2014 (2) TMI 992 - AT - Income Tax

Allowability of deduction u/s 80IB(10) of the Act Held that - Nothing has been brought on record by the Revenue to demonstrate that the powers were exercised by the DVO to take the measurement of the flats when the same was denied by Assessee - the DVO has himself admitted in the noting Property inspected from terrace - The flats from inside will not be available for verification of measurements in a day which could not be arranged today the noting of DVO that he has inspected the property in question personally and had measured the same from terrace and the area is less than 1500 sq. ft. per unit shows that even by including the outer walls, while measuring from terrace, the area was less than 1500 sq. ft. per unit Relying upon CIT vs Anriya Project Management Services (P) Ltd 2012 (5) TMI 196 - KARNATAKA HIGH COURT - the definition of built up area inserted by Finance No 2 of 2004 which came into effect from 1.4.2005 is prospective in nature and has no application to the housing projects which were approved by the local authority prior to that date - Thus, the Assessee is eligible for deduction u/s 80IB(10) the order of CIT(A) set aside Decided in favour of Assessee.

Summary

Issues:
Allowability of deduction u/s 80IB(10) for A.Y. 2006-07 and 2007-08.

Analysis:
For A.Y. 2006-07, the Assessee, a firm engaged in developers and builders profession, filed returns declaring income. The AO denied deduction u/s 80IB(10) as Assessee was not considered a Developer but a Contractor. The CIT(A) upheld this decision. The Assessee contended that the project met all requirements, including plot size and built-up area. The DVO's measurements were challenged, arguing the area was below 1500 sq ft. The Tribunal noted the DVO's inability to physically verify the flats and relied on the Karnataka High Court's decision regarding the definition of "built-up area." As no contrary decision was presented, the Tribunal allowed the Assessee's appeal, granting the deduction.

For A.Y. 2007-08, the facts and issues mirrored those of A.Y. 2006-07. Following the same reasoning and conclusions, the Tribunal allowed the appeal for this year as well.

In both cases, the Tribunal found in favor of the Assessee, allowing the deduction u/s 80IB(10) for both A.Y. 2006-07 and 2007-08. The judgments were pronounced on 21-02-2014.