Case summary, Income Tax

Gujarat High court decides: Date considerations for eligibility of deduction u/s 80IB(10)?

Case Name: Sheetal Infrastructure Private Limited vs Asst. Commissioner of Income Tax, Circle 4(1)(1)

Forum: Gujarat HC

Judges: Sangeeta K. Vishen, Harsha Devani

Lawyers (Assessee): B S Soparkar


  • The assessee was granted approval (Raja Chitthi) for its office construction project Vedika-I by the Kudsan Gram Panchayat on 16-Mar-2005.
  • Gandhinagar Urban Development Authority (GUDA) approved the Assessee’s housing project, Vedika-E on 6-Feb-2008, and the project was completed on 31-Mar-2012.
  • Since approval is termed as revised plan, AO, in view of explanation to section 80IB(10)(a) treated approval dated 16.03.2005 as first approval and held assessee required to complete the project before 31.03.2009.
  • To deny the benefit of deduction u/s 80IB(10), AO issued notice beyond four years, on 13.03.2018, u/s 148 to reopen assessment which is concluded u/s 143(3)

Assessee’s Arguments

  • The reopening is based on incorrect facts. It was pointed out that the date of approval of the housing project is 06.02.2008 and not 16.03.2005 as referred to in the reasons recorded.
  • Reopening of assessment is based upon a mere change of opinion as, during the course of scrutiny assessment, the Assessing Officer had called for the record from GUDA and formed an opinion and thereafter, had allowed a deduction under section 80IB(10) of the Act.
  • The approval granted on 06.02.2008 by the GUDA is the only approval for the housing project and hence, the reasons recorded for reopening the assessment are based on wrong facts.

Revenue’s Arguments

  • Initially, the approval for the project was granted on 16.05.2005 by the local authority namely the Kudasan Gram Panchayat, which is the first approval.
  • The approval on the basis of which the petitioner has sought deduction under section 80IB(10) of the Act is a revised approval granted by the GUDA on 06.02.2008.
  • The completion date has to be computed from the date of initial approval and what is to be considered is the first approval; whereas, in this case, the first approval has been given in 2005 and hence, the assessee would not be entitled to get deduction under section 80IB(10) of the Act.
  • Reliance was placed upon the decision of Gujarat high court in the case of Commissioner of Income Tax v. Radhe Developers, [2012] 341 ITR 403 (Guj).

High Court’s Judgement

  • For the first time approval for housing project came to be granted only on 06.02.2008 by GUDA.
  • Since, in the present case, earlier a project for residential plots was approved and approval was granted on 16.03.2005 in respect of an office building, in the subsequent approval granted to the assessee in respect of the subject land for a housing project, the plan is referred to as a revised plan.
  • From the facts, it is manifest that insofar as approval for a housing project in respect of the subject land is concerned, such approval was granted for the first time on 06.02.2008.
  • The Explanation to clause (a) of section 80IB(10) of the Act provides that in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority. In the present case, approval in respect of housing project is obtained for the first time on 06.02.2008 and hence, that is the relevant date for considering the eligibility for deduction under section 80IB(10) of the Act.
  • Since the previous approval granted by the Kudasan Gram Panchayat was not for a housing project, the decision of this Court in Commissioner of Income-tax v. Radhe Developers would have no applicability to the facts of the present case.
  • Since the permission dated 06.02.2008 was the first approval granted for a housing project on the subject land, AO could not have formed the belief that income chargeable to tax has escaped assessment.

Accordingly, notice u/s 148 was quashed.

Follow an issue related to Section 80IB on Riverus Telescope.

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