2010 (9) TMI 1266 - AT - Income Tax

Summary

Issues Involved:

1. Deletion of disallowance of deduction u/s 80IB(10) of the Act amounting to Rs. 20,81,746/-.

Summary:

Issue 1: Deletion of disallowance of deduction u/s 80IB(10) of the Act amounting to Rs. 20,81,746/-

The Revenue appealed against the order of the CIT(A)-II, Bangalore, which deleted the disallowance of deduction u/s 80IB(10) of the Act for the assessment year 2006-07. The assessee, a real estate developer, claimed a deduction of Rs. 1.67 crores for profits from housing projects G.R. Grand Residency and G.R. Pinnacle Project. The AO denied the deduction citing several deviations from the sanctioned plan, such as construction of a swimming pool within the residential building area, an extra apartment attached to the commercial building, and other deviations like car parking lots, extra lifts, and balconies. The AO also noted that the built-up area exceeded 1500 sq. ft. for several flats, and the project included commercial space exceeding the permissible limit.

Aggrieved, the assessee approached the CIT(A), who, after analyzing the contentions and referencing the Tribunal's findings in the assessee's own case for earlier years, accepted the assessee's plea regarding the built-up area. The CIT(A) observed that clause (d) of section 80IB(10) was inserted with effect from 1/4/2005 and did not apply to the appellant's case. The CIT(A) concluded that the project, approved as a residential-cum-commercial project, did not meet the conditions for deduction u/s 80IB(10).

The Revenue contended that the CIT(A) failed to appreciate that the assessee claimed a wrong deduction u/s 80IB(10) and did not fulfill the stipulated conditions. The Revenue also noted that the findings for the preceding years were pending before the High Court. The assessee argued that the issue was similar to earlier years where the Tribunal decided in their favor.

The Tribunal, after considering the submissions and records, noted that a similar issue for earlier years was adjudicated in favor of the assessee. The Tribunal referenced various judicial decisions, including the Special Bench decision in Brahma Associates v. JCIT, which ruled that the entire profits of a housing project are deductible if it qualifies as a housing project, and proportionate deduction is not relevant.

In conclusion, the Tribunal upheld the CIT(A)'s decision, allowing the deduction u/s 80IB(10) for the assessment year under dispute and dismissed the Revenue's appeal.

Pronounced in the open court on this 30th day of September, 2010.