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2019 (8) TMI 1408 - AT - Income TaxDisallowance u/s. 80IB(10) - assessee was not entitled for deduction under Sec. 80IB(10) in respect of the residential project under consideration - HELD THAT - A.R had tried to impress upon us that as the residential housing project in the case of the assessee had been approved on 19.07.2003 i.e much prior to the insertion of the definition of built-up area in clause (a) to Sec.80IB(14) as was made available on the statute vide the Finance Act, 2004 w.e.f 01.04.2005, therefore, the same would not be applicable in its case. We have perused the afore stated judgment of the Hon ble Supreme Court in the case of CIT-19, Mumbai Vs. Sarkar Builder 2015 (5) TMI 555 - SUPREME COURT and find substantial force in the contention advanced by the ld. A.R. Hon‟ble Apex Court had observed that that as the definition of built-up area in clause (a) of Sec. 80IB(14) that was made available on the statute, vide the Finance (No. 2) Act, 2004, w.e.f 01.04.2005 was inextricably linked with the approval and construction of the housing project, therefore, an assessee cannot be called upon to comply with the said condition when it was not in contemplation of either the assessee or even the legislature at the time when the housing project was accorded approval by the local authorities. However, at the same time, we also cannot remain oblivious of the fact that the factual position in the case of the assessee before us, as had been canvassed by the ld. A.R, cannot be summarily accepted and would require to be verified. Accordingly, in all fairness, we restore the matter to the file of the A.O who is directed to adjudicate the issue as regards the entitlement of the assessee towards claim of deduction under Sec. 80IB(10) after considering the aforesaid judgment of Sarkar Builders - Appeal of the assessee is allowed for statistical purposes.
Issues Involved:
1. Disallowance of deduction under Section 80IB(10) of the Income Tax Act, 1961. 2. Application of amended provisions of Section 80IB(10) regarding the definition of 'built-up area'. Issue-wise Detailed Analysis: 1. Disallowance of Deduction under Section 80IB(10): The assessee, a builder and developer, filed appeals against the orders of the CIT(A) for A.Y. 2009-10 and A.Y. 2010-11, which upheld the disallowance of deductions claimed under Section 80IB(10) of ?40,50,078 and ?21,81,135 respectively. The disallowance was based on the finding that the combined built-up area of certain flats exceeded the prescribed limit of 1000 sq. ft., thus violating the conditions for deduction under Section 80IB(10). The Tribunal noted that the assessee's project was approved on 19.07.2003, prior to the amendment effective from 01.04.2005, which introduced the definition of 'built-up area'. The assessee argued that the definition should not apply retroactively to projects approved before the amendment. The Tribunal acknowledged the assessee's reliance on the Supreme Court's judgment in CIT-19, Mumbai Vs. Sarkar Builder (2015) 375 ITR 392 (SC), which held that the amended definition of 'built-up area' applies only to projects approved after 01.04.2005. 2. Application of Amended Provisions of Section 80IB(10): The Tribunal examined whether the amended definition of 'built-up area' should apply to the assessee's project. The assessee contended that the definition inserted by the Finance (No.2) Act, 2004, w.e.f. 01.04.2005, should not apply to its project approved in 2003. The Tribunal found merit in this argument, referencing the Supreme Court's ruling that the amended definition is linked to the approval and construction timeline of the project. The Tribunal directed the Assessing Officer (A.O) to re-evaluate the assessee's entitlement to the deduction under Section 80IB(10) in light of the Supreme Court's judgment. The matter was remanded to the A.O for fresh adjudication, ensuring that the conditions for deduction are assessed based on the legal framework applicable at the time of the project's approval. Conclusion: The Tribunal allowed the appeals for statistical purposes, remanding the cases to the A.O for fresh adjudication. The A.O was instructed to consider the Supreme Court's ruling in CIT-19, Mumbai Vs. Sarkar Builder and verify the factual position regarding the project's approval date and the applicable definition of 'built-up area'. The Tribunal's decision emphasized the need for a fair assessment based on the legal provisions in effect when the project was approved. Order Pronouncement: The appeals for A.Y. 2009-10 and A.Y. 2010-11 were allowed for statistical purposes, and the orders were pronounced in the open court on 28.08.2019.
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