9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (9) TMI 1009 - AT - Income TaxEligibility to deduction u/s.80-IB(10) - allowance on proportionate basis - Held that - The provision being an incentive provision, toward promoting the growth of affordable housing in the country, the construction enables the same, while at the same time operating to exclude the extension of the incentive to housing that is not covered or targeted by the provision, as sought to be included by the ld. AR. Again, it is trite law that the benefit of any ambiguity, if any, in the language of the provision, so that two reasonable views are permissible, is to go to the tax payer. We may clarify that our decision, even as sought to be emphasized earlier, despite approving the proportionate deduction, i.e., w.r.t. section 80-IB(10)(c), is, for the reasons afore-stated, thus not in conflict with the decision by the hon ble jurisdictional high court in Brahma Associates (2011 (2) TMI 373 - BOMBAY HIGH COURT ). The deduction toward the residential units satisfying the condition of s. 80-IB(10)(c), arrived at on a proportionate basis, is therefore upheld. - Decided against revenue
Issues Involved:
1. Eligibility of the assessee's housing project 'Ekta Meadows' for deduction under section 80-IB(10) of the Income Tax Act, 1961. 2. Interpretation of section 80-IB(10)(c) regarding the maximum built-up area of residential units. 3. Applicability of the decision by the jurisdictional High Court in CIT vs. Brahma Associates to the current case. Detailed Analysis: Issue 1: Eligibility of the Assessee's Housing Project for Deduction under Section 80-IB(10) The core issue revolves around whether the assessee, an Association of Persons (AOP) comprising M/s. Sankalp Developers, Shri Ashok G. Mohanani, and Shri Vivek A. Mohanani, is eligible for deduction under section 80-IB(10) for its housing project 'Ekta Meadows'. The project was approved by the local authority on 13.05.2005 and completed on 26.03.2009. The assessee claimed a proportionate deduction based on the built-up area of the residential units, while the Revenue argued that the entire project must meet the conditions of section 80-IB(10) to qualify for any deduction. Issue 2: Interpretation of Section 80-IB(10)(c) Section 80-IB(10)(c) stipulates that the maximum built-up area of a residential unit in a housing project should not exceed 1000 sq. ft. for the Mumbai region. The controversy stems from the fact that 35% of the residential units in 'Ekta Meadows' exceeded this limit, while the remaining 65% did not. The assessee restricted its deduction claim to the profits attributable to the compliant units, whereas the Revenue contended that the entire project must meet the condition to qualify for any deduction. Issue 3: Applicability of the Decision in CIT vs. Brahma Associates The Revenue invoked the decision by the jurisdictional High Court in CIT vs. Brahma Associates, which clarified that the deduction under section 80-IB(10) applies to the entire project as approved by the local authority, and not to parts of it. The Tribunal had previously allowed proportionate deduction in the assessee's own case for the preceding year (A.Y. 2007-08), but this was done without considering the Brahma Associates decision. Analysis: Tribunal's Order for A.Y. 2007-08: The Tribunal allowed the assessee's claim for proportionate deduction based on the decision in Bengal Ambuja Housing Development Ltd. vs. DCIT and other similar cases. However, the Tribunal did not consider the binding precedent set by the jurisdictional High Court in Brahma Associates, which mandates that the entire project must qualify for deduction under section 80-IB(10). Decision in Brahma Associates: The High Court in Brahma Associates held that a housing project, as approved by the local authority, is either entirely eligible or ineligible for deduction under section 80-IB(10). The Court rejected the notion of proportionate deduction based on the area of compliant residential units. This decision is binding and directly applicable to the current case. Interpretation of Section 80-IB(10)(c): The Tribunal examined section 80-IB(10)(c) closely and found that the condition regarding the maximum built-up area applies to each residential unit individually, not to the project as a whole. Therefore, the profits attributable to the compliant units should qualify for deduction, while those attributable to non-compliant units should not. Conclusion: The Tribunal, while acknowledging the binding nature of the Brahma Associates decision, concluded that the deduction should be allowed proportionately for the profits attributable to the residential units that meet the condition of section 80-IB(10)(c). The Revenue's appeals were dismissed, and the proportionate deduction was upheld. Order Pronounced: The Tribunal dismissed the Revenue's appeals and upheld the proportionate deduction for the assessee's housing project 'Ekta Meadows' based on the built-up area of the compliant residential units. The order was pronounced in the open court on September 12, 2014.
|
