M/S. Shipra Estate Ltd., … vs Acit, Ghaziabad on 22 January, 2021

Income Tax Appellate Tribunal – Delhi
M/S. Shipra Estate Ltd., … vs Acit, Ghaziabad on 22 January, 2021 INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “G”: NEW DELHI

BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
(Through Video Conferencing)

ITA No. 740/Del/2016
(Assessment Year: 2012-13)

Shipra Estate Ltd, Vs ACIT,
C/o. Pradeep & Co, Circle-2,
Tax Advocates, Ghaziabad
7, Navyug Market,
Ghaziabad
PAN: AACCS6116J
(Appellant) (Respondent)

Assessee by : Shri R. S. Singhvi, C.A.;
Revenue by: Shri H. K. Choudhary [CIT]-DR;
Date of Hearing 24/12/2020
Date of pronouncement 22/01/2021

ORDER
PER PRASHANT MAHARISHI, A. M.

01 This appeal is filed by the assessee against the order of the ld. CIT
(Appeals), Ghaziabad, dated 1 December 2015 for the Assessment Year
2012-13.
02 The assessee has raised the following grounds of appeal:-
“1. That the learned Commissioner of Income Tax (Appeals) grossly
erred in upholding the addition of Rs. 13,00,15,605 on account
of disallowance of deduction claimed u/s 80IB(10) of the Income
Tax Act, 1961 even after recording the findings that technically
sufficient evidences are filed to explain the conditions
prescribed by the statute in respect of project completion
certificate issued from the Authority is fulfilled.

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2. That the learned Commissioner of Income Tax (Appeals) grossly
erred in upholding the disallowance of deduction u/s 80IB(10) of
the Income Tax Act, 1961 in entirety on non fulfillment of the
condition laid down under clause (f) of section 80IB(10) of the
Act.
3. That having regard to the facts and circumstances of the case,
the learned Commissioner of Income Tax (Appeals) has erred in
law and on facts in not reversing the action of the learned
Assessing Officer in charging interest u/s 234B of the Income
Tax Act, 1961.
4. That having regard to the facts and circumstances of the case,
the learned Commissioner of Income Tax (Appeals) has erred in
law and on facts in not reversing the action of the learned
Assessing Officer in charging interest u/s 234C of the Income
Tax Act, 1961. ”

03 The brief fact of the case shows that assessee is a builder company
engaged in the business of construction and sale of flats in Ghaziabad and
other places.
04 The assessee filed its return of income for Assessment Year 2012-13 on
30th September, 2012 declaring total income of Rs. 199,98,55,110/-. In
the return of income, assessee has claimed deduction u/s 80 IB (10) of the
act amounting to ₹ 288,419,207 which was restricted up to Rs.
13,00,15,605/-.
05 For claiming deduction u/s 80 IB (10) , assessee has submitted Form No
10 CCB being an audit report required u/s 80 IB of the act for the
impugned assessment year. According to para number 23 of the above
report it was stated that the project of the assessee has been granted
approval on 26th of September 2006 and with respect to the date of
completion of the housing project, it was submitted that the request for
issuing complication certificate has already been filed with the
Ghaziabad development authority [ GDA] on 30th of November 2011.
However as per the certificate of Architect dated 17/8/2012 the project
has been completed in FY 2011 – 12 and the copy of the completion

