2013 (6) TMI 462 - AT - Income Tax

Deduction u/s. 80IB(10) disallowed - Held that - As the assessee had fulfilled all the conditions of Section 80IB(10) and amendment made in Clause (d) as held in case of Mannan Corpn. Vs. ACIT (2012 (9) TMI 700 - Gujarat High Court) is not applicable on the project approved by the competent authority before 01.04.2005 by which certain riders for deduction has been imposed by the legislature. As ssessee s project was approved in 2001 and in March, 2004 therefore assessee is fully entitled for deduction u/s. 80IB(10) - In favour of assessee.

Summary

Issues:
- Claim of deduction u/s. 80IB(10) of the IT Act for A.Y. 2004-05, 2005-06 & 2008-09.

Analysis:
1. A.Y. 2004-05:
- The AO disallowed the deduction u/s. 80IB(10) as the built-up area of commercial shops exceeded 10% of the total built-up area of the housing project, not meeting the statutory requirement.
- ITAT had earlier restored the issue based on a Special Bench decision, emphasizing on the size of the plot and compliance with statutory provisions.

2. A.Y. 2005-06:
- The AO disallowed the deduction as the residential built-up area was less than 90% and commercial area exceeded 10%, contrary to the statutory conditions.
- The AO was directed to verify the terms of the agreement, and based on findings, the deduction was denied following the Brahma Associates decision.

3. A.Y. 2008-09:
- The AO disallowed the deduction based on various considerations including legal transfer of land, beneficial ownership, and proportion of utilized FSI.
- The AO calculated the disallowance amount based on the ratio of utilized and unutilized FSI.

4. CIT(A) Decisions:
- The CIT(A) upheld the AO's orders, emphasizing on compliance with statutory conditions and specific ratios of commercial and residential areas.
- The CIT(A) referred to relevant case laws and held that the appellant failed to meet the conditions for deduction u/s. 80IB(10) in all three years.

5. Appellant's Arguments:
- The appellant argued that the amendment in Section 80IB(10)(d) was not applicable to projects approved before 01.04.2005, citing a recent Gujarat High Court decision.
- The appellant contended that their project was approved prior to the amendment and requested allowance of the deduction u/s. 80IB(10) in all years.

6. ITAT Decision:
- ITAT held that the appellant fulfilled all conditions of Section 80IB(10) and the amendment in Clause (d) was not applicable to projects approved before 01.04.2005.
- Referring to the Gujarat High Court decision, ITAT allowed the appellant's appeal in all three years, reversing the CIT(A) orders.

In conclusion, the ITAT allowed the appellant's appeal in all three years, emphasizing that the appellant met the statutory conditions for deduction u/s. 80IB(10) and the amendment in Clause (d) did not apply to their pre-amendment approved project.