2013 (3) TMI 690 - AT - Income Tax

Summary

Issues Involved:
1. Claim of deduction u/s 80IB(10) for the "Citadel" project.
2. Applicability of section 80IB(10)(d) regarding commercial area limits.
3. Applicability of section 80IB(14)(a) regarding built-up area limits.

Summary:

1. Claim of Deduction u/s 80IB(10) for the "Citadel" Project:
The assessee, a partnership firm engaged in real estate, filed a return of income for A.Y. 2007-08, claiming deductions u/s 80IB(10) for two projects: "Citadel" and "Citadel Enclave." The Assessing Officer denied the deduction for both projects, but the CIT(A) allowed the deduction for "Citadel Enclave" and denied it for "Citadel." The denial was based on the project's commercial area exceeding limits and some flats exceeding the built-up area limit of 1500 sq.ft. The Tribunal had previously dealt with similar objections for A.Y. 2003-04 to 2006-07, ruling in favor of the assessee.

2. Applicability of Section 80IB(10)(d) Regarding Commercial Area Limits:
The Revenue's objection was based on the commercial area exceeding the 2000 sq.ft. limit prescribed in section 80IB(10)(d), effective from 1-4-2005. The Tribunal, referencing the Hon'ble Bombay High Court's decision in Brahma Associates, held that the amendment is prospective and not applicable to projects commenced before 1-4-2005. The "Citadel" project, approved as a residential-cum-commercial project by the local authority, qualified for the deduction as the amendment did not apply retrospectively.

3. Applicability of Section 80IB(14)(a) Regarding Built-Up Area Limits:
The Revenue argued that some units exceeded the 1500 sq.ft. limit due to the inclusion of terrace and balcony areas, as defined in section 80IB(14)(a). The Tribunal held that this definition, effective from 1-4-2005, does not apply to projects commenced before this date. The built-up area should be considered as per local municipal rules, which do not include terraces. Thus, the assessee's project met the conditions for the deduction.

Conclusion:
The Tribunal upheld the assessee's claim for deduction u/s 80IB(10) for the "Citadel" project, aligning with previous decisions and the Hon'ble Bombay High Court's ruling in Brahma Associates. The appeal of the assessee was allowed.