fallacy in the view taken by the learned CIT(Appeals). - Decided against revenue

Summary

Issues:
1. Disallowance of deduction u/s 80IB(10)
2. Approval for housing projects from local authorities

Analysis:

Issue 1: Disallowance of deduction u/s 80IB(10)
The Revenue appealed against the deletion of an addition of a specific amount on account of disallowance of deduction u/s 80IB(10). The AO raised concerns regarding the approval for the housing projects, specifically focusing on the lack of permission from the local authorities for certain projects. The AO contended that the projects did not fulfill the conditions for deduction u/s 80IB(10) due to insufficient approvals. The AO's objections were based on the nature of permissions obtained and the scope of the projects approved by the authorities.

Issue 2: Approval for housing projects from local authorities
The central point of contention was whether the approvals obtained from the Gram Panchayat were sufficient to qualify the projects as eligible for deduction u/s 80IB(10). The AO argued that the permissions granted were not in accordance with the law, as they were not from recognized local authorities. However, the assessee defended the approvals from the Gram Panchayat, citing legal interpretations and precedents that supported the Gram Panchayat's status as a local authority for such approvals. The CIT(A) analyzed the legal provisions and past decisions, ultimately ruling in favor of the assessee's eligibility for the deduction.

In the detailed analysis, the Tribunal referred to previous orders and legal interpretations to support the conclusion that the Gram Panchayat could be considered a local authority for granting approvals related to housing projects. The Tribunal emphasized the need for a reasonable interpretation of deductions and exemptions in favor of the assessee. By considering the sequence of events, approvals obtained, and legal precedents, the Tribunal confirmed the CIT(A)'s decision and dismissed the Revenue's appeals.

In conclusion, the Tribunal upheld the CIT(A)'s decision, confirming the eligibility of the assessee for deduction u/s 80IB(10) based on the approvals obtained from the Gram Panchayat. The detailed analysis of legal provisions, precedents, and the specific circumstances of the case led to the dismissal of the Revenue's appeals.