2011 (2) TMI 1441 - AT - Income Tax

Summary

Issues Involved:

1. Eligibility for deduction u/s 80IB(10) concerning the commercial area exceeding permissible limits.
2. Applicability of clause (d) of sec. 80IB(10) inserted by Finance Act 2004 w.e.f. 1.4.2005 to projects approved before 31.3.2005.

Summary:

Issue 1: Eligibility for deduction u/s 80IB(10) concerning the commercial area exceeding permissible limits

The assessee, an AOP, claimed deduction u/s 80IB(10) for a housing project. The Assessing Officer disallowed the claim, noting that the commercial area of shops in the project exceeded the permissible limit of 2000 sq.ft as per clause (d) of sec. 80IB(10). The assessee argued that this clause was not applicable as their project was approved before 31.3.2005. The CIT(A) allowed the claim, following the Tribunal's decision in Saroj Sales Organization vs ITO and other cases, stating that the amendment should be applied based on the date of project approval.

Issue 2: Applicability of clause (d) of sec. 80IB(10) inserted by Finance Act 2004 w.e.f. 1.4.2005 to projects approved before 31.3.2005

The revenue appealed, arguing that the CIT(A) erred in holding the assessee entitled to deduction u/s 80IB(10), ignoring the applicability of sec. 80IB(10)(d). The Tribunal, considering the arguments and previous decisions, upheld the CIT(A)'s order. It was held that the law as it existed when the project was approved should apply, not the amended law. The Tribunal cited the decision in Hiranandani Akruti JV vs DCIT, emphasizing that amendments should not retroactively affect projects approved before the amendment date.

Conclusion:

The Tribunal dismissed the revenue's appeals, affirming that the assessee's claim for deduction u/s 80IB(10) was valid as the project was approved before the amendment date. The decision followed the precedent set by Saroj Sales Organization and Hiranandani Akruti JV cases, ensuring that the law applicable at the time of project approval governs the eligibility for deductions.

Order pronounced on the 11th day of Feb 2011.