2021 (4) TMI 1103 - HC - Income Tax

Proportionate deduction u/s 80IB(10) with respect to the units less than 1500 sq.ft. where the housing project contains units with built up area exceeding 1500 sq.ft. - HELD THAT - Question of law involved in the present appeal is covered by the decision of the Hon'ble Division Bench of this Court reported in Commissioner of Income-tax, Chennai Vs. Elegant Estates 2016 (1) TMI 502 - MADRAS HIGH COURT the question of law is decided against the Revenue and in favour of the assessee wherein held as assessee will be entitled for deduction u/s 80IB(10) with respect to income from flats measuring less than 1500 sq ft limit and assessee will not entitled for deduction u/s 80IB(10) proportionately only with respect to the income from the 2 flats exceeding the limit of 1500 sq ft when the assessee had considered all the flats as forming part of single project on interpretation of the provisions of section 80IB(10)(c) - the language used in the relevant provision of law does not bar a deduction claim altogether if some of the units sold exceed the specified dimensions. - Decided in favour of the assessee

Summary

Issues involved:
Challenge to order passed by Income Tax Appellate Tribunal regarding deduction under Section 80IB(10) for units in a housing project exceeding 1500 sq.ft.

Analysis:
The Revenue challenged the order passed by the Income Tax Appellate Tribunal regarding the allowance of proportionate deduction under Section 80IB(10) for units in a housing project exceeding 1500 sq.ft. The substantial question of law raised was whether the Tribunal was correct in allowing deduction for units less than 1500 sq.ft. when the project contained units exceeding 1500 sq.ft. The appellant contended that the Tribunal erred in denying deduction for the larger units while allowing it for smaller units, arguing that all units in the project must not exceed 1500 sq.ft. for the deduction to apply. On the other hand, the respondent argued that the Tribunal's decision was in line with previous court rulings, emphasizing that the law does not prohibit deduction if some units exceed the specified dimensions.

The High Court considered the arguments presented by both parties and referred to a previous decision in a similar case. The Court found that the Tribunal's decision was legally sound and consistent with past judgments. The Court held that the appellant's contentions were not valid, and the question of law was answered against the Revenue and in favor of the assessee. Consequently, the Tax Case Appeal was dismissed based on the precedent set by the Division Bench's ruling. Both the senior standing counsel for the appellant and the counsel for the respondent acknowledged that the issue was covered by the Division Bench's decision, leading to the dismissal of the appeal. The Court concluded that the question of law was decided against the Revenue and in favor of the assessee, following the precedent established by the Division Bench's judgment.