2014 (5) TMI 1137 - AT - Income Tax

Disallowance of claim of deduction u/s.80IB(10) - Gram Panchayat is not a local authority competent to issue approvals and completion for the housing project - Held that - We hold that the concerned Gram Panchayat is a competent local authority for the purpose of issuing approval and completion certificates for claiming deduction u/s.80IB(10) in respect of the profit from sale of eligible flats in project in question. The Assessing Officer is directed accordingly. See Shri Krishna Haribhau Lohokare, Prop. Harikrupa Builders Versus ITO, Ward-4 (5) , Pune 2013 (2) TMI 800 - ITAT PUNE Road area not part of the project and hence the area of the land was less than one acre - Held that - This issue is covered in favour of assessee by the order of ITAT, Pune B Bench in Bunty Builders Vs. ITO 2010 (2) TMI 791 - ITAT, Pune to hold that the area of amenity space compulsorily required to be handed over to Municipal Corporation constitutes an integral part of housing project and hence, is required to be considered while calculating the one acre area of plot of land of housing project for the purpose of deduction u/s.80IB(10). So, the assessee is eligible for claiming deduction on this account as well. The Assessing Officer is directed accordingly. - Appeal decided in favour of assessee

Summary

Issues:
1. Disallowance of claim of deduction u/s.80IB(10)
2. Competency of Gram Panchayat as a local authority for issuing approvals and completion certificates
3. Inclusion of road area as part of the housing project for calculating land area

Issue 1: Disallowance of claim of deduction u/s.80IB(10):
The appeal was filed against the CIT(A)'s order confirming the disallowance of the deduction u/s.80IB(10) amounting to Rs. 25,48,221. The Assessing Officer denied the claim citing reasons related to the competency of the Gram Panchayat to issue approvals and completion certificates. The ITAT Pune Bench referred to a previous case and concluded that the Gram Panchayat was a competent local authority for issuing completion certificates. The Tribunal emphasized that the law should be interpreted liberally in favor of the assessee, especially in cases where compliance was hindered due to administrative changes. The Tribunal directed the Assessing Officer to allow the deduction as the assessee fulfilled all conditions.

Issue 2: Competency of Gram Panchayat as a local authority:
The Tribunal held that the concerned Gram Panchayat was a competent local authority for issuing approvals and completion certificates for claiming deduction u/s.80IB(10). It was emphasized that the benefit of doubt should be given to the assessee in cases where administrative changes affected compliance, and the law should be construed liberally to promote economic growth. The Tribunal directed the Assessing Officer to act accordingly based on this finding.

Issue 3: Inclusion of road area in the housing project:
The Tribunal referred to a previous case where it was established that the area of amenity space handed over to the Municipal Corporation should be considered an integral part of the housing project for calculating the one-acre land area. The Tribunal held that the assessee was eligible for claiming deduction based on this consideration. Consequently, the appeal filed by the assessee was allowed on these grounds, and the Assessing Officer was directed to comply with the Tribunal's findings.

This comprehensive analysis of the judgment highlights the key issues addressed by the ITAT Pune Bench regarding the disallowance of deduction u/s.80IB(10), the competency of the Gram Panchayat as a local authority, and the inclusion of road area in the housing project for calculating land area.