2018 (11) TMI 1249 - AT - Income Tax

Allowing pro-rata deduction u/s. 80IB(10) - Held that - The allowability of proportionate deduction u/s. 80IB(10) in respect of completed units is no more res integra. Hon ble Bombay High Court in the case of Commissioner of Income Tax Vs. Brahma Associates 2011 (2) TMI 373 - BOMBAY HIGH COURT and Commissioner of Income Tax Vs. Vandana Properties 2012 (4) TMI 54 - BOMBAY HIGH COURT approved allowing of proportionate deduction u/s. 80IB(10) in respect of completed eligible units. The Tribunal in catena of orders have been consistently allowing proportionate deduction u/s. 80IB(10) in respect of units which are complete in every respect in consonance with the conditions set out u/s. 80IB(10) of the Act - no infirmity in the findings of Commissioner of Income Tax (Appeals) in allowing pro-rata deduction to the assessee in respect of completed residential units. Allowing deduction u/s. 80IB(10) considering size of plot as more than one acre after including area acquired for DP road - Held that - The total area of size of plot on which the housing project has been constructed is 7689 sq. mtrs. After reducing the area of 1502.25 sq. mtrs. acquired by PCMC for construction of approach road, the net area of the plot on which the residential complex has been constructed is 6186.75 sq. mtrs. AO while computing the area of plot only considered saleable area of Wing A and B and further erred in reducing the area ear marked for DP road. The Assessing Officer worked the total area of plot as 3808.56 sq. mtrs. The First Appellate Authority while adjudicating this issue followed the decision rendered in the case of Commissioner of Income Tax Vs. Vandana Properties 2012 (4) TMI 54 - BOMBAY HIGH COURT and Bunty Builders Vs. Income Tax Officer 2010 (2) TMI 791 - ITAT, PUNE and calculated the size of plot by including the area marked for DP road and the other areas excluded by Assessing Officer.

Summary

Issues Involved:
1. Allowance of pro-rata deduction under section 80IB(10) of the Income Tax Act.
2. Consideration of the size of the plot for deduction under section 80IB(10).

Issue 1: Allowance of Pro-rata Deduction under Section 80IB(10):
The case involved a partnership firm engaged in a housing project named "Paradiso." The firm claimed deduction under section 80IB(10) of the Income Tax Act, but the Assessing Officer rejected the claim due to incomplete documentation. The Commissioner of Income Tax (Appeals) allowed a pro-rata deduction for the completed part of the project, citing relevant judicial precedents. The Tribunal upheld this decision, referencing judgments by various High Courts and Tribunals supporting proportionate deductions for completed units under section 80IB(10). The Tribunal dismissed the Revenue's appeal on this issue, as the Commissioner's decision was in line with established legal principles.

Issue 2: Consideration of Plot Size for Deduction under Section 80IB(10):
Another issue raised in the appeal was the size of the plot concerning the eligibility for deduction under section 80IB(10). The Assessing Officer had rejected the deduction, considering only the saleable area of certain wings and excluding the area designated for a development plan (DP) road. However, the Commissioner of Income Tax (Appeals) calculated the plot size by including the DP road area and other relevant sections, in accordance with legal precedents. The Tribunal upheld the Commissioner's decision, emphasizing that the plot size should be determined by considering all relevant areas, as per the provisions of section 80IB(10). Consequently, the Tribunal dismissed the Revenue's appeal on this issue as well.

In conclusion, the Tribunal upheld the Commissioner of Income Tax (Appeals)'s decisions on both issues, allowing the pro-rata deduction for completed units and considering the full plot size for deduction under section 80IB(10). The Revenue's appeal was dismissed, affirming the findings based on established legal interpretations and precedents.