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2015 (5) TMI 1172 - AT - Income TaxDeduction u/s 80-IB(10) - condition for time limit within which the project had to be completed - assessee having completed the building after 31st March, 2008 - assessee was a builder and had undertaken project at Chinchwad - The land on which the assessee had constructed the project was initially purchased by a Co-operative Housing Society wherein some of the partners of the assessee firm and their family members were the members - pro-rata deduction - single unified project - whether the construction carried out by the assessee in Sector No.1 and Sector No.7 were independent housing projects, against which the assessee could separately claim the deduction under section 80-IB(10) of the Act, where the projects had fulfilled the conditions laid down in the said section? Held that - We hold that while deciding the claim of the assessee relating to assessment year 2006-07, the provisions of the Act as applicable for this assessment year are to be applied harmoniously and consequently the claim of the assessee is to be looked into in line with the amended provisions of section 80-IB(10) of the Act, which have been made applicable for the construction of the housing project, which had commenced development and construction after the 1st day of October, 1998 but before 1st day of October, 2004, then such housing projects in order to avail the aforesaid deduction, had to be completed on or before 31st day of March, 2008. We uphold the order of CIT(A) in this regard. We hold that the provisions of section 80-IB(10)(a)(i) are clearly applicable to the facts of the case and the assessee had to complete its project on or before 31st March, 2008 in order to avail the deduction under section 80-IB(10) of the Act. Each of the project developed by the assessee was independent project itself and consequently if the individual project satisfies the conditions of section 80-IB(10) of the Act, then the said project is entitled to the claim of deduction. The housing project in Sector No.1 comprising of five buildings was completed on 28.03.2008, against which the assessee had received part completion certificate and since the project has been completed prior to 31.08.2008 i.e. within stipulated period under section 80-IB(10)(a)(i) of the Act, the assessee is entitled to the claim of deduction under the said section in respect of the profits from the said housing project in Sector No.1. We uphold the order of the CIT(A) in this regard and dismiss the grounds of appeal raised by the Revenue on both the issues. Coming to the second housing project in Sector No.7. Admittedly, the assessee in assessment year 2006-07 has completed only 2 buildings i.e. Q-1, Q-2 and some flats in assessment year 2007-08. The building comprised in P-1 to P-6 and the row houses have not been constructed by the assessee till the date of survey and upto 31.03.2008. The Hon ble Madras High Court in Viswas Promoters Pvt. Ltd. vs. ACIT, 2012 (11) TMI 1117 - MADRAS HIGH COURT have laid down that within a composite housing project, where there are eligible and intelligible units, the assessee can claim deduction in respect of eligible units in the project and even within the block, the assessee is entitled to claim proportionate relief against the units satisfying the extent of built-up area. We hold that the assessee is entitled to pro-rata deduction in respect of residential units in the housing project No.7, which have complied with the conditions and were eligible for the deduction under section 80-IB(10) of the Act. The said deduction is allowable to the assessee only in respect of units construction of which has been completed upto 31st March, 2008. Accordingly, we direct the Assessing Officer to verify the claim of the assessee in this regard in assessment years 2006-07 and 2007-08 and if the assessee has fulfilled the aforesaid conditions under section 80-IB(10) of the Act, pro-rata deduction under the said section could be allowed to the assessee in relation to the buildings / flats completed in Sector No.7. Consequently, the ground of appeal raised by the assessee is partly allowed.
Issues Involved:
1. Deduction under section 80-IB(10) of the Income-tax Act, 1961. 2. Applicability of amendments brought by the Finance Act, 2004. 3. Whether Sector No.1 and Sector No.7 are separate projects. 4. Pro-rata deduction for completed units in Sector No.7. Detailed Analysis: 1. Deduction under section 80-IB(10) of the Income-tax Act, 1961: The main issue in the appeals was the assessee's claim for deduction under section 80-IB(10) for housing projects. The Assessing Officer (AO) denied the deduction because the project was not completed by the stipulated date of 31.03.2008. The CIT(A) upheld the AO's decision for Sector No.7 but allowed the deduction for Sector No.1, treating them as separate projects. 2. Applicability of amendments brought by the Finance Act, 2004: The assessee argued that the amendments brought by the Finance Act, 2004, which introduced a time limit for project completion, should not apply retrospectively to projects approved before 01.04.2004. The AO and CIT(A) disagreed, stating that the amendments were clarificatory and thus applicable retrospectively. The Tribunal upheld this view, referencing the Supreme Court's ruling in Reliance Jute and Industries Ltd. vs. CIT, which established that the law in force during the assessment year applies unless specified otherwise. 3. Whether Sector No.1 and Sector No.7 are separate projects: The assessee contended that Sector No.1 and Sector No.7 were separate and independent projects, each eligible for deduction under section 80-IB(10). The CIT(A) accepted this argument, noting that the sectors were separated by a road and had separate FSI calculations and approvals. The Tribunal upheld this finding, emphasizing that each sector met the conditions of section 80-IB(10) independently. 4. Pro-rata deduction for completed units in Sector No.7: The assessee sought pro-rata deduction for units in Sector No.7 that were completed by 31.03.2008. The CIT(A) denied this, stating that the entire project must be completed to qualify for deduction. The Tribunal disagreed, citing precedents from the Madras High Court and various Tribunal decisions, which allowed pro-rata deductions for completed units within a composite project. The Tribunal directed the AO to verify and allow pro-rata deductions for completed units in Sector No.7 for the relevant assessment years. Conclusion: The Tribunal concluded that: - The amendments to section 80-IB(10) by the Finance Act, 2004, apply retrospectively. - Sector No.1 and Sector No.7 are separate projects, and the assessee is entitled to deductions for Sector No.1. - The assessee is eligible for pro-rata deductions for completed units in Sector No.7 up to 31.03.2008. - The appeals of the assessee were partly allowed, and those of the Revenue were dismissed.
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