2015 (12) TMI 1622 - AT - Income Tax

Deduction u/s 80IB(10) - Held that - The Tribunal in the case of assessee for assessment year 2007-08 2013 (2) TMI 289 - ITAT MUMBAI identically, deliberated upon the issue and finally held that the assessee is eligible for deduction u/s 80IB(10) of the Act. No contrary facts were brought to our notice by either side in respect of development project carried out in Dharavi Slum Area. Following the aforesaid decision of the Tribunal wherein, the circular of the Board Regulation no. 33(10) of DC rules for Greater Mumbai, 1991, read with provision of notification no. PB-4391/4080(A)/UD-II(ROP)dt. 03/06/1992 along with conditions therein, Notification no. 2 of 2011, dated 05/01/2011, issued by CBDT, decision from Hon ble Apex Court in CIT vs. Alom Extrusion Ltd.(2009 (11) TMI 27 - SUPREME COURT) and Allied Motors P. Ltd. vs. CIT (1997 (3) TMI 9 - SUPREME Court), were considered, thus, we find no infirmity, on this issue, in the order of the Ld.CIT(A). It is affirmed. - Decided in favour of assessee Eligible for deduction u/s 80 IB(10) - Disallowance to rent expenses - assessee paid rent to close relatives and did not produced the details of the premises taken on rent, purpose of utilization of the premises for business purposes and genuineness of the transaction - Held that - Even if, the said expenses are disallowed, the assessee is eligible for deduction u/s 80 IB(10) on enhanced income for the project as the said expenses worked laid against the income from the eligible project by placing reliance upon the decision in Liberty India Ltd. (2009 (8) TMI 63 - SUPREME COURT) wherein held that the devices adopted to reduced on inflate the profits of eligible business has to be rejected while calculating deduction u/s 80IB. As that during assessment proceeding the details of payment of rent of ₹ 1,20,00/- is to Shri. Amit Ringshia and Shri. Aditya Ringshia, with respect to Andheri office premises and ₹ 1,80,000/- to Shri. K.G. Ringshia (HUF) for our office premises in Vile-Parle were filed by the assessee. The payment of rent was duly authenticated by relevant documents. No Contrary decision or facts were brought to our notice by either side and more specifically the Revenue. Thus, we find on infirmity in the conclusion drawn by the Ld. CIT (A) in deleting the addition .- Decided in favour of assessee

Summary

Issues Involved:
1. Deduction under Section 80IB(10) of the Income Tax Act, 1961.
2. Deletion of disallowance of rent expenses.

Issue-wise Detailed Analysis:

1. Deduction under Section 80IB(10) of the Income Tax Act, 1961:
The Revenue was aggrieved by the order dated 19/03/2014, which directed the Assessing Officer to allow the deduction under Section 80IB(10) amounting to Rs. 41,30,079/-. The Revenue contended that the project was not eligible for the deduction as it did not meet the required conditions, particularly the plot size being less than one acre. The assessee argued that this issue was already settled in their favor by the Tribunal's decision dated 12/09/2012 for the assessment year 2007-08.

The Tribunal had previously held that the assessee was eligible for the deduction under Section 80IB(10) despite the plot size being less than one acre because the project was a slum rehabilitation project approved by the Slum Rehabilitation Authority (SRA) and notified by the CBDT. The Tribunal noted that the CBDT's notification dated 5th January 2011 clarified that the benefit applied to projects approved between 1st April 2004 and 31st March 2008.

The Tribunal reaffirmed that the assessee fulfilled all conditions for the deduction, including the project being approved by the SRA and the project size conditions being relaxed by the Finance Act, 2004. The Tribunal found no reason to deviate from the earlier decision and confirmed the deduction under Section 80IB(10).

2. Deletion of Disallowance of Rent Expenses:
The Revenue also challenged the deletion of the disallowance of rent expenses amounting to Rs. 4,20,000/-, arguing that the assessee paid rent to close relatives without providing details of the premises or the business purpose of the rent.

The Tribunal noted that the assessee had provided details of the rent payments to Shri. Amit Ringshia, Shri. Aditya Ringshia, and Shri. K.G. Ringshia (HUF) for office premises in Andheri and Vile-Parle. These payments were authenticated by relevant documents. The Tribunal further observed that even if the rent expenses were disallowed, the assessee would still be eligible for the deduction under Section 80IB(10) on the enhanced income, as per the decision in Liberty India Ltd. (317 ITR 218 SC).

The Tribunal found no infirmity in the conclusion drawn by the CIT(A) regarding the rent expenses and affirmed the deletion of the disallowance.

Conclusion:
The Tribunal dismissed the Revenue's appeal, confirming the deduction under Section 80IB(10) and the deletion of the disallowance of rent expenses. The Tribunal's decision was based on the fulfillment of all conditions for the deduction and the proper authentication of rent payments. The order was pronounced in the open court on 03/12/2015.