2016 (6) TMI 178 - AT - Income Tax

Deduction u/s. 80IB(10) - profit derived from development of residential building - allowability of deduction u/s 80IB (10) when the project in question is cleared after approval of the Slum Rehabilitation Authority - Held that - The due dates for completion of project provided under subsection-10 of section 80IB are not applicable to the project like this in view of the immunity provided under proviso to clause (a) & (b) of the said sub-section 10 of section 80IB. - Decided against assessee

Summary

Issues:
- Appeal challenging the order of CIT(A) regarding deduction u/s. 80IB(10) of the Income Tax Act.

Analysis:
- The Assessing Officer (AO) filed an appeal against the order of CIT(A) regarding the deduction u/s. 80IB(10) of the Income Tax Act. The Assessee, a company engaged in the redevelopment of slum properties, had declared total income at ?69.86 Lakhs, but the AO determined the total income at ?4.63 crores. The main issue was the allowance of deduction u/s. 80IB(10) amounting to ?3.90 crores.
- The Departmental Representative argued that due to the proviso to clause (a) and (b) of section 80IB(10), the Assessee was not entitled to claim the deduction. The Tribunal had previously dismissed a similar appeal by the department for the AY 2009-10. The AO raised specific grounds of appeal questioning the justification of allowing the deduction under section 80IB(10) without appreciating certain facts.
- The Tribunal analyzed the grounds raised by the AO and the arguments presented by both parties. The Counsel for the Assessee contended that the project in question was a Slum Rehabilitation Project and hence, the time limit provided in the statute would not be applicable to the Assessee due to the proviso to section 80IB(10). The CIT(A) had given a categorical finding that the project fell under the proviso, as it was approved as a Slum Rehabilitation Project by the relevant authority.
- The Tribunal, after considering the arguments and the CIT(A)'s order, agreed with the decision of the CIT(A) and dismissed the appeal filed by the AO. The Tribunal emphasized that the proviso to section 80IB should be given a liberal interpretation to achieve socio-economic objectives and not defeat genuine claims for deduction by developers undertaking projects in slum areas approved by the government. The Tribunal also highlighted the importance of not imposing time limits that could hinder the purpose of the proviso.
- Ultimately, the Tribunal decided against the AO based on the previous order and dismissed the appeal. The order was pronounced in open court on 30th May 2016, upholding the decision in favor of the Assessee regarding the deduction u/s. 80IB(10) of the Income Tax Act.