2015 (6) TMI 940 - AT - Income Tax

Proportionate deduction of 80IB(10) - flats which are having built up area of below 1000 sq. ft. - whether conditions of 80IB(10) have not been fulfilled for the whole project/building and cannot be approved in piecemeal for some flats in the building? - CIT(A) allowed claim - Held that - There are series of decisions of this Tribunal, wherein, the Tribunal has held that in case of certain dwelling units exceeds the area prescribed u/s 80-IB(10) then the assessee would be eligible for deduction proportionately to the extent of the dwelling unit having the constructed area less than the limit provided in the section. Even if the proportionate area of plot is excluded from the total area of the plot of the project all other conditions prescribed u/s 80-IB(10) including the size of the plot are satisfied. Accordingly following the earlier order of this Tribunal we do not find any error or illegality in the order of CIT(A) allowing the proportionate deduction u/s 80-IB(10). - Decided in favour of assessee.

Summary

Issues:
1. Eligibility of deduction u/s 80IB(10) for housing units below 1000 sq. ft.
2. Interpretation of conditions under section 80-IB(10) for deduction eligibility.

Analysis:

Issue 1: Eligibility of deduction u/s 80IB(10) for housing units below 1000 sq. ft.
The case involved appeals by the revenue against two orders of CIT(A) for A.Y. 2007-08 and 2008-09 regarding the eligibility of deduction u/s 80IB(10) for housing units below 1000 sq. ft. The Assessing Officer disallowed the deduction as the built-up area exceeded 1000 sq. ft. The CIT(A) allowed proportionate deduction for units below 1000 sq. ft. The Revenue contended that any violation of the conditions under section 80-IB(10) renders the project ineligible for deduction. The Authorized Representative argued that previous tribunal decisions supported proportionate deduction based on unit sizes. The Tribunal referred to various decisions and held that if certain units exceed the area limit, the assessee can claim deduction proportionately for units within the limit. The Tribunal emphasized that the entire project must meet the conditions for deduction under section 80-IB(10).

Issue 2: Interpretation of conditions under section 80-IB(10) for deduction eligibility
The Tribunal considered the interpretation of conditions under section 80-IB(10) for deduction eligibility. It highlighted the importance of the conditions precedent for eligibility and the need for each residential unit in the project to satisfy the conditions. The Tribunal analyzed the wording of clause (c) of section 80-IB(10) and clarified that it applies to each residential unit in the housing project. The Tribunal emphasized that the provision should be strictly interpreted, and any ambiguity should benefit the taxpayer. It also noted that the provision aims to promote affordable housing while excluding ineligible projects. The Tribunal upheld the proportionate deduction for residential units meeting the conditions of section 80-IB(10)(c) based on previous decisions and the judgment of the Hon'ble Calcutta High Court.

In conclusion, the Tribunal dismissed the revenue's appeals, citing previous tribunal decisions and the judgment of the Hon'ble Calcutta High Court. The Tribunal upheld the proportionate deduction for housing units below 1000 sq. ft. meeting the conditions of section 80-IB(10)(c) in line with the interpretation of the relevant legal provisions and precedents.