2012 (10) TMI 1140 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of the claim u/s 80IB(10) of Rs. 1,04,58,412/-.
2. Pro-rata allowance of deduction u/s 80IB(10) for residential units not exceeding 1500 sq.ft.

Summary:

Issue 1: Disallowance of the claim u/s 80IB(10) of Rs. 1,04,58,412/-

The Assessing Officer (AO) disallowed the assessee's claim for deduction u/s 80IB(10) on the grounds that the residential units exceeded the maximum built-up area specified u/s 80IB(10). The AO found that independent units were merged into single units, thus violating the condition for maximum built-up area. The legislative intent of u/s 80IB(10) was to increase housing stock for low and middle-income groups, and this intent was deemed defeated by the assessee's actions. The CIT(A) upheld the AO's decision, rejecting the claim for deduction.

Issue 2: Pro-rata allowance of deduction u/s 80IB(10) for residential units not exceeding 1500 sq.ft.

The assessee argued that the CIT(A) was not justified in disallowing the pro-rata deduction for residential units not exceeding 1500 sq.ft. The ITAT Pune Bench in the case of D.S.Kulkarni Developers Ltd. vs. ACIT had previously upheld the plea for proportionate deduction u/s 80IB(10) where some residential units violated the built-up area condition. The Tribunal observed that the assessee would not lose the exemption u/s 80IB(10) entirely but would be entitled to a proportionate deduction for eligible units. Similar decisions were cited from other cases, including M/s. Ekta Housing Pvt. Ltd., G.V. Corporation vs. ITO, and Kruti Constructions.

Judgment:

The Tribunal found that the lower authorities did not consider the decisions in G.V. Corporation and Kruti Constructions, which supported the assessee's claim for proportionate deduction. The Tribunal set aside the order of the CIT(A) and restored the issue to the AO for reconsideration based on the facts and law available at the relevant time, providing due opportunity of hearing to the assessee. Both appeals were allowed for statistical purposes.

Pronounced in the open court on the 31st day of October, 2012.