2014 (10) TMI 625 - HC - Income Tax

Cryptic order passed by Tribunal - Allowability of deduction u/s 80IB(10) on proportionate basis - housing project had contiguous residential units which were merged into a single residential unit measured in excess of 1000 sq.ft. Held that - The Tribunal has rendered a cryptic finding - It is not an elaborately reasoned order as could have been expected from the last fact finding authority - If the argument was that in each of the project/building the flats having less than 1000 sq.ft. area have been sold by separate agreements, may be to the members of the same family and consequent to the purchase by such members, they have merged the flats/unit and that is beyond the control of the Assessee, the Tribunal has not held that these facts are admitted or that there is no dispute about the same - the Tribunal referred to the construction projects, the flats in dispute and certain findings so also the admission by the Assessee in survey proceedings - If the disputed flats were identified by the parties, their position and situation at site should have been elaborately referred including the statements which have been recorded during the course of survey proceedings - The documents, namely, agreements in relation to these flats should have been referred in extenso by the Tribunal - That having not been done, any expression of opinion on the legal question would be academic thus, the order of the Tribunal is to be set aside and the matter is remitted back to the Tribunal for fresh decision Decided in favour of revenue.

Summary

Issues:
1. Interpretation of Section 80IB(10) of the Income Tax Act, 1961 regarding deduction eligibility.
2. Determination of whether contiguous residential units exceeding 1000 sq.ft. qualify as a single residential unit.
3. Assessment of a housing project not on a plot of land more than one acre on a "stand alone" basis.

Issue 1: Interpretation of Section 80IB(10)
The High Court of Bombay heard an appeal challenging the order of the Income Tax Appellate Tribunal regarding the deduction under Section 80IB(10) of the Income Tax Act, 1961. The Assessee contended that the profit earned on certain projects should qualify for the deduction, while the Revenue argued against it. The Tribunal's order was influenced by a previous decision in favor of the Assessee by a Coordinate Bench. The High Court dismissed the appeal based on this precedent and upheld the decision in favor of the Assessee.

Issue 2: Contiguous Residential Units
The Assessee argued that two contiguous flats purchased by one buyer should be considered separate residential units, thus qualifying for the deduction under Section 80IB(10). The Revenue contended that if the built-up area of some flats in the project exceeds 1000 sq.ft., the deduction should not be allowed proportionately. The High Court found that the Tribunal's order lacked detailed reasoning and factual analysis regarding the disputed flats. Therefore, the High Court set aside the Tribunal's order and remanded the case to the Tribunal for a fresh decision, instructing it to provide detailed reasons for its decision within three months.

Issue 3: Assessment on "Stand Alone" Basis
Regarding the assessment of a housing project not on a plot of land more than one acre on a "stand alone" basis, the High Court noted that the Tribunal's order was influenced by a previous decision in favor of the Assessee. The High Court directed the Tribunal to reassess the matter independently and provide detailed reasons for its decision within three months, keeping all contentions open. The High Court allowed the appeal to this extent, with no order as to costs.