2016 (1) TMI 607 - AT - Income Tax

Deduction under section 80IB(10) - Held that - The assessee had completed all the buildings, for which sanction was received for parking seven floors and further all the conditions laid down under section 80IB(10) of the Act were complied with, then the assessee is entitled to the claim of deduction under section 80IB(10) of the Act. The Assessing Officer is directed to compute the said deduction under section 80IB(10) of the Act in line with the directions of Tribunal in assessment years 2007-08 to 2009-10. - Decided in favour of assessee.

Summary

Issues Involved:
1. Denial of deduction under section 80IB(10) for profits derived from housing projects DSK Sundarban and DSK Vishwa Phase-V Meghmalhar Phase-I.
2. Determination of whether Amenity Space I and II are part of the residential project or independent projects.
3. Eligibility for deduction under section 80IB(10) for Meghmalhar Phase-I and whether it should be considered as a single integrated project with Meghmalhar Phase-II.
4. Allowance of deduction on a proportionate basis for parts of the project complying with section 80IB(10).

Detailed Analysis:

1. Denial of Deduction under Section 80IB(10) for DSK Sundarban and Meghmalhar Phase-I:
The assessee claimed deductions under section 80IB(10) for profits derived from the housing projects DSK Sundarban and Meghmalhar Phase-I. The Assessing Officer denied these deductions, stating that the projects did not comply with the conditions laid down under section 80IB(10). Specifically, the denial for DSK Sundarban was based on the inclusion of commercial spaces (Amenity Space I and II), and for Meghmalhar Phase-I, it was argued that the project was not completed within the stipulated time frame and exceeded the prescribed commercial area limit.

2. Determination of Amenity Space I and II as Part of the Residential Project or Independent Projects:
The CIT(A) and Assessing Officer held that the commercial area in DSK Sundarban exceeded the limit prescribed under section 80IB(10)(d), as the Amenity Space I and II were considered part of the residential project. The Tribunal, however, found that the building plans for the residential and amenity spaces were sanctioned independently. It was observed that merely having a common layout plan does not make the amenity spaces part of the residential project. The Tribunal cited several decisions, including Appoorva Properties and Estates Pvt. Ltd., Aditya Developers, and others, supporting the view that independently sanctioned building plans should be treated as separate projects. The Tribunal concluded that Amenity Space I and II should be considered independent projects, and thus, the assessee was entitled to the deduction under section 80IB(10) for DSK Sundarban.

3. Eligibility for Deduction under Section 80IB(10) for Meghmalhar Phase-I:
The Tribunal examined whether Meghmalhar Phase-I and Phase-II were separate projects. The CIT(A) and Assessing Officer had treated them as a single integrated project, denying the deduction because the entire project was not completed. The Tribunal, referencing the Bombay High Court's decision in Vandana Properties, held that each block or building could be considered a separate housing project. The Tribunal found that the buildings for which sanction was received for parking + seven floors constituted a separate housing project, which met all the conditions of section 80IB(10). Therefore, the deduction was allowable for Meghmalhar Phase-I.

4. Allowance of Deduction on a Proportionate Basis:
The assessee argued that even if certain parts of the projects did not comply with section 80IB(10), the deduction should still be allowed proportionately for the parts that did comply. The Tribunal did not explicitly address this issue in the judgment, as it found that the projects in question were eligible for the full deduction under section 80IB(10).

Conclusion:
The Tribunal allowed the appeal, directing the Assessing Officer to grant the deductions under section 80IB(10) for the profits derived from the housing projects DSK Sundarban and Meghmalhar Phase-I. The Tribunal emphasized that independently sanctioned building plans should be treated as separate projects, and the conditions of section 80IB(10) were met in respect of the eligible parts of the projects.