2014 (5) TMI 514 - HC - Income Tax

Deduction u/s 80IB(10) of the Act Held that - CIT(A) and the Tribunal found that the reliance only on the brochure or copy would not be enough to uphold the exercise undertaken by the AO - the Tribunal as also the Commissioner has clarified that in the facts and circumstances the deduction could not be disallowed - the finding of fact cannot be construed as allowing deduction in all cases of the present nature - The payments have been made on the same date - there are separate agreements and that some of them may be that of related persons - there is no prohibition in law in the related persons purchasing different units or units adjacent to each other - Commissioner and equally the Tribunal s order should not be construed to mean that the deduction can be claimed on the footing that in all the cases where the construction as per the plan denotes the residential units of maximum built up area but on the site the position being different then still the deduction can be claimed as such no question of law arises for consideration Decided against Revenue.

Summary

Issues:
Challenge to concurrent findings of fact by Revenue regarding deduction under Section 80IB(10) for assessment years 2004-2005 and 2005-2006.

Analysis:
The appeals by the Revenue contested the findings of the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal regarding the deduction claimed under Section 80IB(10) for the assessment years 2004-2005 and 2005-2006. The Assessee, a developer and builder, argued that all conditions under clause (c) of the Explanation to sub-section 10 of Section 80IB were met, despite the Assessing Officer disallowing the deduction due to certain flats not meeting the required built-up area. The Assessee clarified that alterations exceeding the area were made by flat purchasers post-occupation certificate issuance, beyond the Assessee's control. Several individuals involved in the construction process testified that the Assessee adhered to the approved plans, and any deviations were due to subsequent actions by flat purchasers, not the Assessee.

Upon review of the impugned order, it was noted that the Commissioner of Income Tax (Appeals) did not object to the Assessing Officer's actions but found the denial of deduction unjustified after a thorough examination of the records. The Tribunal upheld the Commissioner's approach, emphasizing the need to consider all evidence collectively, including statements from flat purchasers. The Commissioner highlighted that the construction was initially in compliance with the plan, with subsequent alterations by purchasers causing the area to exceed the limit. Both the Commissioner and the Tribunal concluded that reliance solely on brochures was insufficient to support the Assessing Officer's decision. They clarified that the specific circumstances of this case did not warrant disallowance of the deduction, cautioning that this ruling should not be generalized to all similar cases.

The Tribunal stressed that the factual findings in this case did not imply blanket approval for deductions in all scenarios where on-site construction deviated from the original plan. The judgment underscored the importance of examining each case individually and emphasized that related persons purchasing adjacent units did not violate any legal provisions. Ultimately, the Tribunal and the Commissioner's decisions were deemed reasonable in the context of this case, with no substantial question of law raised by the appeal, leading to its dismissal.