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2017 (4) TMI 246 - AT - Income TaxAssessment u/s 153A - Deduction under section 80IB - Held that - AO did not dispute with regard to fulfillment of other conditions contemplated under section 80IB of the Income Tax Act 1961. His objections are very limited. A perusal of the assessee s note would indicate that it has developed and built a housing project in the name of Ratna Jyoti Apartments. Total area of land used for development of this housing project was 22529 sq.meters i.e. 5.567 acres. It consists of two different plots viz. FP No.107 108 & 109 of TPS No.2 admeasuring 15034 sq.meters i.e. 3.715 acre and (ii) F.P.No.05 T.P. Scheme No.7 admeasuring 7495 sq.meters i.e. 1.852 acre. The assessee has constructed eight high rise towers on this area. On the first plot it has constructed tower bearing no.A B E F G & H whereas on the plot bearing F.P.No.5 it has constructed towers C and D. The flats constructed in tower C & D were having more than 1500 sq.feet area. Therefore these towers do not qualify the conditions for grant of deduction under section 80IB of the Act. As far as non-filing of the return within time limit provided in its notice under section 153A is concerned the assessee has already filed regular return which was revised within time granted and claim was made in connection with that return and therefore this is not a valid reason assigned by the AO and this aspect has rightly been considered by the ld.CIT(A). Thus out of four reasons assigned by the AO three are peripheral procedural reasons wherein the assessee has not committed any default which would statutorily prohibit the assessee for claiming such deduction. The last reasons remained to be dealt with is whether if an assessee has violated conditions require to be fulfilled under section 80IB qua two towers then it would attract a disqualification for the remaining tower also. We find that as far construction raised by the assessee on TPS No.2 where it has raised six towers is concerned it has not committed any irregularity or default. In the judgment replied by the ld.counsel for the assessee it has been recognized that if the assessee has completed the construction and fulfilled all the requirements for some of the units or towers in a housing project proportionate deduction would be granted to the assessee. No contrary decision was brought to our notice. Apart from the above a perusal of site plan photos of completed towers their entrance would show that both plot were having more than 1 acre area which is the minimum requirement for development of housing project for claiming deduction under section 80IB(10). They can be treated as two independent project because independently they fulfill all requirement of section 80IB(10) therefore we are of the view that the ld.CIT(A) has appreciated the facts in right perspective and we do not find any error in the order of the ld.CIT(A). - Decided against revenue.
Issues Involved:
1. Eligibility for proportionate deduction under Section 80IB(10) of the Income Tax Act. 2. Treatment of a single housing project as two separate projects. 3. Compliance with procedural requirements under Section 153A of the Income Tax Act. 4. Filing of audit report along with the return of income. Issue-wise Detailed Analysis: 1. Eligibility for Proportionate Deduction under Section 80IB(10): The primary issue was whether the assessee was entitled to a proportionate deduction under Section 80IB(10) despite having a single housing project with some units not meeting the conditions specified in the section. The assessee developed a housing project named Ratna Jyoti Apartments, consisting of 8 towers on two separate plots. Towers A, B, E, F, G, and H met all conditions under Section 80IB(10), while Towers C and D did not, as their flats exceeded the built-up area of 1500 sq. ft. The Revenue argued that the entire project should be treated as a single entity, and since part of it did not meet the conditions, the entire deduction should be disallowed. However, the CIT(A) allowed the deduction proportionately for the part of the project that met the conditions, citing various judicial precedents, including the Bombay High Court's decision in CIT v. Vandana Properties and the ITAT Mumbai's decision in Saroj Sales Organisation v. ITO. 2. Treatment of a Single Housing Project as Two Separate Projects: The Revenue contended that the housing project should be considered as a single project, and the violation of conditions in Towers C and D should affect the entire project. The assessee argued that the two plots of land were separate, with different entries and approvals, and thus should be treated as separate projects. The CIT(A) accepted the assessee's contention, noting that each plot independently fulfilled the conditions of Section 80IB(10) and could be treated as separate projects. 3. Compliance with Procedural Requirements under Section 153A: The AO rejected the deduction claim on the grounds that the assessee did not file the return within the time limit specified in the notice under Section 153A and did not claim the deduction in the original return filed under Section 139(1). The CIT(A) held that the assessee had filed the original return within the time limit, revised it within the permissible period, and claimed the deduction during the assessment proceedings. The CIT(A) relied on the Gujarat High Court's decision in CIT v. Gujarat Oil and Allied Industries, which held that the filing of the audit report during assessment proceedings suffices for compliance. 4. Filing of Audit Report along with the Return of Income: The AO also disallowed the deduction on the ground that the audit report was not filed along with the return of income but was submitted during the assessment proceedings. The CIT(A) found this to be a procedural lapse that did not statutorily prohibit the assessee from claiming the deduction. The CIT(A) cited the Gujarat High Court's decision in CIT v. Gujarat Oil and Allied Industries, which held that the requirement to file the audit report along with the return is directory, not mandatory, provided it is submitted before the completion of the assessment. Conclusion: The Tribunal upheld the CIT(A)'s order, allowing the proportionate deduction under Section 80IB(10) for the part of the project that met the conditions. The Tribunal dismissed the Revenue's appeals, confirming that the procedural lapses cited by the AO were not sufficient grounds to deny the deduction. The Tribunal emphasized that the objective of Section 80IB(10) is to encourage housing projects, and proportionate deduction should be granted if part of the project meets the statutory conditions.
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