2012 (8) TMI 1077 - AT - Income Tax

Summary

Issues Involved:
1. Assessee's claim for deduction u/s 80IB(10) of the Act.
2. Compliance with the condition prescribed in clause (c) of section 80IB(10) regarding the built-up area of residential units.

Summary:

Issue 1: Assessee's claim for deduction u/s 80IB(10) of the Act

The assessee, a partnership firm engaged in developing land and constructing housing projects, claimed deductions u/s 80IB(10) for profits derived from the 'Kumar Residency - Phase-I' project for A.Ys. 2003-04, 2004-05, and 2007-08. The assessments for A.Ys. 2003-04 and 2004-05 were passed u/s 143(3) r.w.s. 263, and for A.Y. 2007-08 u/s 143(3). The Assessing Officer denied the deduction claim, asserting non-compliance with clause (c) of section 80IB(10) regarding the built-up area of residential units.

Issue 2: Compliance with the condition prescribed in clause (c) of section 80IB(10) regarding the built-up area of residential units

The dispute centered on whether the built-up area of certain residential units exceeded the 1500 sq. ft. limit prescribed in clause (c) of section 80IB(10). The Assessing Officer found that four units were combined into two larger units, exceeding the limit. The assessee argued that the units were sold as independent units and combined by purchasers post-possession. The CIT(A) supported the assessee, noting that the units were sold separately, had individual completion certificates, and separate electricity connections. The CIT(A) concluded that the merger occurred post-sale, thus not violating section 80IB(10).

The Tribunal upheld the CIT(A)'s decision, emphasizing that the merger of units by purchasers post-possession did not disqualify the assessee from the deduction. The Tribunal referenced the Mumbai Bench decision in G.V. Corporation, which supported the assessee's position. Consequently, the Revenue's appeals were dismissed, and the assessee's cross objections were deemed academic and dismissed as infructuous.

Conclusion:

The Tribunal confirmed the CIT(A)'s conclusion that the assessee did not violate section 80IB(10)(c) and was entitled to the deduction. The appeals of the Revenue were dismissed, and the cross objections by the assessee were rendered academic and dismissed.