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2015 (9) TMI 842 - AT - Income TaxDisallowance for deduction u/s. 80IB(10) - claim denied by the A.O for the reason that the plot size of the land on which the project was undertaken was less than 1 acre. - Held that - Hon ble Bombay High Court in the case of CIT vs. Vandana Properties reported in (2012 (4) TMI 54 - BOMBAY HIGH COURT) had an occasion to decide on the issue of deduction u/s. 80IB(10) wherein it has held that the expression housing project is neither defined under section 2 of the Act nor under Section 80IB(10) of the Act and therefore the expression housing Project in Section 80IB(10) would have to be construed as commonly understood Housing Project in common parlance and it would mean constructing a building or group of buildings consisting of several residential units. Assessee cannot be denied deduction u/s. 80IB(10) on the ground that the area of project is less than 1 acre and more so when Revenue has not disputed about the fulfillment of other conditions stipulated u/s. 80IB(10) by the Assessee. As far as denial of deduction on the ground of flat size being in excess of 1500 sq. ft. is concerned, we find that the Assessee had sold 4 flats namely C-401, 402, 403 and 404 to 4 different purchasers vide separate sale deeds which have also been confirmed by the respective purchasers and at the time of its sale each flat was less than 1500 sq. ft. It is also a fact that the inspection was carried out by the DVO subsequent and much after the date when Assessee had handed over the possession to respective owners of the flat. The respective owners have also confirmed by carrying out the modification in those flats and combining those 4 flats into 2 flats. In such a situation the act of the purchasers of flats of converting the 2 flats in to 1 flat resulting into the area of are combined flat being excess of 1500 sq. ft. cannot be said to be done by Assessee and therefore it cannot be said that Assessee has sold flat whose area was in excess of 1500 sq. ft. In view of the aforesaid facts, we are of the view that the Assessee is eligible for deduction u/s. 80IB(10) and therefore set aside the order of A.O on this ground. - Decided in favour of assessee. Disallowance u/s. 40(a)(ia) - late deduction tax at source from payments - Held that - With respect to the payment made to Anar Builders Pvt. Ltd., we find that though Assessee had submitted that the payee has already included the payment received from the Assessee as its income and paid tax on it but we find that there is no finding to that effect either by the A.O or ld. CIT(A). In such a situation, we are of the view that the issue needs to be re-examined and re-decided at the end of A.O. in accordance with law. With respect to the submission of the Assessee in connection with the payments made to Dayal Krupa and Viral Transport, we are of the view that in the absence of categorical finding of A.O or ld. CIT(A) and in the light of the factual submission made by the Assessee the issue needs re-verification. We therefore restore the issue to the file of A.O for verification and thereafter decide the issue in accordance with law. - Decided in favour of assessee for statistical purposes.
Issues Involved:
1. Deduction under Section 80IB(10) of the Income Tax Act. 2. Disallowance under Section 40(a)(ia) for late deduction and non-deduction of TDS. 3. Charging of interest under Section 234B. 4. Initiation of penalty proceedings under Section 271(1)(c). Issue-wise Detailed Analysis: 1. Deduction under Section 80IB(10): The Assessee, a partnership firm engaged in the construction of housing projects, claimed a deduction of Rs. 62,83,272 under Section 80IB(10) for the A.Y. 2006-07. The Assessing Officer (A.O.) disallowed this deduction, arguing that the housing project was split into three different projects, each on a plot of land less than 1 acre, which did not meet the conditions of Section 80IB(10). The CIT(A) upheld the A.O.'s decision, noting that the Assessee had entered into three separate development agreements for plots below 1 acre and that the built-up area of some flats exceeded 1500 sq. ft. However, the Tribunal found that the Assessee's project "Pushkar Residency" was approved by the Ahmedabad Municipal Corporation (AMC) as a single project with a total plot area of 4717 sq. mtrs. (1.166 acres). The Tribunal referred to the Bombay High Court's decision in CIT vs. Vandana Properties and the Madras High Court's decision in CIT vs. Voora Property Developers P. Ltd., which held that multiple housing projects on a plot of land exceeding 1 acre could qualify for deduction under Section 80IB(10). The Tribunal concluded that the Assessee's project met the conditions of Section 80IB(10) and allowed the deduction. 2. Disallowance under Section 40(a)(ia): The A.O. disallowed payments totaling Rs. 44,48,483 under Section 40(a)(ia) due to late deduction and non-deduction of TDS. This included Rs. 39,00,000 paid to Shreenath Builders, where TDS was deducted on 31st March 2006 but deposited on 31st May 2006, and Rs. 5,48,483 paid to various contractors without TDS deduction. The Tribunal noted that the Assessee had deposited the TDS before filing the return of income, in line with the Gujarat High Court's decision in CIT vs. Omprakash Chaudhary, which held that the amendment to Section 40(a)(ia) by the Finance Act 2010 was retrospective. Thus, the disallowance of Rs. 39,00,000 was not warranted. For the payment to Anar Builders Pvt. Ltd., the Tribunal found no evidence that the payee had included the payment in its income and paid tax. This issue was remanded to the A.O. for re-examination. Similarly, the payments to Dayal Krupa and Viral Transport were remanded for verification, as the Assessee claimed these were not contractual payments requiring TDS. 3. Charging of Interest under Section 234B: The Tribunal held that the issue of charging interest under Section 234B was consequential and directed the A.O. to recompute the interest based on the final determined income. 4. Initiation of Penalty Proceedings under Section 271(1)(c): The Tribunal found the ground related to the initiation of penalty proceedings under Section 271(1)(c) to be premature and did not adjudicate on it. Conclusion: The Tribunal allowed the Assessee's appeal for statistical purposes, granting the deduction under Section 80IB(10) and remanding the disallowance under Section 40(a)(ia) for further verification. The issue of interest under Section 234B was directed to be recomputed, and the penalty proceedings under Section 271(1)(c) were not addressed as they were premature.
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