2017 (3) TMI 1758 - AT - Income Tax

Deduction u/s 80 IB (10) - scope of amendment - HELD THAT - No doubt, the amendment is effective from 01.04.2010 and the even AY 2010-11 is also covered under the explanation. However, amendment was made by finance act 2009 with effect from 01/04/2010 i.e. after allotment of the Flats by the assessee to Mr.N.Suresh Kumar and Shri Madhukar Gandhi. The Flats were allotted and registered in favour of both the individuals before the amendment came into force. Therefore, we are of the considered pinion that subclause (e) and (f) of Explanation of Sec.80 IB (10) is not applicable in the assessee s case. The assessee relied on the discussion of this Tribunal ITAT B Bench, Chennai in the case of ACIT v. M/s.Elegant Estates 2016 (5) TMI 1441 - ITAT CHENNAI on similar issue which was held in favour of the assessee. In the instant case, the sale was made in 2008 and construction agreement was entered in 2008 and UDS was registered in 2008, all the formalities were completed during the FY 2008-09 relevant to the AY 2009-10. Therefore, we hold that the sub clause (e) and (f) of Explanation to Sec.80 IB (10) is not applicable in the case of the assessee and the assessee is entitled for deduction u/s.80 IB (10). Accordingly, we delete the addition made by the AO and set aside the order of the lower authorities. - Decided in favour of assessee. Disallowance of depreciation on motor cars - No evidence was furnished by the assessee to show that the vehicles are running on hire - HELD THAT - During the assessment proceedings, the AO asked the assessee to produce details for verification of addition to assets as well as the evidence for running them on hire. The assessee did not produce the details called for by the AO. CIT(A) confirmed the order placing reliance on the findings of the AO. AR did not furnish any evidence to prove that the findings of the AO is erroneous before us. Therefore, we do not find any error in the orders of the lower authorities and the order of the Ld.CIT(A) is confirmed - Decided against assessee.

Summary

Issues:
1. Disallowance of deduction u/s.80 IB (10) of the Income Tax Act.
2. Disallowance of depreciation on a new motor car.

Analysis:

Issue 1: Disallowance of deduction u/s.80 IB (10) of the Income Tax Act:
The appellant appealed against the Commissioner of Income Tax (Appeals)'s order disallowing a deduction claimed under section 80 IB (10) of the Act. The appellant sold two flats to individuals, leading to the disallowance based on sub-clause (f) of the explanation to Sec.80 IB (10). The AO disallowed the deduction, which was confirmed by the CIT(A). The appellant contended that the flats were sold before the amendment came into effect, making the sub-clauses inapplicable. The Tribunal found in favor of the appellant, citing a similar case precedent where the amendment was held to apply prospectively. As the flats were allotted and registered before the amendment, the Tribunal allowed the deduction, overturning the lower authorities' decision.

Issue 2: Disallowance of depreciation on a new motor car:
The AO disallowed depreciation claimed on a new motor car by the appellant, restricting it to 15% due to lack of evidence for running the vehicles on hire. The appellant failed to provide necessary details during assessment proceedings, leading to the disallowance. The CIT(A) upheld the AO's decision, and the Tribunal found no error in their findings. As the appellant did not present any evidence to refute the AO's conclusions, the disallowance of depreciation on the motor car was confirmed. The Tribunal dismissed the appellant's appeal on this issue.

In conclusion, the Tribunal partly allowed the appellant's appeal concerning the disallowance of deduction u/s.80 IB (10) but dismissed the appeal regarding the disallowance of depreciation on the new motor car. The judgment was pronounced on 22nd March 2017 in Chennai.