2022 (7) TMI 964 - HC - Income Tax

Deduction u/s 80IB - pro rata deduction for eligible units - Tribunal allowing the assessee s claim of deduction u/s 80IB(10) on pro rata basis considering the fact that the assessee did not comply with the limit on built-up area prescribed of Section 80IB(10)(c) in respect of eligible fats in the project Kumar Kruti and Kumar Shantiniketan - as suggested that even if a single fat in a housing project is found to exceed the permissible maximum built-up area of 1500 sq.ft., the assessee would lose its right to claim the benefit of deduction in respect of the entire housing project under Section 80IB(10) - HELD THAT - A plain reading of the said section does not support that interpretation at all. Learned Counsel for the appellant would have been perfectly justified, had the legislature in its wisdom, in clause c used the words each residential unit has a maximum built-up area . This would then clearly indicate that the intention was to ensure that each and every residential unit in such a housing project confirms inter alia to the size prescribed with a view to make an assessee eligible for claiming the deduction. It is a well settled principle of interpretation of statutes that when the language of a statute is unambiguous and admits of only one meaning, no question of construction of a statute then arises. Reliance in this regard can be placed on the Apex Court judgment in Nelson Motis 1992 (9) TMI 355 - SUPREME COURT It, therefore, becomes clear that clause c only qualifies an eligible residential unit and no more and further that if there is such a residential unit, which confirms to the requirement as to size in a housing project, all other conditions being fulfilled, the benefit of deduction cannot be denied in regard to a such residential unit. Section 80IB(10), nowhere even remotely aims to deny the benefit of deduction in regard to a residential unit, which otherwise confirms the requirement of size at the cost of an ineligible residential unit with a built-up area of more than 1500 sq.ft. We are of the opinion that the order of the ITAT directing the A.O. to workout the pro rata deduction under Section 80IB(10) of the Act, 1961, in regard to the eligible residential units, merits no interference. The appeal is held to be without merit.

Summary

Issues:
1. Appeal under Section 260 A of the Income Tax Act, 1961 against ITAT's judgment.
2. Eligibility for deduction under Section 80IB(10) for residential projects.
3. Compliance with size limits for residential units in housing projects.
4. Interpretation of Section 80IB(10) regarding pro rata deduction.

Analysis:
1. The appeal was filed against the ITAT's order directing the Assessing Officer to calculate the pro rata deduction under Section 80IB(10) of the Income Tax Act, 1961 for the assessment year 2011-12.
2. The assessee, a firm developing residential projects, claimed a deduction under Section 80IB(10) for two projects, Kumar Shantiniketan and Kumar Kruti, in their income tax return.
3. The Assessing Officer disallowed the deduction for the projects due to non-compliance with the size limits of residential units as prescribed in Section 80IB(10).
4. The CIT(A) allowed the appeal, following previous ITAT decisions in favor of the assessee for other assessment years.
5. The ITAT, Pune, dismissed the Revenue's appeal, leading to the question of law on whether the ITAT was justified in allowing the deduction on a pro rata basis despite non-compliance with size limits.
6. The Respondent cited a judgment supporting proportionate deduction under Section 80IB(10) based on consistent views of various High Courts and the Supreme Court.
7. Section 80IB(10) allows deductions subject to conditions like project approval timelines and size limits for residential units.
8. The argument against pro rata deduction was based on the interpretation that non-compliance in a single unit would disqualify the entire project, but the court disagreed.
9. The court held that Section 80IB(10) does not aim to deny deduction for compliant units due to non-compliant units, affirming the ITAT's decision on pro rata deduction for eligible residential units.

This detailed analysis of the judgment highlights the issues, arguments, and the court's interpretation of the relevant legal provisions, providing a comprehensive understanding of the case and its implications.