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certificate issued by the architect was also attached. According to the
certificate of the architect, it was stated that the project has already been
completed and possession has already been given to the customers during
financial year 2011 – 12. Subsequent to the above filing of the return and
certificate dated 29/9/2012 issued by the chartered accountant, the
assessee also obtained a letter dated 21 February 2013 from Ghaziabad
development authority stating that the date of completion of the above
project is 21st of February 2011. Thus, it was stated that the assessee’s
claim of deduction u/s 80 IB (10) is in order , as it complies with all the
conditions including the condition of the completion of the project within
five years from tend of the year in which the approval was granted.
06 During the assessment proceedings , The ld. Assessing Officer noted that
assessee has claimed deduction under Section 80IB(10) of the Income
Tax Act, 1961 (the Act) of Rs. 28,84,19,207/- and restricted the same at
Rs. 13,00,15,605/- for Sun City Phase-I Project at Indirapuram,
Ghaziabad. The ld. Assessing Officer examined the claim of the assessee
and asked the assessee to show the date of completion of the project. The
assessee submitted a letter issued by Ghaziabad Development Authority
(GDA) regarding the completion certificate. The approval to the plan for
the construction of housing project was granted by GDA on 26.09.2006.
The plan was constructed on total plot area of 11055.99 sq. mts. The
project was stated to have been completed and possession has already
been given to customers on 21 February 2011, during Financial Year
2011-12. Thus, according to the assessee the project was completed on
21/02/2011 i.e. within five years from the end of the financial year in
which the project was approved (i.e. 26/9/2006). The Assessing Officer
noted that according to the provisions of Section 80IB(10) of the Act the
project should have been completed within 5 years from the end of the
financial year for which the housing project was approved by the local
authority. He noted that the project for eligibility of deduction, the last
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date of completion would be 31st of March 2012. The AO noted that
Ghaziabad Development Authority (GDA) through its Joint Secretary
issued completion certificate on 21.02.2013. However, according to the
assessee the application was submitted for completion certificate vide
letter dated 29.09.2012. The assessee submitted that GDA has approved
the date of project as on 21.02.2011. It further states that application
after the completion of the project was submitted to the authority and the
authorities constituted an inspection committee. As per the report and
recommendation of the committee, the GDA approved the date of the
completion of the project as 21.02.2011. The ld. Assessing Officer was
of the view that the Act recognizes only the actual date of the completion
certificate by the local authorities. He, therefore, rejected the explanation
of the assessee that the first registration of the flat was made on
21.02.2011 and Ghaziabad Development Authority has accepted the date
of completion as at 21.02.2011 as per the letter dated 21.02.2013. The
Assessing Officer was of the view that the language of the Act was very
clear and the date of completion of construction of the housing project
shall be taken to be the date on which the completion certificate in
respect of housing project is issued by the local authority. He held that
such completion certificate was issued by GDA on 21.02.2013, which is
beyond the prescribed time limit on 31.03.2012. He further held that
merely as the first registration of housing unit has taken place on
21.02.2011, the whole project cannot have to be considered as completed
by 31.03.2012. He held that assessee has constructed 346 units in the
project and by merely registration one unit out of 346 units the assessee
cannot claim to have completed the whole project within the prescribed
limit. Therefore, he held that the submission of the assessee is de void of
any merit. He therefore held that, the assessee has not completed the
housing project in terms of the outer time limit provided u/s 80 IB (10) of

