2011 (6) TMI 884 - AT - Income Tax

Summary

Issues involved:
The judgment deals with the following Issues:
1. Eligibility of deduction u/s 80IB(10) for a residential project with commercial establishments exceeding the specified limit.
2. Applicability of amendment in law w.e.f 1-4-2005 on deduction u/s 80IB(10).
3. Entitlement to deduction u/s 80IB(10) based on project approval and formation of Assessee AOP.

Issue 1:
The Revenue contended that the residential project had commercial establishments exceeding the limit, disentitling the assessee from claiming deduction u/s 80IB(10). However, the Tribunal referred to the decision of the Hon'ble Bombay High Court in CIT vs. Brahma Associates, emphasizing that once the project is approved by local authorities, deduction must be allowed on the entire project, rejecting the Revenue's objection.

Issue 2:
Regarding the amendment in law w.e.f 1-4-2005, the Tribunal cited the case of Hiranandani Akruti JV vs. DCIT, highlighting the hardship faced by assessees due to retrospective application. The Tribunal held that the law as it existed when the project was approved should apply, rejecting the Revenue's objection.

Issue 3:
The Revenue argued that the AOP was formed after project approval, disqualifying the assessee from deduction u/s 80IB(10). However, the Ld. CIT(A) ruled in favor of the assessee, noting that the project was developed by the AOP led by a physically challenged individual, Shri Harish P. Doshi. The Tribunal upheld the decision, stating that sec.80IB(2)(i) is not applicable for claiming deduction u/s 80IB(10), and dismissed the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the assessee's entitlement to deduction u/s 80IB(10) based on the project's approval and development by the AOP.