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2016 (8) TMI 1586 - AT - Income TaxDeduction u/s. 80IB(10) - housing project Kumar Puram developed by the assessee - HELD THAT - Assessing Officer in the assessment year 2001-02 had raised similar objections in disallowing the claim of deduction u/s. 80IB(10) on the housing project Kumar Puram developed by the assessee. In appeal filed by the assessee before the Tribunal, the Tribunal decided the issue in favour of the assessee. The Commissioner of Income Tax (Appeals) in the impugned order has followed the order of Tribunal i 2013 (2) TMI 925 - ITAT PUNE and accepted the claim of the assessee in assessment years under appeal. DR has not placed on record any material to controvert the findings of Tribunal. In the absence of any contrary material, we find no infirmity in the order of CIT (Appeals) on this issue. Accordingly, the findings of CIT (A) on this issue are affirmed and the ground raised by the Department against allowing claim of deduction u/s. 80IB(10) of the Act to the assessee is dismissed. Disallowance u/s. 14A r.w. Rule 8D - HELD THAT - Assessee has earned exempt income from share of profit from the partnership firm and dividend. The disallowance has been made by the AO u/s. 14A read with Rule 8D. The Hon'ble Jurisdictional High Court in the case of Godrej and Boyce Mfg. Co. Ltd 2010 (8) TMI 77 - BOMBAY HIGH COURT has held that Rule 8D would apply from assessment year 2008-09. Some reasonable disallowance has to be estimated u/s. 14A for earning income exempt from tax. The Commissioner of Income Tax (Appeals) has restricted the disallowance to 10% of the exempt income - The assessee has accepted the same. We do not find any infirmity in the order of CIT (Appeals). Accordingly, the issue raised by the Department against restricting the disallowance u/s. 14A to 10% of the exempt income is devoid of any merit. Accordingly, this ground of appeal of the Revenue is dismissed. Depreciation on Motor Cars - AO disallowed the claim of depreciation on motor cars on the ground that twin conditions for claiming depreciation u/s. 32 assets should be used for the purpose of business and assets should be owned by the assessee, are not satisfied - HELD THAT - Commissioner of Income Tax (Appeals) has allowed the claim of the assessee by placing reliance on the decision of the Co-ordinate Bench of the Tribunal in the case of Rohan Builders and Developers Pvt. Ltd. 2012 (6) TMI 319 - ITAT PUNE . We do not find any infirmity in the order of CIT (Appeals) in accepting the claim of the assessee. Thus, in view of the facts of the case and the decision of Co-ordinate Bench, the ground of appeal raised by the Department against allowing of depreciation on motor vehicles registered in the name of Directors of the assessee company is dismissed. Deduction u/s. 80IA(4)(iii) - assessee has complied with all the conditions laid down under the Industrial Park Scheme, 2008 and thus, the assessee is eligible to claim deduction u/s. 80IA(4)(iii) - HELD THAT - In the present case the project of the assessee was initially approved under IPS 2002 on 15-02-2005. The assessee had claimed deduction u/s. 80IA(4)(iii) in assessment year 2006-07 which was allowed to the assessee. The assessee could not complete the project within the time frame specified in IPS 2002 i.e. 31-03-2006. The assessee applied for notification of the project under IPS 2008. The project was notified by CBDT on 09-07-2010. After notification of the project under IPS 2008, the eligibility of deduction has to be seen with respect to the new scheme. Thus, in view of the facts of the case and the observations of the Co-ordinate Bench of the Tribunal we find no merit in the contentions of the ld. DR that the assessee is not eligible to claim deduction u/s. 80IA(4)(iii) in assessment years under appeal. Second objection of the Revenue is that minimum 30 units were not established as per the scheme - The order of the Tribunal in the case of M/s. Kolte Patil Developers Ltd. Vs. Dy. Commissioner of Income Tax 2015 (3) TMI 363 - ITAT PUNE further strengthens the case of assessee in allowing the deduction u/s. 80IA(4)(iii) of the Act. Accordingly, the ground of appeal raised by Department against allowing deduction u/s. 80IA(4)(iii) to the assessee is dismissed. Disallowing the claim of assessee with respect to interest expenditure pertaining to interest free advances given to various parties - HELD THAT - As in view of the absence of vital information, we are of the considered view that this issue needs a revisit to the file of Assessing Officer to ascertain the financial position of the assessee at the time of giving advances. In case own interest free funds of the assessee are sufficient to cover the advances at the time of making such advances, no disallowance should be made in view of the decision of Hon'ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Reliance Power Utility Ltd 2009 (1) TMI 4 - BOMBAY HIGH COURT Accordingly, ground No. 3 raised in the appeal of the assessee for assessment year 2007-08 is allowed for statistical purpose.
