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2013 (11) TMI 110 - AT - Income TaxWhether deduction u/s 80-IB (10) allowed if the undertaking is not approved by local authority The assessee was a partnership firm engaged in the business of development of land and construction of residential buildings The assessee was denied deduction on the reason that the land was not in the name of firm - Held that - Following Radhe Developers 2007 (6) TMI 316 - ITAT AHMEDABAD The assessees was entitled to the benefit u/s 80IB(10) even where the title of the lands had not passed on to the assessees and in some cases, the development permissions may also have been obtained in the name of the original land owners - There was a typographical error in the computation sheet and the actual profit was ₹ 26,35,686 and inadvertently the same was mentioned as ₹ 23,35,686 - The books of account are audited and it was not mentioned anywhere that there was undisclosed receipts Following ITO v. Shakti Corporation 2008 (11) TMI 436 - ITAT AHMEDABAD - the benefit under 80-IB(10) would be available if the developer has dominant control over the project and has developed the land at its own cost and risk and the benefit would be denied if the assessee had entered into an agreement for a fixed remuneration as a contractor to construct or develop the project on behalf of the land owner - The issue was restored for fresh adjudication. The TDS was not deducted on transport expenses of ₹ 10,93,134 inadvertently as this was the first year of applicability of section 40(a)(ia) of the Act The assessee should be allowed deduction u/s 80IB(10) on the disallowance of ₹ 10,93,134 by invoking the provisions of section 40(a)(ia) - Decided against Revenue.
Issues:
1. Delay in filing cross-objection by the assessee. 2. Deduction under section 80-IB(10) disallowed by the Assessing Officer. 3. Disallowance under section 40(a)(ia) of the Act and deduction under section 80-IB(10). Issue 1: Delay in filing cross-objection by the assessee: The appeal filed by the Revenue and the cross-objection filed by the assessee arose from the order of the Commissioner of Income-tax (Appeals) for the assessment year 2005-06. The cross-objection was filed late by the assessee, leading to an application for condonation of delay. The Tribunal, after considering the application and hearing both parties, condoned the delay and proceeded to decide the matter alongside the Revenue's appeal. Issue 2: Deduction under section 80-IB(10) disallowed by the Assessing Officer: The case involved a partnership firm engaged in land development and residential construction, claiming a deduction under section 80-IB(10) of the Income-tax Act. The Assessing Officer disallowed the deduction citing reasons such as the land not being in the firm's name, the firm acting as an agent for land consideration collection, and lacking eligibility as a builder or developer. The Commissioner of Income-tax (Appeals) directed the Assessing Officer to verify details in light of previous Tribunal decisions. The Tribunal upheld the Commissioner's decision, dismissing the Revenue's appeal. Issue 3: Disallowance under section 40(a)(ia) of the Act and deduction under section 80-IB(10): Regarding disallowance under section 40(a)(ia) of the Act, the Assessing Officer disallowed a sum under this provision, which was sustained by the Commissioner of Income-tax (Appeals). The assessee sought deduction under section 80-IB(10) on this disallowance, arguing that if expenses were disallowed, they should be assessed as profit and allowed as a deduction. The Tribunal allowed the assessee's cross-objection, granting deduction under section 80-IB(10) on the disallowed amount. Consequently, the Revenue's appeal was dismissed, and the assessee's cross-objection was allowed. In conclusion, the Tribunal's judgment addressed issues related to the delay in filing the cross-objection, the disallowance of deduction under section 80-IB(10), and the allowance of deduction under section 80-IB(10) on the disallowed amount under section 40(a)(ia) of the Act. The Tribunal upheld the Commissioner's decision on the main issue, dismissing the Revenue's appeal and allowing the assessee's cross-objection.
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