2014 (8) TMI 1062 - AT - Income Tax

Allowability of deduction u/s 80IB (10) - project cleared after approval of the Slum Rehabilitation Authority - time limit for calming the deduction - Held that - After hearing both the parties and on perusal of the CIT (A) s order we find the CIT (A) has given the finding categorically by holding that the project in question is a Slump Rehabilitation Project and the time limit provided in the statute will not be applicable to the assessee in view of the proviso to section 80IB(10). - Decided in favour of assessee

Summary

Issues:
1. Allowability of deduction under section 80IB(10) for profit from development of residential building.
2. Interpretation of proviso to clause (a) and (b) of section 80IB(10) regarding project approval.
3. Applicability of time limits for project completion under subsection-10 of section 80IB.

Analysis:
1. The appeal concerned the allowability of a deduction under section 80IB(10) of the Income Tax Act for the profit derived from the development of a residential building. The Revenue challenged the decision of the CIT (A) to allow the deduction amounting to Rs. 1,03,79,815. The core issue was whether the project approval by the Slum Rehabilitation Authority fell within the specified period as per Board's Notification No.2 of 2011.

2. The central question revolved around the interpretation of the proviso to clause (a) and (b) of section 80IB(10) concerning the approval of the revised project and plan. The CIT (A) held that the project in question, approved by the Slum Rehabilitation Authority, was covered by the proviso, thereby exempting it from certain restrictions. The Tribunal analyzed the legislative intent behind the proviso and emphasized the importance of a liberal interpretation to achieve socio-economic objectives.

3. An important aspect of the case was the applicability of time limits for project completion under subsection-10 of section 80IB. The Tribunal considered the statutory provisions and the notification issued by the CBDT, emphasizing that any restriction imposed by subordinate legislation should not override the main enactment. The Tribunal upheld the CIT (A)'s decision, stating that the time limit for project approval after 1st April, 2004, should not be applicable in the case of the proviso to section 80IB(10).

In conclusion, the Tribunal dismissed the appeal of the Revenue, affirming the CIT (A)'s order as fair and reasonable. The judgment highlighted the legislative intent behind the proviso to section 80IB(10) and emphasized the need for a liberal interpretation to support genuine claims for deductions in socio-economic development projects.