2012 (11) TMI 633 - HC - Income Tax

Deduction u/s 80IB Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the assessee was eligible for deduction under Section 80IB(10) in pro-rata basis for housing unit having less than 1500 sq.ft., even though it would defeat the intention behind enacting the said provision, which was only for providing housing facilities for middle income group? held that - Assessee was entitled to pro-rata deduction in respect of Units which have built-up area less than 1500 sq.ft. Thus, there could be no disallowance of the entire claim Order of the Tribunal is confirmed, thereby rejecting the Revenue s appeals - In the result, Tax Case Appeals stand dismissed. No costs.

Summary

Issues:
Interpretation of Section 80IB(10) for deduction eligibility on a pro-rata basis for housing units under 1500 sq.ft.

Analysis:
The case involved an appeal by the Revenue against the Tribunal's order regarding the assessment years 2003-04 and 2004-05. The main issue was whether the assessee was eligible for deduction under Section 80IB(10) on a pro-rata basis for housing units having less than 1500 sq.ft. The assessee, a property development company, claimed deduction for houses below 1500 sq.ft. The Assessing Officer rejected the claim, stating that the entire project must meet the criteria for claiming the deduction. The Commissioner of Income Tax (Appeals) also denied the claim, emphasizing that the assessee did not develop the entire project as required. However, the Income Tax Appellate Tribunal found that the approval from the local authority was obtained as per the requirement, and the project as a whole met the conditions of Section 80IB(10). The Tribunal allowed the assessee's pro-rata deduction claim for units below 1500 sq.ft.

In a detailed analysis, the Tribunal considered the approval granted by the Deputy Director of Town Planning and the total project area, concluding that the project complied with the area requirement. The Tribunal also noted that the assessee obtained approval from the local authority and produced necessary certificates. Referring to decisions from other benches, the Tribunal supported the pro-rata deduction claim. The High Court, in a similar case previously decided, had considered the question of proportionality in granting deductions under Section 80IB. Following that decision, the High Court confirmed the Tribunal's order, rejecting the Revenue's appeals and dismissing the Tax Case Appeals without costs.

In conclusion, the judgment clarified the eligibility of the assessee for a pro-rata deduction under Section 80IB(10) for housing units below 1500 sq.ft. The decision emphasized compliance with the statutory requirements and approval processes, ultimately upholding the Tribunal's ruling in favor of the assessee.