2018 (7) TMI 115 - AT - Income Tax

Denying the deduction u/s 80IB(10) - Held that - Disallowance of deduction u/s 80IB(10) of the Act is to be made only on the units which fail to comply with the conditions laid out u/s 80IB(10) of the Act which, in the instant case, relates to few flats and row houses, which were not able to satisfy the provisions of section 80IB(10)(c) of the Act having built up area of more than 1500 sq. ft. We, therefore, find no infirmity in the order of the Commissioner of Income Tax (Appeals) partly allowing the assessee s claim of deduction u/s 80IB(10) of the Act. Appeal of the revenue is dismissed.

Summary

Issues:
1. Dispute over deduction claimed under section 80IB(10) of the Income Tax Act for the assessment year 2013-14.

Analysis:
The appeal before the Appellate Tribunal ITAT Indore involved a dispute regarding the deduction claimed by the assessee under section 80IB(10) of the Income Tax Act for the assessment year 2013-14. The revenue challenged the order of the Commissioner of Income Tax (Appeals) which had deleted the addition made by the Assessing Officer, denying the deduction claimed by the assessee amounting to ?43,66,480. The Assessing Officer had rejected the claim as the assessee allegedly failed to comply with the conditions provided under section 80IB(10)(c) of the Act. The main contention revolved around the built-up area of certain units exceeding the prescribed limit.

The Commissioner of Income Tax (Appeals) partially allowed the assessee's appeal, granting proportionate deduction under section 80IB(10) for units that complied with the provisions. The revenue, aggrieved by this decision, appealed before the Tribunal. The Tribunal considered the arguments presented by both parties. It was noted that the assessee had complied with most conditions under section 80IB(10) for the housing project, except for the built-up area limit for certain units. The Tribunal analyzed the relevant legal provisions and past judicial decisions to determine the eligibility for deduction in such cases.

In its analysis, the Tribunal referred to precedents where courts had allowed proportionate deduction for units meeting the conditions of section 80IB(10) even if some units did not comply. The Tribunal emphasized the importance of interpreting the provisions liberally to achieve the intended purpose of promoting housing projects. It highlighted that the legislative intent was to encourage entrepreneurs to undertake such projects. The Tribunal also considered the practical challenges faced by developers in construction activities.

Based on the legal principles established in previous judgments and considering the specific circumstances of the case, the Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) to allow proportionate deduction for the units adhering to the conditions of section 80IB(10). The Tribunal dismissed the revenue's appeal, affirming the partial allowance of the deduction claimed by the assessee. The judgment was pronounced on 6th December 2017.