2009 (6) TMI 1001 - AT - Income Tax

Summary

Issues Involved:
1. Deduction u/s 80IB(10) for housing projects.
2. Erroneous and prejudicial assessment by AO.
3. Proportionate deduction for units exceeding built-up area.
4. Commencement and completion of housing projects.
5. Disallowance u/s 14A.

Summary:

1. Deduction u/s 80IB(10) for housing projects:
The assessee claimed a deduction u/s 80IB(10) for housing projects, which was partially allowed by the AO due to non-furnishing of completion certificates for certain projects. The CIT, however, set aside the assessment, questioning the AO's failure to make necessary inquiries regarding the date of completion, maximum built-up area, and disallowance u/s 14A.

2. Erroneous and prejudicial assessment by AO:
The CIT deemed the AO's order erroneous and prejudicial to revenue, citing the Supreme Court decisions in Rampyari Devi Saraogi vs. CIT and Tara Devi Aggarwal vs. CIT, and the jurisdictional High Court in Gee Vee Enterprises vs. Addl. CIT. The CIT argued that the AO did not adequately verify the conditions for deduction u/s 80IB(10).

3. Proportionate deduction for units exceeding built-up area:
The Tribunal held that even if some units exceeded the statutory limit of 1000 sq. ft., the assessee should still be entitled to proportionate deduction for eligible units. This view was supported by decisions in Bengal Ambuja Housing Developments Ltd., Delhi Iron and Steel Pvt. Ltd., and DCIT vs. Brigade Enterprises Pvt. Ltd.

4. Commencement and completion of housing projects:
The Tribunal found that the AO had made sufficient inquiries and that the assessee had complied with the conditions for deduction, including the commencement and completion dates of the projects. The Tribunal noted that the definition of "built-up area" was inserted by the Finance (No.2) Act, 2004, effective from 1.4.2005, and thus not applicable to the assessment years in question.

5. Disallowance u/s 14A:
No submissions were made regarding disallowance u/s 14A, and the CIT's order setting aside the assessment on this ground was upheld.

Conclusion:
The Tribunal vacated the CIT's order, restoring the AO's assessment, except for the disallowance of deduction for units exceeding the built-up area of 1000 sq. ft. The appeals were partly allowed.