2013 (6) TMI 897 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of deduction u/s 80IB(10) due to non-completion of the project within the stipulated period.
2. Interpretation of the term "housing project" and the applicability of additional FSI and TDRs.

Summary:

Issue 1: Disallowance of Deduction u/s 80IB(10)
The assessee, a partnership firm engaged in the business of promoter, builder, and developer, faced disallowance of deduction u/s 80IB(10) amounting to Rs. 1,00,17,003/- for A.Y. 2007-08. The Assessing Officer (AO) disallowed the deduction on the grounds that the project "Gulmohar Paradise Home, Kharadi" was not completed within the stipulated period. The AO noted that the project initially comprised 80 flats as per the commencement certificate issued by PMC on 28.04.2004, and later 46 more flats were added in 2005. The completion certificates for the 126 flats were received in parts on 13.02.2006, 06.05.2008, and 15.12.2008. However, the AO concluded that the project was not completed in totality by 31.03.2009, as required u/s 80IB(10)(a), and thus rejected the deduction claim.

Issue 2: Interpretation of "Housing Project" and Additional FSI
The assessee argued that the project of 126 flats was completed before the due date of 31.03.2009, and the additional FSI sanctioned on 10.06.2009 for constructing 30 additional flats was a separate project. The assessee cited a clarification from CBDT's letter dated 04.05.2001, which allowed additional housing projects on existing sites to qualify for deduction u/s 80IB(10) if undertaken by a separate undertaking with separate books of accounts. The AO, however, maintained that the entire project, including the additional flats, should be considered as one and thus disallowed the deduction.

Tribunal's Decision:
The Tribunal found that the assessee had completed the initial project of 126 flats before the stipulated date of 31.03.2009 and received the necessary completion certificates. The additional construction of 30 flats using the additional FSI sanctioned on 10.06.2009 was considered a separate project. The Tribunal emphasized that the beneficial provisions of section 80IB(10) should not be diluted by narrow interpretations. Therefore, the assessee was entitled to the deduction u/s 80IB(10) for the 126 flats completed before 31.03.2009. The Tribunal directed the AO to allow the deduction accordingly. Similar reasoning was applied for A.Y. 2008-09, and the claim of deduction u/s 80IB(10) was allowed.

Conclusion:
Both appeals filed by the assessee were allowed, and the assessee was granted the deduction u/s 80IB(10) for the 126 flats completed before the due date. The Tribunal's decision was pronounced on 26th June 2013.