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2013 (1) TMI 419 - AT - Income TaxDeduction u/s 80-IB(10) - Whether a deduction original claimed in the return of income filed could be revised in the course of assessment proceedings? - Held that - CIT (Appeals) was justified in considering the revised computation as a valid one for the purpose of claiming deduction u/s 80-IB(10). There is a clear finding by the CIT (Appeals) that assessee had made a claim u/s 80-IB(10) in the original return itself. This position has not been disputed. Revised computation was filed by the assessee whereby it re-worked the quantum of the claim considering each of the project separately or in other words by omitting out those projects which resulted in a loss. This cannot be construed as a fresh claim - against revenue. Prorata deduction u/s 80-IB(10) for the housing projects - Whether deduction u/s 80-IB(10) could be given to an assessee even where some of the dwelling units in a project exceeded built-up area 1500 sq.ft.? - Held that - As decided in Sanghvi & Doshi Enterprise v. ITO 2011 (5) TMI 597 - ITAT CHENNAI that the assessees are entitled for deduction under s. 80-IB(10) in respect of flats having built-up area not exceeding 1, 500 sq.ft. and not entitled for deduction in respect of those flats having their built-up area exceeding 1, 500 sq.ft - against revenue. Whether each of the project could be considered independently for the purpose of working out deduction u/s 80-IB(10) - whether such deduction could be calculated ignoring the losses in some of the projects subject to the limitations placed by Section 80-AB - Held that - Assessee admittedly was having only one homogenous business activity that was construction and selling of flats. No doubt it was having five projects but the question is whether each of the projects were forming part and parcel of one unit or part of one industrial undertaking. There is no claim for the assessee that each of these projects were separate and there was no interlacing interconnection or interdependence. Assessee was only doing housing project development which is a homogenous business and vis- -vis the five projects there was no demarcation of identity in such a manner that each of the project could be considered as independent units. There is nothing in this sub-section 10 of Section 80-IB which would require each of the housing projects to be considered by itself as independent undertaking while working out the deduction. Here there is nothing on record to show that each of the projects were independent with no interlacing interconnection or interdependence of various units. Therefore all these projects together had to be considered as a single unit for the purpose of working out deduction under Section 80-IB(10) and the methodology adopted by the assessee in the revised computation filed by it cannot accepted - in favour of the Revenue. Non deduction of TDS on contract amounts paid - invoking Section 40(a)(ia) for disallowing the claim - Held that - Whether the amounts were fully paid or payable at the end of the relevant previous year is not clear from the record. Special Bench of this Tribunal in the case of Merilyn Shipping & Transport v. Addl. CIT 2012 (4) TMI 290 - ITAT VISAKHAPATNAM has held that Section 40(a)(ia) would be applicable only to amounts standing payable at the end of the relevant previous year. Therefore the matter requires a fresh look by the AO - in favour of assessee for statistical purposes.
Issues Involved:
1. Pro rata deduction under Section 80-IB(10) for housing projects. 2. Disallowance of payments made to contractors for non-deduction of tax at source under Section 40(a)(ia). 3. Section 154 rectification by CIT (Appeals). Detailed Analysis: 1. Pro Rata Deduction under Section 80-IB(10) for Housing Projects: The Revenue contested the CIT (Appeals)'s direction to allow pro rata deduction under Section 80-IB(10) for the assessee's housing projects, arguing that: - Some flats exceeded 1500 sq. ft., and as per the Tribunal's decision in Asstt. CIT v. Viswas Promoters (P.) Ltd., such pro rata deduction could not be allowed. - The deduction claim was made through a revised computation, which should not be considered based on the Supreme Court's decision in Goetz (India) Ltd. v. CIT. - The CIT (Appeals) directed the computation of deduction considering each project separately, which was not in line with the Supreme Court's decision in IPCA Laboratory Ltd. v. Dy. CIT. The Tribunal held that: - The revised computation was valid as the assessee had made the claim in the original return and only revised the quantum during assessment proceedings. This did not constitute a fresh claim. - Deduction under Section 80-IB(10) could be allowed for units with built-up areas not exceeding 1500 sq. ft., following the Third Member decision in Sanghvi & Doshi Enterprise v. ITO. - All projects should be considered as a single unit for deduction purposes due to the homogenous nature of the business and lack of evidence showing the projects as independent units. 2. Disallowance of Payments Made to Contractors for Non-Deduction of Tax at Source under Section 40(a)(ia): The assessee's cross-objection related to the disallowance of Rs. 1,96,89,532/- for non-deduction of tax at source on payments to M/s Macro Marvel Infrastructure Corporation Ltd. The assessee argued that: - The expenditure was direct construction cost and should be considered under Section 28, not under Sections 30 to 38, thus not attracting Section 40(a)(ia). The Tribunal noted: - The Hyderabad Bench's decision in Teja Constructions v. Asstt. CIT, which stated Section 40(a)(ia) applies only to items under Sections 30 to 38, did not apply here as the books were not rejected. - The matter was remitted to the Assessing Officer to verify if the amounts were payable at the end of the relevant year, following the Special Bench decision in Merilyn Shipping & Transport v. Addl. CIT. 3. Section 154 Rectification by CIT (Appeals): The Revenue also appealed against the CIT (Appeals)'s rectification order directing the Assessing Officer to allow the deduction based on the revised computation. The Tribunal held: - Since it had already decided that all projects should be considered as a single unit for deduction, the rectification order's basis was invalid. - The Assessing Officer should recompute the deduction under Section 80-IB(10) considering all projects together, and the rectification order was unnecessary. Conclusion: - The appeal of the Revenue in I.T.A. No. 1685/Mds/2010 was partly allowed. - The cross-objection of the assessee in C.O. No. 117/Mds/2011 was allowed for statistical purposes. - The appeal of the Revenue in I.T.A. No. 116/Mds/2011 was allowed.
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