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the act i.e. within five years from the end of the financial year in which
the approval was granted.
07 The learned assessing officer also noted that assessee has allotted the
flats to the related parties for more than one unit and therefore the
assessee is not entitled to deduction u/s 80 IB (10) of the act. The
assessee on its own surrendered proportionate deduction to the extent of
Rs. 58,47,000/-. Consequently, the ld. Assessing Officer disallowed the
claim of deduction under Section 80IB (10) of the Act amounting to Rs.
13,00,15,605/- for non-completion within specified limit. Accordingly,
assessment order under Section 143(3) of the Act was passed on 22nd
December, 2014 determining total income of the assessee at Rs.
213,87,823/-.
08 The assessee challenged the same before the ld. Commissioner of Income
Tax (Appeals). The assessee made detailed submission before him on
11.08.2015 reproduced at page 5.1.2 of the order of the ld. CIT
(Appeals). Before him, the assessee submitted that project is completed
in time. Therefore, order under Section 250(4) of the Act was passed by
him giving direction to the AO to ascertain the correct date of completion
by obtaining and examining the relevant details from the Development
Authority and assessee. The report of the Assessing Officer states that
committee of GDA was constituted on 25th October, 2012, inspected the
site on 21.02.2013 and on the basis of the documents noting the fact that
registration of sale of flat commenced on 21.02.2012 , the GDA stated
that the date of completion of the project is 21.02.2011. The Assessing
Officer also submitted a copy of the report of the committee. It also gave
the minutes of the committee of GDA. The assessee given an
opportunity and submitted its rejoinder of 21.02.2015, which is as per
para No. 5.1.4 of the order of the ld. CIT (Appeals). The ld. CIT
(Appeals) also put before the assessee the decision of the Hon’ble
Madhya Pradesh High Court in CIT Vs. Global Reality dated 21.08.2015
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wherein it was held that issuance of completion certificate after cut-off
date by local authority mentioned the completion of the date of project
before cutoff date does not fulfill the required condition of Section 80IB
(10) of the Act. The assessee submitted that the case of the assessee on
facts is quite difficult. Assessee also submitted a letter of the installer of
lift stating that the lifts were installed on 3.12.2011. The ld. CIT
(Appeals) held that it is clear that inspection of the site had not taken
place before the cut-off date on or before 31.03.2012. He further noted
that the committee itself was constituted on 25th October, 2012 i.e. after
the cut-off date and the inspection was carried out on 29.01.2013. He,
therefore, held that the recommendation of the committee regarding
completion of the project is not supported by inspection of the site before
cut-off date. He further held that completion certificate merely based on
date of registration of sale of flat only. He further noted that with respect
to the installation of the lift with the Assistant Director of Electric
Security, Ghaziabad, vide letter dated 3.12.2011 certified that the
installation of lift is satisfactory. However, some of the lifts have been
handed over on 17.11.2011, 27.02.2012 and 31.01.2012. Thus, according
to him none of the lifts has been installed before the registration of sale of
flats. He, therefore, noted that the registration of one unit on 21.02.2011
was prior to handing over of the lift to the appellant and, therefore, the
plea that date of registration should be taken as the date of completion of
project is de void of merit. He thereafter referred to the ratio of the
Hon’ble Madhya Pradesh High Court in CIT vs. Global Reality (2015) 62
taxman.com 204 held that the appellant has failed to fulfil the condition
of clause (a) of Section 80IB (10) of the Act. He confirmed the
disallowance of the claim under Section 80IB (10) to Rs.13,00,15,605/-.
09 The assessee also challenged the levy of interest under Section 234B and
234C of the Act. Assessee submitted that as per para No. 6 of the
assessment order the appellant had sold 10,000 equity shares of M/s. Gul
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Properties Pvt. Ltd. for Rs.200 crores. Out of this, assessee received
Rs.127 crores in the Financial Year 2007-08. The Assessing Officer
stated that assessee has considered the date of sale on 30.03.2012.
However, assessee has received more than 51% of consideration in
previous years. The assessee ought to have paid the advance tax during
the year. As assessee has failed to do so, the Assessing Officer computed
that interest liability under Section 234B & 234 C of the Act of Rs. 4.8
crores.
10 The assessee contended that the issue is squarely covered in favour of the
assessee by the decision of the co-ordinate bench in the case of Ram S.
Sarda Vs. DCIT (2012) 13 ITR (T) 457. The ld. CIT (Appeals) held that
if the assessee does not contest the liability of advance tax then assessee
couldn’t question the liability of interest under Section 234B of the Act.
He, therefore, noted that when advance tax liability is not disputed, it
becomes a case of exercise of discretion by the Assessing Officer in
levying or not levying interest under Section 234B or 234C of the Act.
11 Thus, assessee aggrieved with the order of the ld. CIT (Appeals) has