Issues Involved:
1. Deduction under Section 80IB(10) of the Income Tax Act, 1961. 2. Disallowance under Section 14A read with Rule 8D. 3. Depreciation on motor cars registered in the name of Directors. 4. Deduction under Section 80IA(4)(iii) of the Act. 5. Reassessment proceedings under Section 147/148. 6. Disallowance of interest expenditure under Section 36(1)(iii). Issue-wise Detailed Analysis: 1. Deduction under Section 80IB(10) of the Act: The assessee, a builder and developer, claimed deduction under Section 80IB(10) for a housing project 'Kumar Puram'. The Assessing Officer (AO) disallowed the deduction on the grounds that the project commenced before 01-10-1998, the commercial area exceeded 5% of the total area, and the project was part of a larger plot which included a commercial project. The Tribunal observed that similar objections were raised in the assessment year 2001-02, and the issue was decided in favor of the assessee by the Tribunal. The Commissioner of Income Tax (Appeals) followed this precedent, and the Tribunal found no contrary material to dispute this, thus affirming the deduction. 2. Disallowance under Section 14A read with Rule 8D: For the assessment year 2007-08, the AO made a disallowance under Section 14A read with Rule 8D due to the assessee receiving exempt income. The Commissioner of Income Tax (Appeals) restricted the disallowance to 10% of the exempt income, referencing the analogy of deduction under Section 80HHC. The Tribunal upheld this decision, noting that Rule 8D applies from the assessment year 2008-09, and some reasonable disallowance was necessary. 3. Depreciation on Motor Cars: The AO disallowed depreciation on motor cars registered in the names of Directors, arguing that the cars were not owned by the assessee company. The Tribunal, referencing its previous decisions, held that the assessee company was the real and beneficial owner of the cars, which were used for business purposes and shown in the company's balance sheet. Thus, the Tribunal upheld the allowance of depreciation. 4. Deduction under Section 80IA(4)(iii): The AO rejected the assessee's claim for deduction under Section 80IA(4)(iii) for an Industrial Park project, citing non-compliance with the notification and operational requirements. The Commissioner of Income Tax (Appeals) found that the assessee complied with the conditions under the Industrial Park Scheme, 2008, and was eligible for the deduction. The Tribunal agreed, noting that the project was notified under the scheme, and the assessee met the criteria of locating the required number of units within the specified period. The Tribunal dismissed the Revenue's grounds against the deduction. 5. Reassessment Proceedings under Section 147/148: The assessee challenged the reassessment proceedings, but the Tribunal did not address this issue in detail as the assessee did not press the ground. 6. Disallowance of Interest Expenditure under Section 36(1)(iii): The assessee contested the disallowance of interest expenditure on advances given to various parties. The Tribunal found that the authorities did not verify whether the assessee had sufficient own interest-free funds at the time of making the advances. The Tribunal remanded the issue to the AO to ascertain the financial position at the time of the advances. If the assessee had sufficient own funds, the disallowance should not be made. Separate Judgments: The Tribunal delivered a common judgment for the issues raised by both the Department and the assessee, without separate judgments by different judges. Conclusion: The Tribunal upheld the deductions under Sections 80IB(10) and 80IA(4)(iii), restricted the disallowance under Section 14A, allowed depreciation on motor cars, and remanded the issue of interest expenditure disallowance for further verification. The reassessment proceedings issue was dismissed as not pressed.
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