2017 (3) TMI 1864 - AT - Income Tax

Deduction u/s. 80IB(10) - Denial of deduction as size of the housing unit is exceeding 1,500 sq.ft., the limit specified under the provisions of section 80IB(10) - HELD THAT - In the case in hand it is undisputed that the AO has pointed out to the assessee that the area of the flats in the projects are exceeding 1,500 sq.ft. and therefore the assessee s claim is not allowable upon which the assessee had withdrawn his claim by filing a revised return. Since the revised return was filed within the period of limitation and it was a valid return of income therefore, the Assessing Officer has framed the assessment on the basis of revised return. AO has not proceeded further to verify and counter the claim of the assessee on the issue of built up area of dwelling units. This issue is not a pure legal issue but it involves the question of facts to be verified and then only the legal provisions are to be applied. There is no quarrel on the legal provisions that as per section 80IB(14)(a) the common area of the projects are to be excluded for the purpose of considering the built up area. The actual built up area is required to be measured and verified. The assessee himself has accepted the objections of the AO during the assessment proceedings. Therefore this claim of the assessee raised before the CIT(A) as well as this tribunal cannot be accepted. As regards the assessment year 2007-08 is concerned it is noted that the AO has not given any finding on this issue and therefore it is not a case that the AO has carried out any exercise of measuring the built up area of the flats in question. - Decided against assessee.

Summary

Issues: Claim of deduction u/s. 80IB(10) denied by AO for exceeding 1,500 sq.ft. limit, assessee challenges AO's measurement methodology, AO frames assessment based on revised return, CIT(A) upholds AO's decision, appellant reiterates claim at appellate stage.

Analysis:
1. Claim of Deduction u/s. 80IB(10): The assessee, engaged in land development and construction, filed for deduction u/s. 80IB(10) which was denied by the AO due to the housing unit size exceeding 1,500 sq.ft. The appellant contested this denial, arguing that the AO incorrectly calculated the built-up area by including common areas and merging separate units. The appellant also highlighted discrepancies in considering private garden areas as part of the built-up area. The appellant further pointed out that for the assessment year 2007-08, the AO accepted the deduction claim. However, the AO maintained that the revised return filed by the assessee withdrawing the claim was valid, and the CIT(A) upheld this decision. The tribunal noted that the AO did not verify the actual built-up area and accepted the revised return within the limitation period, leading to the dismissal of the appellant's claim.

2. Appellate Stage Claim: The appellant raised the claim of deduction u/s. 80IB(10) at the appellate stage, arguing that the AO's measurement methodology was flawed. The tribunal held that while fresh pleas can be raised at the appellate stage, if the claim is fact-dependent and requires investigation, it may not be admissible. In this case, since the AO had pointed out the housing unit sizes exceeding the limit and the appellant withdrew the claim via a revised return, the tribunal concluded that the AO did not proceed to verify the claim further. The tribunal emphasized the need for factual verification before applying legal provisions, leading to the dismissal of the appellant's appeal.

3. Legal Provisions vs. Actual Area: The tribunal highlighted the distinction between legal provisions and actual measurements, noting that the appellant's claim was based on factual discrepancies in the built-up area calculation. While acknowledging the legal requirement to exclude common areas as per section 80IB(14)(a), the tribunal emphasized the necessity of verifying the actual built-up area. The tribunal concluded that the appellant's acceptance of the AO's objections during assessment proceedings undermined the claim raised at the appellate stage, leading to the dismissal of the appeal.

Overall, the tribunal dismissed the appellant's appeal, emphasizing the importance of factual verification in determining eligibility for deductions under section 80IB(10) and upholding the assessment based on the revised return filed by the assessee.