2012 (8) TMI 1085 - AT - Income Tax

Summary

Issues involved: Appeal against order u/s 143(3) for assessment year 2005-2006 - Deduction u/s 80IB(10) - Existence of commercial area in housing project - Eligibility of project for deduction - Claiming deduction on commercial component.

Summary:

Issue 1: Existence of commercial area in housing project
The appellant department challenged the CIT(A)'s decision regarding the existence of a commercial area in the housing project approved before 01/04/2005 affecting the deduction u/s 80IB(10) of the Income Tax Act, 1961. The appellant contended that the commercial units were constructed and sold along with the residential units, leading to the rejection of the deduction claim. However, the CIT(A) allowed the claim based on the separate maintenance of accounts for commercial and residential projects, non-inclusion of commercial area for deduction purposes, and compliance with Section 80IB(10) conditions. The decision was supported by the High Court ruling in CIT Vs. Brahma Associates, upholding that the existence of commercial units in a project completed before 01-04-2005 does not impact the deduction claim.

Issue 2: Eligibility of project for deduction
The appellant department also disputed the eligibility of the project "Pride Park" for deduction u/s 80IB(10) on a 'stand alone' basis. The CIT(A) considered the separate maintenance of accounts, non-inclusion of commercial area for deduction, and compliance with Section 80IB(10) conditions to allow the deduction claim. The decision was further supported by the High Court ruling in CIT Vs. Brahma Associates, emphasizing that the project's commencement and completion before 01-04-2005 did not affect the deduction claim.

Issue 3: Claiming deduction on commercial component
The appellant department raised concerns about the assessee not claiming deduction on the commercial component of the project, questioning the allowance of deduction u/s 80IB(10). The CIT(A) justified the allowance based on the project's compliance with Section 80IB(10) conditions, separate maintenance of accounts, and non-inclusion of commercial area for deduction purposes. The decision was in line with the High Court ruling in CIT Vs. Brahma Associates, affirming that the existence of commercial units in a project completed before 01-04-2005 does not hinder the deduction claim.

In conclusion, the appeal of the department was dismissed based on the separate maintenance of accounts for commercial and residential projects, non-inclusion of commercial area for deduction purposes, and compliance with Section 80IB(10) conditions, as supported by the High Court ruling in CIT Vs. Brahma Associates.