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TRILOK ASSOCIATES Versus INCOME TAX OFFICER

2016 (10) TMI 327 - GUJARAT HIGH COURT

Reopening of assessment - Eligibility of deduction u/s 80IB(10) - Held that:- The entire claim of deduction was minutely scrutinised by the Assessing Officer before acceptance. Any attempt on his part now to reopen the issue would be based on change of opinion. In any case, there is not even an allegation that the assessee had not disclosed truly and fully all material facts. Since the impugned notice has been issued beyond four years from the end of relevant assessment year, this aspect would a .....

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roject as a works contract awarded by any person including the Government. In the opinion of the Assessing Officer, this explanation changed the very legal matrix for granting deduction under section 80IB( 10) of the Act. - Decided in favour of assessee. - SPECIAL CIVIL APPLICATION NO. 16220 of 2010 - Dated:- 4-10-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MRS SWATI SOPARKAR, ADVOCATE FOR THE RESPONDENT : MR NITIN K MEHTA, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.J .....

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B( 10) of the Income Tax Act ( the Act for short). The return was taken in scrutiny by the Assessing Officer during which he raised multiple queries asking the assessee to substantiate the claim of deduction. After considering the replies of the assessee, the Assessing Officer passed the order of assessment on 11.11.2005 in which he accepted the petitioner's returned income. The Assessing Officer thus granted deduction claimed by the petitioner in its entirety. In order to reopen such assess .....

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passed on 11.11.2005. However, on verification of the details, it is noticed that the assessee is mealy a work contractor and not taken any developing of housing project approved by the Local Authority and hence, the claim of the assessee for deduction u/s80IB(10) of the IT Act, is not in accordance with law. Finance Act 2009 has amended the section 80IB(10) by way of the Explanation with retrospective effect from 01.04.2001. After the introduction of the Explanation to remove the doubts with re .....

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of the IT Act. 3. Upon being supplied with the reasons, the assessee raised the objections under letter dated 22.11.2010. Such objections were however, rejected by the Assessing Officer by an order dated 30.11.2010. 4. Learned counsel Shri Soparkar for the petitioner submitted that the entire issue was examined by the Assessing Officer during the scrutiny assessment. It would now not be open for him to reexamine the same claim. He submitted that there was no failure on part of the assessee to d .....

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ustries Ltd. v. Incometax officer reported in (2004) 271 ITR 340. 2) In case of Sadbhav Engineering Ltd. v.Deputy Commissioner of Incometax reported in (2011) 333 ITR 483 (Guj). 3) In case of Classic Network Ltd. v. Deputy Commissioner of IncometaxCircle1 reported in (2014) 45 taxmann.com 234 (Gujarat). 5. On the other hand, learned counsel Shri Nitin Mehta for the department opposed the petition contending that the Assessing Officer has recorded proper reasons before issuing the impugned notice .....

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rn filed for the assessment year in question. This claim came up for scrutiny before the Assessing Officer during which he raised the below queries : 1. Details of construction work executed during the year. 2. Details of loans outstanding on 1st day of previous year, taken during the year and squared up during the year, along with copy of accounts confirmation and proof of credit worthiness. 3. Details of sundry creditor along with age analysis and their present position. 4. Details of sundry d .....

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for approval of said project along with copy of order of said authority granting approval to the project. 11. Copy of site plan approved. 12. Details of subcontracts, if any given, along with copy of agreement and how subcontracts was awarded. 13. Details of the concerns operating from the same premises and how expenses are bifurcated between them. 14. Copy of accounts of all the parties connected u/s. 40A(2)(b) for all financial/commercial transactions. 15. Details of all the partners includin .....

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project called Pruthvi (ii) Details of booking amounts collected from the Members (iii) Copy of Development Agreement for construction of Housing Project (iv) Copy of Form No. 7/12 of the land on which Pruthvi project was constructed. (v) Copy of approval of the Project granted by the Ahmedabad Urban Development Authority (AUDA) (vi) Date of commencement of the Project i.e. 27th October, 1999 and copy of Plan approved by AUDA (vii) Built up area of each residential unit (viii) Note regarding el .....

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the IT. Act 1961. Moreover it has other income also. The assessee firm has furnished the audit report from M/S G..K Chokshi & Co., in Form No lOCC B under rule 18 BBB of I T Rules 1962 regarding eligibility of deduction u/s 80 IB(10) of the I. T Act 1961. The working of the deduction u/s. 80 IB (10) have also been furnished as per AnnexureB of the above report. During the course of the assessment proceedings the assessee was asked to furnish his explanation regarding interest paid not relat .....

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the Profit. Moreover, it has been further submitted that the assessee firm have sufficient interest free fund to carry out the project Pruthvi which is eligible for deduction u/s. 80 IB (10) of the IT Act 1961 i. e. outstanding opening balance of ₹ 1,79,10,447/- from the society and maximum outstanding balance from society of ₹ 4,59,01,465/- on which no interest has been paid. Over and above the assessee firm has received interest free fund from sister concern where balance as on 31. .....

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that the entire claim of deduction was minutely scrutinised by the Assessing Officer before acceptance. Any attempt on his part now to reopen the issue would be based on change of opinion. In any case, there is not even an allegation that the assessee had not disclosed truly and fully all material facts. Since the impugned notice has been issued beyond four years from the end of relevant assessment year, this aspect would assume significance. 10. In order to suggest that the assessee was not a .....

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In the opinion of the Assessing Officer, this explanation changed the very legal matrix for granting deduction under section 80IB( 10) of the Act. 11. In case of Denish Industries Ltd.(supra), Division Bench of this Court, when the Revenue relied on retrospective statutory amendment for reopening the assessment beyond four years, observed as under : It is true that when there is a statutory amendment with retrospective effect, the statutory amendment has to operate as if the law as amended was .....

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that when the assessee had filed its return in 1983 it could not have assumed that such a legislative amendment was going to be made in the year 1986 with retrospective effect from the year 1974. In the facts of the present case, it could never be said by any stretch of imagination that in the year 1983 when the assessee filed return claiming investment allowance on the capitalization of interest paid after the date on which the machinery was first installed and put to use, the assessee had fail .....

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as per the explanation given below subsection (13) of section 80IA of the Act, which has been substituted by the Finance Act No.2 of 2009 with retrospective effect from 1.4.2000, deduction under section 80IA would not be admissible to an assessee who carries on business which is in the nature of works contract. That the petitioner assessee being a civil contractor working for the Government is not eligible for deduction under section 80IA as claimed by the assessee, hence there was reason to be .....

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f the petitioner to disclose fully and truly all material facts. Only by way of submission advanced before the Court it is contended that in the light of the amendment of section 80IB, it is deemed that the petitioner has failed to disclose the correct facts. As to whether or not there is any failure on the part of the assessee in disclosing fully and truly all material facts necessary for his assessment, is a matter of fact and there can be no deemed failure as is sought to be contended on beha .....

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