2014 (6) TMI 177 - AT - Income Tax

Deduction u/s 80IB(10) of the Act Residential units exceeding 1000 sq. ft. Qualifying conditions not met - Held that - Relying upon Brahma Associates. & others Versus Joint Commissioner Of Income-tax 2009 (4) TMI 215 - ITAT PUNE - a housing project approved upto 31.03.2005, commercial user to the extent permitted under the development control rules/regulations framed by the respective local authority would hold in-as-much as the amendment in law, prescribing the said limitation came w.e.f. 01.04.2005 - Phases VII and X were approved by the local authority on 25.01.2001 and Phases XI and XIA on 14.01.2004, i.e., both prior to 01.04.2005 w.e.f. from which date clause (d) stands inserted to section 80-IB(10) thus, the amendment would have no bearing on the allowability of the deduction under the provision for the phases of the housing project - a perusal of the details of the deduction u/s.80-IB(10) for the current year reveals a claim in the negative sum for the Phase, so that no positive deduction stands claimed for the current year Decided against Revenue.

Summary

Issues:
- Appeal against CIT(A) order allowing deduction u/s. 80-IB(10) for AY 2009-10.
- Controversy over deduction eligibility conditions.
- Disallowance of claim due to commercial area exceeding prescribed limits.
- Dispute regarding construction of residential units exceeding 1000 sq. ft.

Analysis:
1. The appeal pertains to the Revenue challenging the CIT(A) order allowing the assessee's appeal regarding assessment u/s. 143(3) of the Income Tax Act, 1961 for AY 2009-10. The issue revolves around the deduction u/s. 80-IB(10) for a housing construction project named 'Golden Nest'.

2. The controversy arises due to the commercial area exceeding the prescribed percentage of 5% of the total built-up area, leading to the disallowance of deduction u/s. 80-IB(10). The Tribunal, following a decision by the jurisdictional High Court, held that the project phases were approved before the amendment imposing limitations, thus allowing the deduction for the project.

3. Another aspect of the dispute concerns the construction of residential units exceeding 1000 sq. ft., violating the conditions of section 80-IB(10)(c). The Tribunal noted that for the current year, no deduction was claimed for the relevant project. The issue of area exceeding 1000 sq. ft. was found to be irrelevant for the current year, and the Tribunal dismissed the Revenue's claim as not applicable.

4. Ultimately, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A) order allowing the deduction u/s. 80-IB(10) for the AY 2009-10. The decision was based on the project's approval status before the imposition of restrictions and the inapplicability of the area exceeding 1000 sq. ft. issue for the current year.

5. The Tribunal's decision was in line with the precedents set by the jurisdictional High Court and the interpretation of the relevant provisions of the Income Tax Act. The judgment provided a detailed analysis of the issues raised by the Revenue and the grounds for dismissing the appeal, ensuring a fair and thorough consideration of the legal aspects involved in the case.