2011 (5) TMI 954 - AT - Income Tax

Summary

Issues involved:
The judgment involves the denial of deduction u/s.80IB(10) amounting to Rs. 24,42,380 based on the commercial area exceeding the prescribed limit.

Deduction u/s.80IB(10) - Commercial Area Dispute:
The assessee, engaged in the business of builders and land developers, claimed deduction u/s.80IB(10) for a specific amount. The Assessing Officer (AO) denied the deduction as the commercial area exceeded the permissible limit of 5% or 2000 sq.fts. as per the amended rule. The CIT(A) upheld the AO's decision, stating that the amended rule was effective from A.Y 2005-06. However, the assessee argued that the project was approved before the amendment and cited precedents where the amended provision was not applicable to projects approved prior to the change.

Precedents Supporting Assessee's Claim:
The Tribunal referred to various decisions favoring the assessee's position, including cases like Saroj Sales Organisation and Hiranandani Akruti JV, where it was held that the amended provisions of sec.80IB(10) were not applicable to projects approved before the amendment. The Tribunal concluded that the assessee was eligible for the deduction u/s.80IB(10) based on the approval date of the project and directed the AO to allow the deduction.

Conclusion:
The Tribunal ruled in favor of the assessee, allowing the appeal and directing the AO to grant the deduction u/s.80IB(10) based on the project's approval date and completion before the amendment. The judgment highlighted the importance of considering the approval date of the project in determining the applicability of amended provisions.