2011 (7) TMI 1200 - AT - Income Tax

Summary

Issues Involved:
1. Eligibility for deduction u/s 80IB(10) based on the plot area.
2. Eligibility for deduction u/s 80IB(10) based on the presence of commercial area.

Summary:

Issue 1: Eligibility for deduction u/s 80IB(10) based on the plot area

The Assessing Officer (AO) disallowed the claim of deduction u/s 80IB(10) on the grounds that the plot area for the Vidhi Complex project was 3461.68 sq. meters, which is less than the required one acre. The CIT(A) upheld this disallowance, stating that the project was constructed on a plot of land less than one acre after excluding the area occupied by the DP road. The Tribunal, however, referred to the decision in the case of Umiya Enterprises vs. ITO, which held that the area for road set back, recreation open space, and internal road set back should not be excluded for calculating the plot size. Consequently, the Tribunal reversed the CIT(A)'s order, directing the AO to allow the deduction after verifying the commercial area in the Vidhi Complex project.

Issue 2: Eligibility for deduction u/s 80IB(10) based on the presence of commercial area

The AO also disallowed the deduction on the basis that the Vidhi Complex project included commercial area, which violated the conditions of u/s 80IB(10). The Tribunal found that the issue was covered by the decision in the assessee's own case for the assessment year 2005-06, where it was held that the existence of commercial area in a different project within the same sanctioned layout does not affect the eligibility for deduction u/s 80IB(10) for the housing project. The Tribunal directed the AO to verify if the Vidhi Complex project had any commercial area and if such area was within the permitted limits. The Tribunal concluded that the presence of commercial area in the Amrut Dham project would not impact the deduction claim for the Vidhi Complex project.

Conclusion:

The appeal filed by the assessee was allowed, with the Tribunal setting aside the order of the CIT(A) and directing the AO to allow the claim for deduction u/s 80IB(10) after verifying the commercial area in the Vidhi Complex project. The order was pronounced on July 15, 2011.