preferred this appeal before us.
12 The ld. AR on the issue of completion of the housing project for claiming
deduction u/s 80 IB (10) of the act, submitted that appellant obtained the
approval on 26.09.2006 for developing housing project in the name of
Neo Project, Phase-I, as on 11056 sq. mtrs. of land situated at Plot No.
11, Indirapuram, Ghaziabad. The permissibility of 5 years for
completion of the project ended on 31st of March 2012. He submitted
that assessee submitted a request on 15.02.2011 to GDA for issuance of
registration in the name of first buyer of the flats. Accordingly, on
21.12.2011 the first flat was sold at same registration. The Electricity
Board on 24.10.2011 approved the installation of lift in various towers.
Thus, on 21.10.2011 the process of handing over of the possession to
respective buyers submitted. He further stated that Electricity Board on
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28.11.2011 issued electricity certificate to the project. Thus, based on
this on 30.11.2011 the assessee made an application for issuance of
completion certificate in respect of the project. He referred to such
application placed at Page Nos. 65 of the paper book. He further referred
to the letter dated 21.02.2013 issued by GDA confirming the date of
completion i.e. 21.02.2011. He further stated that the GDA once again
confirmed to the Addl. CIT during the remand proceedings about the date
of completion at 21.02.2011. Such communication dated 3.09.2015 was
also submitted. He further stated that before 31.03.2012 i.e. the cut-off
date 296 flats were already registered in favour of buyers by the GDA.
This itself shows that the project was in fact completed before the cut-off
date. He further referred to the decision of the Hon’ble Delhi High Court
in CIT Vs. CHD Developers Ltd. in 362 ITR 177 (Del.) He specifically
referred to Para No. 7 wherein para 8.16 identical facts were considered.
He also referred to para No. 9 of that decision. He referred to para No.
10 of that decision wherein the claim of the assessee was allowed
following the decision of the Hon’ble Gujarat High Court and Hon’ble
Karnataka High Court. He further referred to a decision from paper book
where several decisions of the co-ordinate bench were relied upon. He
further stated that the decision of the Hon’ble Madhya Pradesh High
Court in CIT Vs. Global Reality 379 ITR 107 (M.P.) relied upon heavily
by the ld. CIT (Appeals) for confirming the disallowance of deduction
has already been stayed by the Hon’ble Supreme Court vide order dated
8.07.2019. He, therefore, submitted that this decision cannot be applied
to the facts of the case of the assessee. He further even distinguished the
facts of that case and stated that it should not be applied. He extensively
referred to the provisions of Section 80IB (10) of the Act. He further
submitted that the fact of completion before the cut-off date is also
supported by certificate of architect. He further stated that though CIT
(Appeals) for this assessment year has not allowed the claim of the
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assessee. However, he referred to the order of the ld. CIT (Appeals)
dated 23.01.2018 for Assessment Year 2013-14 and order dated
10.05.2018 for Assessment Years 2014-15 and 2015-16 wherein the
claim of the assessee was thoroughly discussed and the addition on
account of disallowance of deduction under Section 80IB(10) of the Act
was allowed. He, therefore, submitted that the claim of the assessee
deserves to be allowed.
13 The ld. DR heavily relied upon the order of the ld. Assessing Officer and
the CIT (Appeals). He also extensively relied on the decision of the
Hon’ble Madhya Pradesh High Court in CIT vs. Global Reality and
stated that the issue in the case of the assessee is squarely covered against
the assessee. It was further stated that merely stating of the decision by
the Hon’ble High Court does not obliterate the binding precedent of the
order unless it is quashed. With respect to the order of the ld. CIT
(Appeals) in subsequent years he submitted that the appeals for
Assessment Years 2014-15 and 2015-16 have been dismissed by the co-
ordinate bench on account of low tax effect and appeal for Assessment
Year 2013-14 is pending before the co-ordinate bench. Thus, moreover
the orders of CIT (Appeals) as they have been challenged before the
higher forum cannot be an on-going force for appeal at higher forum. In
view of this he submitted that the order of the lower authorities so far as
disallowance of deduction under Section 80IB (10) is concerned is
required to be upheld.
14 We have carefully considered the rival contention and perused the orders
of the lower authorities. The facts are clearly stated in the above
paragraphs that the approval of the housing project was granted on 26
September 2006. Therefore, the project is required to be completed
within five years from the end of the year in which the approval was
granted. Thus, the project should have been completed by 31st of March
2012. The assessee filed an application before the Ghaziabad
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development authority for issue of completion certificate on 30
November 2011, which is placed at page number 65 of the paper book.
Along with the application, the assessee submitted the drawings of the
buildings duly signed by the architect, the landscaping work as per the
