Tribunal Upholds Deduction for Housing Project Pre-Amendment

The Tribunal dismissed the Revenue's appeal, upholding the allowance of deduction under section 80IB(10) for a housing project. The Tribunal found that the project commenced before the amendment to the section came into effect, thus entitling the assessee to the deduction. The decision was based on the principle established in the case law of CIT vs. Brahma Associates, determining that the amendment was prospective in operation. Therefore, the assessee was granted the deduction, and the Revenue's challenge was rejected.

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Issues involved: Challenge to denial of deduction u/s 80IB(10) for a housing project due to presence of commercial area exceeding specified limits.

Summary:

1. The Revenue challenged the order of the Ld. CIT(A) disallowing deduction u/s 80IB(10) for the A.Y. 2005-06, citing the presence of a commercial area exceeding limits in the housing project. The AO denied the deduction based on the amendment to section 80IB(10) from 01.04.2005. The assessee contended that the project commenced before this date and relied on a High Court decision supporting their claim.

2. The Tribunal noted that the assessee, a builder and land developer, initiated the project prior to 01.04.2005. Referring to the case law of CIT vs. Brahma Associates, it was established that the amendment to section 80IB(10) was prospective in operation. As the project in question began in December 2003, the Tribunal held that the amendment did not apply, and the assessee was entitled to the deduction u/s 80IB(10). The Tribunal upheld the Ld. CIT(A)'s decision in favor of the assessee.

3. Consequently, the Revenue's appeal was dismissed by the Tribunal, affirming the allowance of deduction u/s 80IB(10) for the housing project. The order was pronounced on April 27, 2011.

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