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2015 (9) TMI 549 - AT - Income TaxEligibility to claim deduction u/s 80IB(10) - Held that - Provisions of section 80IB(10) being beneficial in nature, too technical a approach, would defeat the purpose for which provision has been brought into the statute. Moreover, as far as ld. CIT(A) s observation that the housing project should have been completed by 31/03/2011, we do not find the same to be acceptable. As assessee s housing project has been approved after 1st April, 2005, the stipulated period within which assessee has to complete the project is five years. Assessee having completed blocks A, B & F within five years from the date of approval, in our view, it is eligible to claim deduction u/s 80IB(10) in respect of blocks A, B & F. Though, in principle, we agree that assessee is eligible to claim deduction u/s 80IB(10) in respect of blocks A, B & F, however, the quantum of deduction has to be verified. As could be seen, assessee has been recognizing revenue from Sadguru Krupa project by following percentage completion method and project of the assessee has started in FY 2007-08. As it appears, assessee in the years under consideration i.e. AYs 2010-11 and 2011-12 has recognized revenue on percentage completion method and has also claimed deduction u/s 80IB(10) on that basis. Therefore, it is very much necessary and essential to verify whether deduction claimed in these two AYs is for the entire project (all six blocks) or only blocks A, B & F. Neither the AO has examined this aspect nor the assessee has brought any material on record to indicate that deduction claimed u/s 80IB(10) for these two years is only in respect of blocks A, B & F. While computing assessee s claim of deduction u/s 80IB(10), AO has to examine this aspect. With the aforesaid observations, we set aside the impugned orders of ld. CIT(A) and remit the matter back to AO for deciding afresh - Decided in favour of assessee for statistical purposes.
Issues Involved:
1. Denial of Assessee's Claim of Deduction under Section 80IB(10) of the Income Tax Act. Detailed Analysis: Issue 1: Denial of Assessee's Claim of Deduction under Section 80IB(10) of the Income Tax Act Facts and Background: The assessee, a construction company, filed returns for AY 2010-11 and 2011-12, claiming deductions under Section 80IB(10) for its housing project "Vertex Sadguru Krupa." The Assessing Officer (AO) disallowed this claim, arguing that the project was executed on a lease basis through an agreement of sale-cum-General Power of Attorney (GPA), which does not qualify for deductions under the amended provisions of Section 80IB(10). The AO also noted that the assessee showed a higher profit percentage for this project compared to others, leading to the disallowance of the deduction claim. CIT(A) Findings: The Commissioner of Income Tax (Appeals) [CIT(A)] found the AO's reasons for disallowance invalid but denied the deduction based on the project's completion status. The CIT(A) observed that the project, approved on 30/03/2007, required completion by 31/03/2011. However, the assessee provided a partial completion certificate dated 31/12/2011, indicating only three out of six blocks were complete. The CIT(A) concluded that Section 80IB(10) does not allow deductions for partially completed projects, referencing CBDT Instruction No. 4/09 and a prior ITAT decision. Assessee's Arguments: The assessee argued that the CIT(A) introduced a new reason for disallowance not raised by the AO. The assessee claimed that the deduction should apply to the completed blocks (A, B, and F), as they met all conditions under Section 80IB(10). The assessee contended that the project approved after April 1, 2005, had a five-year completion period, thus the CIT(A) erred in requiring completion by 31/03/2011. The assessee cited several judicial precedents supporting the claim that deductions could apply to partially completed projects if specific blocks met the necessary conditions. Revenue's Arguments: The Revenue argued that the entire housing project (six blocks) needed completion within the stipulated time for the deduction to apply. Since only three blocks were completed, the assessee was not eligible for the deduction. Tribunal's Analysis: The Tribunal examined the submissions and found no dispute that the project, approved on 30/03/2007, required completion within five years. The Tribunal noted that blocks A, B, and F were completed with all amenities and certified by municipal authorities. The Tribunal referenced judicial precedents indicating that even a single building or part of a larger project could qualify as a housing project for deductions if it met the conditions of Section 80IB(10). Tribunal's Conclusion: The Tribunal concluded that blocks A, B, and F met all conditions for the deduction under Section 80IB(10). The Tribunal emphasized that the provision's beneficial nature should not be defeated by a technical approach. However, the Tribunal remitted the matter back to the AO to verify the quantum of the deduction, ensuring it applied only to the completed blocks (A, B, and F) and not to the entire project. Final Judgment: The appeals were allowed for statistical purposes, directing the AO to re-examine the deduction claim based on the Tribunal's observations. Pronouncement: The judgment was pronounced in the open court on 26th August 2015.
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