2016 (5) TMI 249 - AT - Income Tax

Eligibility of deduction u/s.80IB(10) - CIT(A) had denied the claim of deduction for the reason that assessee had not complied with the conditions stipulated under clause (a), (b) & (c) of Section 80IB(10) of the Act and the basis such conclusion was DVO s report - It is CIT(A) s observation that assessee has constructed only on 5686.74 sq.mtrs., but on the other hand, it is assessee s contention that it has developed on the area of 8838.74 sq. mtrs. of land and for which, support is drawn by ld. A.R. on the certificate being no. 1870 dated 9th September, 2010 issued by Ahmedabad Urban Development Authority (AUDA) - Held that - On perusal of the aforesaid certificate, it is seen that the certificate has been issued by AUDA on 09.09.2010 whereas the impugned order of ld. CIT(A) is dated 04.06.2010 meaning thereby that when the order was passed by ld. CIT(A), the aforesaid certificate issued by AUDA was not before her and therefore she did not have the benefit of the aforesaid certificate. Further on perusal of the certificate, it is seen that it gives details about the area of land, permission number, approved built up area, date of approval etc. which are important factors which would go in determining the eligibility of assessee for deduction u/s.80IB(10) of the Act. In such a situation, in the larger interest of justice, we are of the view that the issue about deduction u/s.80IB(10) of the Act needs to be re-examined in the light of the aforesaid certificate issued by AUDA and in accordance with law - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Appeals against CIT(A) order for AY 2006-07 & 2007-08 regarding deduction u/s.80IB(10) of the Act.

Analysis:
1. Ownership of Land Issue:
- Assessee, a partnership firm in construction business, claimed deduction u/s.80IB(10) for AY 2006-07. AO denied the deduction, stating the land was not owned by the assessee. However, the CIT(A) denied the deduction citing violations of conditions in Section 80IB(10). Assessee argued that the issue of land ownership was settled in its favor by the Gujarat High Court in Radhe Developers case.

2. Size of Flats Issue:
- CIT(A) also denied the deduction due to some flats exceeding 1500 sq.ft. Assessee sold flats below 1500 sq.ft., but purchasers later combined them. Tribunal ruled that the combined area exceeding 1500 sq.ft. post-sale cannot be attributed to the assessee, hence the deduction cannot be denied on this ground.

3. Compliance with Conditions Issue:
- The CIT(A) concluded that the assessee did not comply with conditions under Section 80IB(10) based on DVO's report. However, the certificate from AUDA, issued after the CIT(A)'s order, confirmed the development on 8838.74 sq.mtrs. of land. Tribunal directed a re-examination of the deduction eligibility in light of the certificate, granting both parties a fair hearing.

4. Appeal for AY 2007-08:
- Both parties agreed that the issues and arguments for AY 2006-07 applied to AY 2007-08. Tribunal allowed the appeal for AY 2007-08 based on similar reasons as AY 2006-07.

5. Conclusion:
- The Tribunal allowed both appeals for statistical purposes, directing a re-examination of the deduction eligibility for AY 2006-07 based on the AUDA certificate. The decision was based on settled ownership issues, lack of attribution for flat size violations, and the need for a fresh assessment considering the new evidence.