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2015 (12) TMI 360 - AT - Income TaxDeduction u/s.80IB(10) disallowed - according to revenue DVO s report clearly mentioned that assessee had deviated from the original approved plan - Held that - Once a plot of land has more than one acre, the number of housing projects therein would not matter. There is no case for the Revenue that assessee had violated any conditions or not satisfied any other conditions set out u/s.80IB(10) of the Act. Though DVO has pointed out deviation from the approved project he has not stated what such deviation was and how it violated any condition set out in Section 80IB(10) of the Act. This being the case, we are of the opinion that assessee was eligible for the claim of deduction u/s.80IB(10) of the Act. Nevertheless, we find from the orders of lower authorities that no verification has been done with regard to the quantum of the claim. Denial of the claim has been made for the sole reason that area of the land where the project was being executed was less than one acre. Though we hold that assessee is eligible for deduction u/s.80IB(10) of the Act, for quantification of such claim, we remand the issue back to the file of the AO. - Decided in favour of assessee for statistical purpose. Disallowance of 30% of labour charges - Held that - Disallowance of 30% of labour charges was made for a reason that selfmade vouchers did not carry the addresses of the payees. May be it is true that only self-made vouchers can be maintained in support of labour expenditure. However nothing can stop the assessee from giving full address of the recipients. Having failed to do we cannot say that assessee had discharged its onus for supporting its claim. We are of the opinion that lower authorities were justified in making a disallowance of 30% - Decided against assessee. Disallowance u/s.40(a)(ia) - CIT(A) deleted the disaaalowance considering that Finance Act, 2010, amendment toSection 40(a)(ia) of the Act, through Finance Act, 2010 had to be construed retrospectively - Held that - There is no dispute that tax was deducted by the assessee and remitted by it before the due date of filing the return of income. We find that this issue had come up before the Hon ble jurisdictional High Court in the case of Anil Kumar & Co (2013 (7) TMI 231 - KARNATAKA HIGH COURT ) as held by the Finance Act, 2008, which is given retrospective effect from April 1, 2005, the benefit of that provision had been extended to the assessee, though the assessment order passed initially cannot be found fault. With the change of law, when the effect of the amendment is to give benefit to the assessee, the appellate authority and the Tribunal were justified in extending the said benefit. - Decided in favour of assessee.
Issues Involved:
1. Deduction under Section 80IB(10) of the Income-tax Act, 1961. 2. Disallowance of 30% of labor charges. 3. Disallowance under Section 40(a)(ia) of the Income-tax Act, 1961. Issue-wise Detailed Analysis: 1. Deduction under Section 80IB(10) of the Income-tax Act, 1961: The assessee, a builder and developer, claimed a deduction of Rs. 1,41,62,188/- under Section 80IB(10) for a property constructed in Survey No.50/11, Santhamarenahalli, K R Puram, Bangalore. The AO, based on the DVO's report, disallowed the claim, noting that the land area for the three blocks referred to was less than one acre, and some land was developed as individual plots. The CIT (A) upheld the AO's decision, stating that the project did not meet the conditions under Section 80IB(10). However, the assessee argued that the entire project, named Lake City Residency, was constructed on a land area of 3 acres and 36 guntas, and the DVO's report was incorrect. The ITAT referred to the Bombay High Court judgment in CIT v. Vandana Properties, which emphasized that the area of the plot of land is relevant and multiple housing projects on a plot of more than one acre can qualify for the deduction. The ITAT held that the assessee was eligible for the deduction but remanded the issue back to the AO for quantification of the claim. 2. Disallowance of 30% of labor charges: The assessee claimed labor charges of Rs. 5,25,704/- for the Manju Anugraha project and Rs. 2,55,765/- for the Lake City Residency project. The AO disallowed 30% of the labor charges, amounting to Rs. 2,34,414/-, as the claims were supported only by self-made vouchers without the addresses of the payees. The CIT (A) upheld the AO's decision. The ITAT agreed with the lower authorities, stating that the assessee failed to provide proper addresses of the recipients, and thus, the disallowance of 30% was justified. 3. Disallowance under Section 40(a)(ia) of the Income-tax Act, 1961: The Revenue appealed against the CIT (A)'s decision to delete the disallowance under Section 40(a)(ia), arguing that the amendment to the section through the Finance Act, 2010, should be applied prospectively. The assessee had deducted tax at source on Rs. 4,83,79,766/- but remitted it with substantial delay. The CIT (A) applied the amendment retrospectively, following the jurisdictional High Court's judgment in Anil Kumar & Co. v. ITO, which held that the benefit of the amendment should be extended retrospectively. The ITAT upheld the CIT (A)'s decision, stating that the disallowance was rightly deleted as the tax was remitted before the due date of filing the return of income. Conclusion: The ITAT allowed the assessee's appeal partly for statistical purposes by remanding the issue of quantification of the deduction under Section 80IB(10) back to the AO. The ITAT dismissed the Revenue's appeal, upholding the deletion of the disallowance under Section 40(a)(ia) and maintaining the disallowance of 30% of labor charges.
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