sanction drawings, no objection for operating the left, drawings, Mark
parking plan, and site plan market with setback. The assessee requested
Ghaziabad development authority to issue the completion certificate of
the project. The assessee has also obtained a certificate dated 17 August
2012 from M/s Jaiswal & Associates, architects, planners, and engineers
who certified that the assessee has developed two bedroom apartments at
plot number 11, Vaibhav Khand, Indrapuram, Ghaziabad Under the
project name “Shipra Neo”. The approval of the plan for construction of
the development was granted by the Ghaziabad development authority on
26/09/2006 on a total plot area at 11,055.99 m². The built-up area of the
apartment was also verified and it was certified that the built-up area of
two bedroom flat consisting of 346 lakhs in seven blocks having the
highest built-up area of one unit of flats in square feet of 999.23 ft² to the
lowest built-up area of 934.011 ft². It was also certified that the project
has been completed and the possession has already been given to the
customers during financial year 2011 – 2012. Consequent to the above
request of the assessee dated 30 November 2011 to the Ghaziabad
development authority, on 21 February 2013, it issued a letter for
payment of fees of ₹ 3,243,830/- and completion certificate stating that
date of completion of the project is accepted as 21st of February 2011.
The fee was also charged from the assessee from 1/4/2006 to 21st/2/2011.
Further, it was also noted that the flat was registered in favour of the
buyer on 21 February 2011, which was requested as per letter dated 15
February 2011 to Ghaziabad development authority to register a flat
number SNC – 1104. Along with this letter, the assessee has also
submitted, and it stated that the construction of above-mentioned flat is
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according to the approved map and therefore the above let may be
registered in the name of the buyer. Further, the committee constituted
by the Ghaziabad development authority also certified that the date of
completion of the above project is 21 February 2011. Further, a letter
was issued by Ghaziabad development authority on 13th of March 2015
to the assessee wherein also the date of completion is stated to be
21st/2/2011. Thus according to the sale deed even the buyer is accepted
the possession of the above property in its completeness. Further, on
page number 104 of the paper book the assessee has submitted the list of
late buyer whose position has been given to them before 31st of March
2012. Assessee has given a list of 102 such buyers who have been
allotted flats, possession is granted and the sale deed is registered. When
the learned assessing officer asked the Ghaziabad development authority
to state the completion date of the above project, a letter dated 3
September 2015 was issued by the Ghaziabad development authority to
additional Commissioner of income tax stating that that approval of the
plan was granted on 1 April 2006 and the flats in the above project were
registered on 21 February 2011 and therefore the date of completion has
been taken at 21 February 2011. The learned assessing officer also asked
the further information and therefore it gave the information that the
committee constituted inspected the property on 29th of January 2013.
Therefore the learned assessing officer was of the view that when the
inspection of the property has took place only on 9 January 2013 the date
of completion could not have been certified by the Ghaziabad
development authority on 21st of February 2011. The assessee has also
relied on the Uttar Pradesh apartment (promotion of construction,
ownership and maintenance) act, 2010 wherein it has been provided that
that any apartment can be transferred by the promoter to any person only
after obtaining the completion certificate from the prescribed sanctioning
authority is for building bylaws. It was further provided that if the
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completion certificate is not issued by the prescribed sanctioning
authority within three months of the submission of the application by the
promoter complete with all certificates and other documents required, the
same shall be deemed to have been issued after the expiry of three
months. It also specifies that the completion mean the completion of the
construction work of a building as a whole or the completion of an
independent bloc of such building. In view of this the claim of the
assessee is that according to that law when the assessee applies for
completion certificate to respective authority, and same is not granted
within three months of such request, the completion certificate is deemed
to have been granted to the assessee after the expiry of three months. In
the present case, the assessee made an application on 30 November 2011;
therefore, on this ground also the completion date is within the five
years limitation. It is also interesting to note that for assessment year
2013 – 14 identically the deduction u/s 80 IB 10 was disallowed by the
learned assessing officer however on appeal before the learned and CIT –
A allowed the claim of the assessee wide order dated 23 January 2018.
Further, similarly for assessment year 2014 – 15 also the learned CIT
appeal allowed the claim of the assessee as per order dated 10 May 2018.
However, both these orders are in challenge before the coordinate bench.
