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18.01.2017 - Voice of CA presents - Updates
Wednesday, January 18, 2017

I. Headlines Today    

  1. Relief for FPIs, CBDT puts tax liability circular on hold  (Click for detail)
  2. CBDT Circular: Clarifications on the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016  (Click for detail)
  3. CBDT: IDS disclosures valid if taxes realised by December 5  (Click for detail)
  4. Budget 2017: Arbitrage funds may lose tax advantage  (Click for detail)
  5. CAG wants provision in GST law to seek any info for audit  (Click for detail)
  6. All you need to know about claiming tax break on HRA  (Click for detail)
  7. Sebi to revamp, tighten stock exchange and trading norms  (Click for detail)
II.  Direct Taxes Case Laws: 

1.  PCIT Vs. Adani Gas Ltd., Tax Appeal No. 900 of 2016, Date of Order: 11.01.2017, High Court of Gujarat

Where preliminary expenditure u/s 35D of the Income Tax Act, 1961 is allowed for first two years, whether it can be disallowed in the subsequent years?

Held: No

Brief facts:
The assessing officer has allowed the preliminary expenses claimed by assessee u/s 35D of the Act for the first two years. However, the AO has disallowed amount of Rs.10,28,028/- claimed u/s 35D of the Act in the subsequent assessment year. The Hon’ble ITAT has deleted the disallowance. Being aggrieved by that, the revenue has preferred an appeal with the Hon’ble High Court.

The Hon’ble High Court has placed reliance on the case of Shasun Chemicals & Drugs Ltd vs. CIT reported in (2016) 388 ITR 1 (SC), where the Hon’ble Supreme Court had held that, the issue was with respect to claim under Section 35 D of the Act and it was found that expenses claimed by the assessee for first two assessments years were allowed by the Assessing Officer, the Assessing Officer in the subsequent assessment year could not have disallowed the same. Under the circumstances, no error has been committed by the learned Tribunal in deleting the disallowance of preliminary expenditure under Section 35 D of the Act.

Relying on the above decision of the Hon’ble Supreme Court, the Tribunal was correct in holding that, deleting the disallowance of Rs.10,28,028 being the preliminary expenditure under Section 35 D of the Act.
The appeal of revenue was dismissed.

(Please click here for judgment)


2.  M/s. Mahavir Enterprises Vs. PCIT, I.T.A. No. 920/Mum/2016, Date of Judgment: 28.12.2016, ITAT - Mumbai

Whether the construction of even one building constituting several units would serve the purpose of definition of 'Housing Project' to avail the deduction u/s 80IB(10)?


Brief Facts:
The assessee is a partnership firm engaged in the business of developing a housing project called ‘Balaji Gardern’ claiming deduction under section 80IB(10) of the Act. The assessee had completed Buildings No.2 & 5 in the above project and the resultant profit has been subject to the claim of deduction under section 80 IB(10) of the Act. CIT contended project ‘Balaji Garden’ consisted of total nine buildings and that as per the provisions of section 80IB(10) of the Act, assessee was required to complete the said project by 31/03/2012, but for some of the buildings, the final completion certificate was not received before  this date.

A perusal of section 80IB(10) of the Act reveals that the expression ‘housing project’ has not been defined. The assessee firm is justified in considering the group of Buildings No.2 & 5 in the ‘Balaji Garden’ complex as a ‘project’ for the purposes of claim of deduction under section 80 IB(10) of the Act by placing reliance on the judgement of High Court of Bombay in case of Vandana Properties where it was stated that the provisions of section 80 IB(10) of the Act envisage that construction of even one building with several residential units of the size not exceeding 1000 sq.fts would constitute a ‘housing project’ for the purposes of availment of benefits under section 80 IB(10) of the Act.

The CIT misdirected himself on the issue as to whether the other buildings have been completed within the time frame is not at all relevant to evaluate assessee’s claim for deduction under section 80IB(10) of the Act in the instant year. Moreover, in so far as the said project comprising of Buildings No.2 & 5 is concerned, the same has been completed on 19/03/2010, when assessee’s architect submitted application to the local authority for issuance of Occupancy Certificate. Considered in this light, it has to be understood that the completion of construction of the instant housing project is within the period stipulated in section 80 IB(10)(a)(iii) of the Act r.w. Explanation (ii) thereof. Thus, on this aspect, no reason to uphold the stand of the CIT.
The appeal of the assessee was allowed.

(Please click here for judgment)  

III. Useful Article:

9th GST Council inks breakthrough on dual control over tax payers, rollout deferred to July 1, 2017

(Please click here for detail)

(Contribution by CA. Bimal Jain and contributor is available at eMail-id: 

 Golden Rules:

  "People are Not Beautiful, as they look, as they walk, as they wear.
People are Beautiful as they help, as they Care & as they Share"


  Thanks & Regards


Voice of CA 

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