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2016 (5) TMI 332 - ITAT KOLKATA

2016 (5) TMI 332 - ITAT KOLKATA - TMI - Deduction under section 80IB - AO disallowed the same on technical ground i.e. non-filing of ITR within the due date as specified under section 139(1) - Held that:- CIT(A) rightly held that the profit declared in the assessment year 2008- 09 actually belongs to the assessment years 2005-06, 2006-07 and 2007-08 as the assessee for those years was following the percentage completion method in accordance with the accounting Standard 7 issued by the ICAI of In .....

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the Departmental Circular No. 14(XL-35) dated 11-4-1955 regarding the administrative instructions issued for the guidance of the Income Tax Officers on the matters pertaining to the assessments.

The law is well settled that tax authorities entrusted with the power to make assessment of tax discharge quasi judicial functions and they are bound to observe principles of natural justice in reaching their conclusions, taxing authorities exercise quasi-judicial powers and in doing so they .....

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ve exercised it in a proper and judicious manner. In view of above, we are not inclined to interfere in the order of the ld. CIT(A) in allowing the claim - Decided against revenue

MAT applicability - Re-computing the profit under section 115JB - Held that:- The assessee is liable to pay the tax under MAT in spite of the fact that we have given relief to the assessee under the normal provisions of Act. Accordingly we find no infirmity in the order ld. CIT(A)directing for re-computing t .....

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d by ITO Ward-11(2), Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his order dated 29.12.2010 for assessment year 2008-09. Grounds raised by Revenue is as under:- 1) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is correct in law by reducing the assessee s declared profit amounting to ₹ 3,95,88,640/- to nil . 2) Whether on the facts and in the circumstances of the case the Ld. CIT(A) is correct in law in holding that t .....

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n the circumstances of the case, the Ld. CIT(A) is correct in holding that there was no income chargeable to tax for the year under consideration with the direction of recomputation of book profit u/s. 115JB. 2. Grounds No. 1 to 3 are common in this appeal of Revenue, hence, we club them together to pass a consolidate order. Facts of the case are that assessee in the present case is a Private Limited Company and engaged in the business of development of housing complexes at different sites under .....

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39(1) of the Act. In the instant case, the assessee filed the ITR on dated 04.02.2009 for the assessment year 2008-09 which is after the due date as specified under section 139(1) of the Act. 3. Aggrieved, assessee preferred an appeal before Ld. CIT(A). Before Ld. CIT(A) assessee submitted that assessee was following percentage completion method for the accounting of its real estate project activity in terms of Accounting Standard 7 (AS-7) till 31-3-2007. However the assessee at his own found th .....

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t declared before the deduction under section 80IB of the Act is notional profit for the year under consideration. The return filed by the assessee was belated return under section 139(4), so the assessee could not get the opportunity to rectify the mistake by filing revised return. The assessee at the time of assessment proceedings u/s 143(3) of the Act tried to explain that the income pertains to the earlier assessment years but the AO rejected the plea of the assessee. 3.1 The assessee withou .....

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t the time of passing the assessment order deduction u/s. 80IB is rightly denied due to the fact that the project is not yet fully completed and completion certificate is not available although the project is duly completed and completion certificate is obtained at a later date within the specified period of five years. Obviously the very purpose of Sec. 80IB is defeated if these profits do not qualify for deduction. Therefore, it can be said that Sec. 80IB envisages a situation where profit is .....

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of the Act, income chargeable under the head profits & gains of business shall be subject to accounting standards notified by the Central Government from time to time. RELIEF SOUGHT THROUGH THIS APPEAL 1. Profit declared in the profit & loss account be considered as notional profit or book profit subject to tax u/s 115JB of the income Tax Act 1961 in the assessment year 2008-09 2. Profit declared in the assessment year 2008-09 on presumptive sale of flats is brought to tax in the assess .....

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eleted the addition made by the AO by observing as under:- After going through the facts of the case and citation I am convinced that the income of ₹ 3,95,88,640/- reported in the profit & loss account as well as in the income tax return of the assessment year 2008-09 cannot be brought to tax in that assessment year. At the same time, I do not agree with the Appellant to postpone the reported profit to assessment year 2011-12 i.e. the year in which the housing project is completed. I, .....

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rectly. Income escaped from assessment in one year cannot be assessed in a later year. The Assessing Officer cannot take advantage of any inadvertent error or omission or commission committed by the assessee in the return. of income or in drawing the annual accounts. Accordingly I hold that although the profit & loss account and the income tax return of the assessment year 2008-09 contain a declared profit of ₹ 3,95,88,640/-, the said amount is not chargeable to tax in the assessment y .....

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re, direct the Assessing Officer to re-compute the income of the assessment year 2008-09 based on the allocation stated above. Section 80AC of the Act has come into force w.e.f. assessment year 2006-07. The Appellant has not disputed the disallowance of claim u/s. 80-IB due to application of Section 80AC for not filing the return in time and hence no claim of deduction u/s. 80-IB will be allowed in respect of the income assessable for the assessment year 2008-09. However, the AO is giving libert .....

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income of ₹ 3,95,88,640/- in the assessment year 2008-09. Being aggrieved by this order of Ld. CIT(A) Revenue came in appeal before us. Shri Sital Prasad Roy, Ld. Departmental Representative appearing on behalf of Revenue and Shri Sanjay Bhattacharya, Ld. Authorized Representative appearing on behalf of assessee. 4. The ld. DR relied on the order of AO whereas ld AR relied on the order of ld. CIT(A). We have heard rival contentions and perused the material available on record. The ld. AR h .....

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-07 but failed to declare the profit in that year in consonance with the percentage completion method. We further find that the profit, however, was declared in the return of income for the assessment year 2008-09 and the assessee accordingly claimed the deduction of the profit under section 80IB of the Act. However, the AO disallowed the same on technical ground i.e. non-filing of ITR within the due date as specified under section 139(1) of the Act. However the ld. CIT(A) rightly held that the .....

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this order. We also understand that The AO cannot take the benefit with regard to the inadvertent mistake committed by the assessee in filing the return of its income. The AO should not act against the principal of natural justice. The assessee quoted and relied in the Departmental Circular No. 14(XL-35) dated 11-4-1955 regarding the administrative instructions issued for the guidance of the Income Tax Officers on the matters pertaining to the assessments. The assessee has relied on the followi .....

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ual way or for some other purpose S.L.Kapoor v. Jagmohan AIR (1981) 136, 145 (SC). Principles of natural justice demand that there should be a fair determination of a question by quasi-judicial authorities. Arbitrariness will certainly not ensure fairness. If giving a mere opportunity to show cause and to explain would satisfy the principles of natural justice, the notice to show cause becomes an empty formality signifying nothing, for, after issuing the notice to show cause, the authority can d .....

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th tax return including assets which were not chargeable to tax and could not file a revised return because it was either time-barred or was not permissible in the view that a belated return could not be revised, if the assessment has been taken for scrutiny, the AO is bound to pass an order so that assessee s claim was bound to be considered one way or the other with the right of appeal, if the order is adverse. The decision of the Hon'ble High Court was the subject-matter for special leave .....

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