However, the reasons given therein are required to be considered. An
interesting fact has been recorded by the learned CIT – A for assessment
year 2013 – 14 that during the financial year 2010 – 11 five of the units
got registered in favour of the customers by the appellant company and
another 291 units were transferred in financial year 2011 – 12 out of the
total 346 units constructed by the assessee. Thus 86% of the total units
were registered in the name of the ultimate customers before the end of
the financial year 2011 – 12, which is also the cut-off date for getting the
completion certificate. Therefore, it was held that that the project of the
assessee was completed much before the cut-off date as per the
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provisions of the act i.e. 31st of March 2012. The learned CIT – A noted
that that the honourable M P High Court has taken a view in favour of
the strict interpretation of the statute as relied upon by the learned
assessing officer. He also noted that the honourable Madras High Court
in 29 taxmann.com 386, Honourable Gujarat High Court in 362 ITR 174,
Honourable Delhi High Court in 362 ITR 177, Honourable Bombay High
Court in 377 ITR 150 and various coordinate benches have taken a view
which is in favour of the assessee. The learned CIT – A has noted that
there is no decision of the Honourable jurisdictional High Court either
against the assessee or in favour of the assessee. Therefore, he, relying
on the decision of the honourable Supreme Court in the CIT versus
Vegetable Products Ltd (1973) 88 ITR 192 decided the issue in favour of
the assessee. Coming to the decision of the honourable Madhya Pradesh
High Court in 379 ITR 107 , which has been relied upon by the learned
assessing officer and CIT A for denying the benefit u/s 80 IB (10) of the
act to the assessee on the issue of the completion certificate has been
stayed by the Honourable Supreme Court in CIT versus Global Estates in
SLP number 35004 – 05/2015. However, stay of a judgment does not
obliterate the principles laid down therein, however, where there are
several judicial precedents of honourable High Courts in favour of the
assessee, same should be followed in the given circumstances. In view of
this, we hold that the date of completion of the project has correctly been
claimed that 21st of February 2011 and it is in accordance with the
provisions of Section 80 IB (10) of The Income Tax Act. Accordingly,
we allow ground number [1] of the appeal of the assessee.
15 The [2] ground of appeal is with respect to non-fulfillment of the
condition laid down as per clause (f) of Section 80 IB (10) of the act.
Here the learned assessing officer has disputed the eligibility to claim
deduction u/s 80 IB (10) on the ground that appellant has violated the
provisions of clause (f) by allotting more than one residential unit to
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persons belonging to the same family. The learned assessing officer
noted that there are [3] instances where such violation has been noted.
The assessee explained that barring the above [3] exceptions there are no
such instances when the units have been so sold. The assessee himself
submitted before the learned assessing officer that the amount of
deduction excess claimed on this account proportionately is only ₹ 52.47
lakhs and it was surrendered. Before the learned CIT – A also assessee
submitted that only proportionate disallowance can be made. However
the learned CIT – A rejected contentions of the assessee.
16 The learned authorised representative submitted that only proportionate
disallowance could be made. The learned departmental representative
relied upon the order of the learned and CIT – A.
17 We have carefully considered the rival contention and perused the orders
of the lower authorities. This issue is now squarely covered in favour of
the assessee by the decision of the honourable Bombay High Court in
Kamat Constructions Pvt. Ltd. Vs ACIT (Bombay High Court) Tax
Appeal No. 47 of 2016 dated 01/12/2020 AY 2012-13. Accordingly, we
hold that only proportionate deduction to the extent of violation of the
provisions of Section 80 IB (10) (f) can be made with respect to
allotment of the units to the family members/relatives of the allottees.
Accordingly, ground number 2 of the appeal of the assessee is allowed.
18 The 3rd ground of appeal is with respect to the charging of the interest
u/s 234C of The Income Tax Act and 4 th ground of appeal is with
respect to the charging of interest u/s 234B of the income tax act 1961.
The facts clearly show that the assessing officer has accepted the returned
income of the appellant except the claim of deduction of ₹ 13 crores u/s
80 IB (10) of the income tax act. Assessee has also paid tax on the book
profit u/s 115JB of the Income Tax Act , however pursuant to the
assessment , the tax liable to was determined under the normal provisions
of the Income Tax Act. The fact shows that during the year under
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consideration the appellant earned long-term capital gain on sale of
shares of one private limited company i.e. Gul properties private limited
on 30th March 2012. Claim of the assessee is that the above long-term
gain transaction materialize on 30 of March 2012 as per transfer of shares
on the basis of the execution of transfer deed on receipt of full
consideration. Resultantly, tax liability in respect of these transaction
