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2017 (8) TMI 525 - AT - Income TaxGrant of deduction u/sec. 80IB(10) on pro-rata basis - exceeding maximum area requirement - blocks which are of less 1500 square feet area - Held that - The issue in controversy is covered by the decision of Viswas Promoters Ltd. vs. ACIT 2012 (11) TMI 1117 - MADRAS HIGH COURT wherein the High Court has set aside this issue in favour of the assessee stating that the assessee is entitled to succeed both on the principle of proportionality as well as by reason of the construction on the meaning of the expression housing project as referred u/s 80IB(10) - the mere fact that one of the blocks have units exceeding built-up area of 1500 sq.ft would not result in nullifying the claim of the assessee for the entire projects - Decided against revenue. Addition on account of donations which was neither claimed in A.Y. 2011-12 and nor in A.Y. 2008-09 - Held that - We find that during the course of hearing the learned A.R. submitted the assessee has never claimed donation in its return of income in A.Y. 2011-12 or 2008-09. Therefore, when the assessee did not claim the donation there is no question of addition of ₹ 2,12,000/-. Therefore, we allow the same. Ground No. 1 is allowed. Disallowance of interest expenditure - proof of investments made out of own funds and borrowed funds were utilized for the purpose of business - Held that - We find that the AO and the CIT(A) has not considered whether the assessee has given these advances towards purchase of property or loans have been given for the Bhoomi Acres project or not. Therefore, we restore this matter back to the file of the AO and the AO is directed to verify all the facts whether these loans are given for business purposes or not and decide the matter according to law.
Issues Involved:
1. Appeal by Revenue against CIT(A) order for A.Y. 2011-12 regarding deduction under section 80IB(10). 2. Disallowance of donations not claimed in A.Y. 2011-12 or 2008-09. 3. Disallowance of interest expenditure without proving nexus between advances and business purpose. 4. Claim of capital loss on property sale. Issue 1: Appeal by Revenue against CIT(A) order for A.Y. 2011-12 regarding deduction under section 80IB(10): The case involved a housing project named Bhoomi Acres eligible for deduction under section 80IB(10). The dispute centered around the proportionate deduction under this section due to certain flats exceeding the maximum area requirement of 1000 sq.ft. The CIT(A) directed the AO to allow proportionate deduction based on the project's profit formula. The Tribunal upheld the CIT(A)'s decision citing a High Court judgment that allowed proportionate deduction for blocks with units below 1500 sq.ft. The Tribunal dismissed the Revenue's appeal, following the High Court's ruling. Issue 2: Disallowance of donations not claimed in A.Y. 2011-12 or 2008-09: The AO disallowed a donation of ?2,12,000 debited in the Work-In-Progress account for A.Y. 2008-09 but not claimed in A.Y. 2011-12. The CIT(A) upheld the disallowance. However, the Tribunal allowed the appeal, noting that the donation was never claimed in the relevant assessment years, leading to the disallowance being unwarranted. Issue 3: Disallowance of interest expenditure without proving nexus between advances and business purpose: The AO disallowed interest expenditure on advances to certain entities due to the lack of proof of a nexus with the Bhoomi Acres project. The CIT(A) confirmed the disallowance. The Tribunal remanded the matter to the AO for verification of whether the advances were for business purposes or related to the project, emphasizing the need to establish a clear connection before disallowing interest costs. Issue 4: Claim of capital loss on property sale: The claim of capital loss on the sale of property was not pressed during the hearing and was dismissed as such. In conclusion, the Tribunal's judgment addressed various issues related to deduction eligibility, donation disallowance, interest expenditure, and capital loss claim, providing detailed reasoning and directions for each matter, ensuring a comprehensive resolution of the disputes raised by both the Revenue and the assessee.
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