2013 (2) TMI 239 - HC - Income Tax

Deduction u/s. 80IB(10) - Tribunal allowed the claim for the project approved prior to 1/10/1998 & for a project approved on 28/8/1997- Held that - Tribunal held that in the facts of this particular case the respondent-assessee would be entitled to the benefit of Section 80IB for all the three assessment years i.e. 2004-05, 2005-06 and 2006-07 as the buildings were constructed on the basis of plan approved only in 2002. Further the activity of construction commenced only on 22/1/2002 when the commencement certificate was issued. Therefore, the Tribunal while upholding the order of the CIT (A) held that for all the three assessment years the approval of the authorities and commencement certificate are post 1/10/1998. Similarly, the Tribunal upheld the finding of the CIT(A) in holding that DVO has certified that combined area of the flats was less than 1500 sq. ft. Consequently, Tribunal while upholding the order of the CIT(A) held that Section 80 IB(10) are complied with and the respondent-assessee is entitled to the benefit of Section 80IB of the Act for assessment years 2004-05, 2005-06 and 2006-07. Thus CIT(A) as well as the Tribunal have based their decisions on a concurrent finding of fact & conclusion reached by the Tribunal based on findings of fact cannot be found fault with as the revenue has not been able to show that the impugned order is perverse warranting an interference by this Court - in favour of assessee.

Summary

Issues:
1. Interpretation of Section 80IB(10) of the Income Tax Act, 1961 for a project approved prior to 1/10/1998.
2. Eligibility for deduction under Section 80IB(10) for a project approved before the existence of the provisions of Section 80IB(10) in the statute.

Analysis:
1. The respondent initiated a construction project in 1995-96 for residential premises named "Gold Coast." The project received various approvals and permissions over the years, with the final approval and commencement certificate issued in 2002. The Assessing Officer denied the benefit of Section 80IB of the Income Tax Act for all three assessment years, citing that the project's first approval in 1997 should be considered for interpreting Section 80IB(10). Additionally, the Assessing Officer rejected the DVO's findings on the area of the flats, leading to the denial of deductions for the respondent.

2. On appeal, the CIT(A) allowed the respondent's appeals for all three years, emphasizing that the project effectively commenced in the financial year 2002-03 based on the approvals and certificates received in 2002. The CIT(A) also accepted the DVO's certification that the size of the flats was below 1500 sq. ft., thereby concluding that the project was not disqualified under Section 80IB(10) of the Act.

3. The revenue appealed to the Tribunal, challenging the CIT(A)'s decision. The Tribunal, in its order, dismissed the revenue's appeal for all three assessment years. It noted that the amendment to Section 80IB, which included an explanation in Section 80IB(10), was effective only from 1/4/2005. Therefore, for the assessment year 2004-05, the claim could not be denied based on the new explanation. The Tribunal upheld that the project approvals and construction commencement occurred post-1998, and the area of the flats met the criteria, entitling the respondent to the benefits under Section 80IB of the Act.

4. Both the CIT(A) and the Tribunal based their decisions on factual findings that the project approvals and commencement certificates were obtained in 2002, and the flat areas were below 1500 sq. ft. The Tribunal's conclusion was supported by the lack of evidence showing the impugned order as perverse, leading to the dismissal of all three appeals for the assessment years 2004-05, 2005-06, and 2006-07, with no costs imposed.