2011 (5) TMI 867 - AT - Income Tax

Summary

Issues Involved:
The judgment involves the issue of deduction u/s 80IB(10) claimed by the assessee in respect of project Ganesh Plaza II.

Issue 1: Deduction u/s 80IB(10) Claimed by the Assessee

The assessee claimed deduction u/s 80IB(10) for an amount of Rs. 86,87,698/- on account of income from the project Ganesh Plaza II. The Assessing Officer (A.O.) noted that the commercial area in the project exceeded 2000 sq. ft., violating the conditions of section 80IB(10). The A.O. rejected the explanations provided by the assessee and disallowed the deduction. However, before the Commissioner of Income Tax (Appeals) [CIT(A)], it was argued that the project had been approved as a residential and commercial building by CIDCO. The CIT(A) allowed the deduction for residential units but disallowed it for the commercial component exceeding 2000 sq. ft. The Revenue appealed against this partial relief.

Issue 2: Application of Law Prior to 1.4.2005

The Tribunal considered the application of the law prior to 1.4.2005 in determining the eligibility for deduction u/s 80IB(10). Referring to previous decisions, the Tribunal held that since the project was approved before 1.4.2005, the old law without the 2000 sq. ft. restriction on commercial area applied. The Tribunal also cited a case to support the view that the law as it existed when the project was approved and development commenced should be applied. Consequently, the Tribunal upheld the CIT(A)'s decision to allow the deduction for the residential units and ruled in favor of the assessee regarding the commercial component, as it was less than 10% of the built-up area.

Conclusion:
The Tribunal dismissed the Revenue's appeal and allowed the assessee's Cross-Objection, upholding the CIT(A)'s decision to allow the deduction u/s 80IB(10) for the residential units and ruling that the commercial component, being less than 10% of the built-up area, was also eligible for the deduction.