2012 (11) TMI 140 - AT - Income Tax

Deduction u/s 80IB(10) - the commercial area i.e. shops in the phases XI and XI-A of the project of the assessee was in excess of what has been prescribed - CIT(A) allowed the claim - Held that - As decided in CIT-II, Pune Versus M/s. Brahma Associates 2011 (2) TMI 373 - BOMBAY HIGH COURT up to March 31, 2005 deduction under section 80-IB(10) is allowable to housing projects approved by the local authority having residential units with commercial user to the extent permitted under the Development Control Rules/ Regulations framed by the respective local authority. As in the present case the A.O. has allowed the deduction u/s 80IB(10) in respect of other phases of the property known as Golden Nest & also that the housing project of Golden Nest phase VII and X are approved by the local authority on 25-1-2001 and phase XI and XIA on 14-1-2004 i.e prior to 1-4-2005 inserted under Clause (d) to section 80IB(10) w.e.f. 1-4-2005 which is prospective in nature and not retrospective - As the percentage of commercial area in phase VII, X and combined phase XI and XIA of the property known as Golden Nest are at 6.59%, 4.99%, and 5.48% respectively was not controverted by the Revenue even at this stage - in favour of assessee. On the issue of area of row houses exceeding 1000 sq. ft. the CIT(A) held that the deduction u/s 80IB(10) has to be allowed on proportionate basis as decided by the CIT(A) II, Thane in the case of the assessee for assessment years 2003-04, 2004-05 and 2005-06. After considering the assesse s submission that the A.O. while giving effect to the order of the Tribunal has considered the same and disallowed Rs. 6,70,464/- in the assessment year 2004-05. Thus no interference with the order passed by the CIT(A) on this account required - against revenue.

Summary

Issues:
1. Claim of deduction u/s 80IB(10) for housing project "Golden Nest" for A.Y. 2006-07.
2. Treatment of phases XI and XI-A as one project or separate projects.
3. Disallowance of deduction u/s 80IB(10) based on commercial area exceeding limits.
4. Allowance of deduction on proportionate basis for row houses exceeding 1000 sq. ft.

Analysis:
1. The appeal pertained to the Revenue challenging the order disallowing the deduction u/s 80IB(10) for the A.Y. 2006-07 related to the housing project "Golden Nest." The Revenue contended that the eligibility conditions for the deduction were violated. The A.O. disallowed the deduction due to the presence of commercial areas exceeding limits in certain phases of the project. The CIT(A) allowed the deduction based on previous tribunal decisions and directed the A.O. to allow the claim.

2. The A.O. questioned whether phases XI and XI-A should be treated as a single project or separate projects. The A.O. concluded that these phases should be considered as one project. The commercial area in these phases exceeded the prescribed limits under section 80IB(10)(d) of the Act. The A.O. disallowed the deduction for these phases due to the commercial area exceeding limits.

3. The A.O. disallowed the deduction for certain phases of the project due to the commercial area exceeding the prescribed limits under section 80IB(10)(d) of the Act. The assessee argued that the project approval predated the amendment imposing restrictions on commercial areas. The A.O. disagreed, citing legislative intent to limit benefits to housing infrastructure for middle-income groups. The CIT(A) allowed the deduction based on legal interpretations and previous tribunal decisions.

4. The issue of row houses exceeding 1000 sq. ft. was also raised. The CIT(A) held that the deduction should be allowed on a proportionate basis for such row houses, following decisions from previous assessment years. The Revenue challenged this decision, but the tribunal declined to interfere, upholding the CIT(A)'s order.

In conclusion, the tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to allow the deduction u/s 80IB(10) for the housing project "Golden Nest" for the A.Y. 2006-07. The tribunal also supported the treatment of phases XI and XI-A as one project and the allowance of deduction on a proportionate basis for row houses exceeding 1000 sq. ft.