did arise on 30 March 2012 only and not prior to that. Therefore the
claim of the assessee is that there was no case of any advance tax liability
prior to 30/3/2012 as per the provisions of Section 209 read with Section
211 of the income tax act and as such provisions of Section 234C are not
applicable. However, the learned assessing officer charged interest
Under Section 234C and 234B of the act.
19 On appeal before the learned CIT – A, he rejected the contention of the
assessee and held that the appellant could contend that he is not liable to
pay any advance tax but if the appellant does not dispute the amount of
advance tax determined, he cannot dispute the levy of penalty interest nor
question its quantum. For this proposition the learned CIT – A relied
upon the decision of the honourable Karnataka High Court in 108 ITR
935 and Bombay High Court in case of 27 ITR 192. The learned CIT – A
further referred to the decision of the Honourable Allahabad High Court
in case of income tax appeal number 128 of 2004 in case of Lenoleum
House V ITO dated 4/10/2012. Therefore, by this ground the assessee
challenges charging of the interest u/s 234C and 234B of the Act.
20 The ld AR relied up on plethora of decision of the coordinate benches to
support case that no interest is chargeable u/s 234C of the act prior to
30/03/2012.
21 The ld DR relied up on the orders of the LD CIT A.
22 We have heard the rival contentions and perused the orders of the lower
authorities. Fact shows that appellant has sold shares worth ₹ 200 crores
being 10,000 equity shares of Gul properties private limited. Out of the
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sale, consideration the appellant received ₹ 127 crores in financial year
2007 – 08 the AO has observed that the appellant has considered the date
of sale to be 30 March 2012. The CIT – A of the view that appellant
having received more than 51% of the consideration in previous years the
appellant ought to have paid advance tax during the year Under account
and therefore the interest liability u/s 234B and 234C of the act are
leviable. The learned CIT – A relied heavily on the decision of the
Honourable Allahabad High Court. However on careful reading of the
decision of the honourable Allahabad Court, it was on the issue that
Where assessment made originally by Assessing Officer is either varied
or even set aside by appellate authority, but on further appeal, original
order of Assessing Officer is restored either in part or wholly, interest
under section 220(2) shall be computed with reference to date reckoned
from original demand notice and with reference to tax finally determined.
Therefore, according to us the above decision does not have any
applicability to the facts of the case. According to the proviso to
provisions of Section 234C (1) (a) itself provides that nothing contained
in the provisions of Section 234C shall apply to any shortfall in the
payment of tax due on the returned income whereas such shortfall is on
account of Under estimate or failure to estimate the amount of capital
gain. Further, the case of the assessee is also supported by the decision
of the honourable Rajasthan High Court [2003] 264 ITR 744 (Rajasthan)/
[2003] 185 CTR 601 (Raj) in Commissioner of Income-tax v. Smt.
Premlata Jalani as well as the decision of the coordinate benches in case
of Kumari Kumar Advani versus ACIT (ITA number 7661/Mum/13),
Ridhi Sidhi Gluco Boils Ltd V ACIT (ITA number 27/Ahd/15). In view
of this, the learned assessing officer is directed to compute interest u/s
234C in accordance with the above decisions.
23 As the assessee has earned capital gain as on 30th of March 2012, i.e.
before the close of the year, the interest is chargeable u/s 234B of the
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act. Further, the interest u/s 234B of the act arises only at the close of the
financial year, by that time the income from capital gain arose to the
assessee and interest u/s 234B is chargeable to tax in accordance with the
law.
24 In view of this, the learned assessing officer is directed to recompute the
interest chargeable u/s 234C and 234B of the act. In the result ground
number 4 of the appeal of the assessee is allowed and ground number [3]
of the appeal of the assessee is dismissed.
25 In the result, appeal of the assessee is partly allowed.

Order pronounced in the open court on: 22/01/2021.

Sd/- Sd/-
(H.S.SIDHU) (PRASHANT MAHARISHI)
JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated: 22/01/2021

*MEHTA*
Copy forwarded to

1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR:ITAT
ASSISTANT REGISTRAR
ITAT, New Delhi

Date of dictation 22.01.2021
Date on which the typed draft is placed before the dictating 22.01.2021
member
Date on which the typed draft is placed before the other 22.01.2021
member
Date on which the approved draft comes to the Sr. PS/ PS 22.01.2021
Date on which the fair order is placed before the dictating 22.01.2021
member for pronouncement
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Date on which the fair order comes back to the Sr. PS/ PS 22.01.2021
Date on which the final order is uploaded on the website of 22.01.2021
ITAT
date on which the file goes to the Bench Clerk 22.01.2021
Date on which the file goes to the Head Clerk
The date on which the file goes to the Assistant Registrar
for signature on the order
Date of dispatch of the order

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