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2018 (5) TMI 2053 - AT - Income TaxDeduction under section 80IB(10) - proportionate deduction - block less than the prescribed eligible area - HELD THAT - Some of the flats constructed by the assessee are in excess of area of 1000 sq. ft. and the assessee has allotted more than one flat to some of the buyer or their relative. The assessee has reduced its claim to the extent of flat constructed in excess of 1000 sq.ft. as well as in case where more than one residential unit in housing project is allotted to the person being individual or his family member. CIT(A) by following the decision of Viswas Promoters (P.) Ltd. 2012 (11) TMI 1117 - MADRAS HIGH COURT directed the Assessing Officer to allow the proportionate deduction under section 80IB (10) wherein held that assessee is entitled for deduction under section 80IB(10) on proportionate basis in respect of those block which are less than the prescribed eligible area. Further in case of Sreevatsa Real Estates (P.) Ltd. 2012 (11) TMI 633 - MADRAS HIGH COURT held that where some of the residential units developed by assessee exceeded area of 1500 sq. ft., it was entitled to claim deduction under section 80-IB(10) pro rate for housing units having area of less than 1500 sq.ft., Bangalore Tribunal in case of SJR Builders 2009 (8) TMI 953 - BANGALORE TRIBUNAL COURT held that merely because some flats were larger than the specified limit of 1500 sq.ft., the assessee would not lose the benefit in its entirety. Only with reference to the flats which had more than the prescribed area, the assessee would lose the benefit. We find that there is no illegality and infirmity in the order passed by ld. CIT(A) in directing the Assessing Officer to allow the proportionate deduction under section 80IB(10). No contrary, the decision is brought on record the notice to take the different view. In the result, ground of appeal raised by Revenue is dismissed. Disallowance u/ 14A r.w.r. 8D - contention of assessee before the lower authority was that the assessee made investment on certain fund as strategic partner in joint venture - HELD THAT - Recently, the Hon ble Supreme Court in case of Maxopp Investment Ltd. 2018 (3) TMI 805 - SUPREME COURT held that the dominant purpose for which investment into shares is made by assessee may not be relevant as section 14A applies irrespective of whether shares are held to gain control or as stock-in-trade, where shares are held as stock-in-trade, main purpose is to trade in those shares and earn profits therefrom and, in process, certain dividend is also earned which is tax exempt under section 10(34); expenditure attributable to exempt dividend income will have to be appointed to be disallowed under section 14A Disallowance u/s 14A to the Book profit for the purpose of calculating MAT u/s 115JB - Also in ACIT Vs Vireet Investment (P.) Ltd.. 2017 (6) TMI 1124 - ITAT DELHI held that the Computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to computation as contemplated under section 14A read with rule 8D. Therefore, this ground of appeal is restored back to the file of assessing officer to pass the order afresh after considering the aforesaid two decisions. Needless to order that before passing the order the assessing officer shall grant sufficient opportunity to the assessee before passing the order in accordance with law. Hence, this ground of appeal raised by the revenue is allowed.
Issues Involved:
1. Deduction under section 80IB(10) 2. Disallowance under section 14A read with Rule 8D Issue-wise Detailed Analysis: 1. Deduction under section 80IB(10): - Background: The assessee, a company engaged in Property Development and Wind Power Generation, claimed a deduction under section 80IB(10) amounting to ?31,23,89,658/- for the Assessment Year 2010-11. The Assessing Officer disallowed this deduction, stating that the residential units exceeded the 1000 sq. ft. limit prescribed under section 80IB(10). The CIT(A) allowed the deduction on a proportionate basis. - Revenue's Argument: The Revenue argued that the assessee's housing project included residential units exceeding 1000 sq. ft., violating section 80IB(10). They contended that the entire project should be considered as one, and no deduction should be allowed if any unit exceeds the prescribed area. - Assessee's Argument: The assessee contended that they did not claim deductions for units exceeding 1000 sq. ft. and provided a proportionate calculation for units within the limit. They supported their claim with various judicial precedents. - Tribunal's Decision: The Tribunal upheld the CIT(A)'s decision, allowing proportionate deduction under section 80IB(10). It referenced the Hon’ble Madras High Court's decision in Viswas Promoters (P.) Ltd. vs. ACIT and other Tribunal decisions, which supported proportionate deductions for eligible units. 2. Disallowance under section 14A read with Rule 8D: - Background: The Assessing Officer disallowed ?1,44,76,162/- under section 14A read with Rule 8D, related to the expenditure incurred for earning exempt income. The CIT(A) restricted this disallowance to ?12,75,550/-. - Revenue's Argument: The Revenue argued that the assessee earned dividend income and did not apportion any related expenditure. Thus, the disallowance under Rule 8D was justified. - Assessee's Argument: The assessee argued that their investments were strategic and did not generate exempt income during the year. They contended that the disallowance should be limited. - Tribunal's Decision: The Tribunal restored the issue to the Assessing Officer for fresh adjudication, considering the Hon’ble Supreme Court's decision in Maxopp Investment Ltd. vs. CIT and the Special Bench of Delhi Tribunal in ACIT vs. Vireet Investment (P.) Ltd. It directed the Assessing Officer to reconsider the disallowance without resorting to Rule 8D for computing MAT under section 115JB. Separate Judgments for Different Assessment Years: - Assessment Year 2011-12 (ITA No. 625/M/2016): The Tribunal restored the issue of disallowance under section 14A to the Assessing Officer for fresh adjudication and dismissed the ground related to section 80IB(10) following its decision for AY 2010-11. - Assessment Year 2011-12 (ITA No. 626/M/2016): The Tribunal restored the issue of disallowance under section 14A to the Assessing Officer for fresh adjudication, following the same reasoning as for AY 2010-11. - Assessment Year 2012-13 (ITA No. 7111/M/2016): The Tribunal restored the issue of disallowance under section 14A to the Assessing Officer for fresh adjudication, consistent with its decision for AY 2010-11. Conclusion: The appeals were partly allowed, with the Tribunal upholding the proportionate deduction under section 80IB(10) and restoring the issue of disallowance under section 14A to the Assessing Officer for fresh consideration.
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