2016 (3) TMI 453 - AT - Income Tax

Eligibility of deduction under section 80IB(10) - Held that - All these issues had arisen in the assessee s own case in the earlier assessment year, i.e., A.Y. 2009-10 and this Tribunal has upheld the order of the Ld. CIT(A) in holding that the assessee is eligible for deduction under section 80IB(10) as the permission was obtained for the project and it was not really important that the permission was in the name of the land owners. As regards the excess of the constructed area and the allowability of the deduction on the entire building and also on the estimation of income, we find that for the year under consideration also, the issue needs re-consideration by the A.O. on similar lines as in the earlier assessment year. - Decided in favour of assessee and Revenue for statistical purposes.

Issues:
1. Interpretation of deduction under section 80IB of the Income Tax Act.
2. Validity of deduction under section 80IB(10) for a housing project.
3. Compliance with municipal permissions and regulations for claiming deductions.
4. Estimation of income in absence of proper documentation.

Analysis:
1. The judgment concerns two appeals for the Assessment Year 2010-2011. One appeal by the Assessee challenges the restriction of deduction under section 80IB, while the other appeal by the Revenue questions the eligibility of the Assessee for deduction under section 80IB(10) due to delayed permissions.

2. The Assessee, a partnership firm engaged in real estate development, undertook a project named "La Gardenia" in Hyderabad. The Assessing Officer (A.O.) scrutinized the claim for deduction under section 80IB(10) and found discrepancies in the project's permissions and constructed area. The A.O. disallowed the deduction due to non-compliance with certain conditions, including obtaining the municipal permission in the name of the firm. The A.O. estimated the income at 12.5% of the total turnover.

3. The Commissioner of Income Tax (Appeals) [CIT(A)] partially allowed the Assessee's claim for deduction under section 80IB(10) but restricted it to the actual constructed area approved by the authorities. The CIT(A) also disagreed with the income estimation by the A.O., citing lack of evidence regarding non-production of books of account.

4. The Assessee argued that the project's permission in the developer's name was not a mandatory requirement for claiming deduction under section 80IB(10), citing precedents from previous cases. The issue of excess constructed area and the deduction eligibility were remanded back to the A.O. for further examination, similar to the previous assessment year.

5. The Tribunal upheld the earlier decision regarding deduction eligibility under section 80IB(10) based on project permissions rather than developer's name. However, it directed the A.O. to re-examine the issues related to excess constructed area, income estimation, and compliance with regulatory norms. Both the Assessee's and Revenue's appeals were remanded to the A.O. for reconsideration.

6. Ultimately, the appeals of both the Assessee and the Revenue were allowed for statistical purposes, indicating a procedural victory without altering the substantive tax liability. The judgment emphasized the importance of proper documentation, compliance with regulations, and accurate assessment for claiming deductions under the Income Tax Act.

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