Tribunal grants full deduction for housing project, dismisses revenue's appeal. Residential units to be treated independently.

The Tribunal allowed the appellant's appeal by granting full deduction under section 80-IB(10) for the entire project, modifying the CIT(A)'s order. The revenue's appeals were dismissed. The Tribunal held that each residential unit, as per the approved building plan and less than 1,000 sq.ft., should be considered independently. The legislative amendment restricting multiple sales to family members was prospective and did not apply to the relevant assessment years.

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Issues Involved:
1. Deduction under section 80-IB(10) on a proportionate basis.
2. Interest levied under section 234B.
3. Reopening of assessment.

Detailed Analysis:

1. Deduction under Section 80-IB(10) on a Proportionate Basis:
The primary issue revolves around the eligibility of the appellant for deduction under section 80-IB(10) of the Income-tax Act, 1961. The appellant claimed deductions of Rs. 6,54,82,573 for the assessment year 2003-04 and Rs. 1,91,72,008 for the assessment year 2004-05, which were initially allowed. However, a subsequent survey revealed that some residential units exceeded the 1,000 sq.ft. limit by selling two separate agreements to the same family members. The Assessing Officer (AO) disallowed the deduction on these grounds, but the CIT(A) allowed a proportionate deduction based on the eligible units.

The CIT(A) held that the appellant is entitled to a proportionate deduction on the qualifying units that met the conditions of section 80-IB(10). The CIT(A) relied on various ITAT and High Court decisions, notably the Mumbai ITAT in the case of Saroj Sales Organisation and the Kolkata ITAT in the case of Bengal Ambuja Housing Development Ltd., which allowed proportionate deductions for qualifying units.

Upon appeal, the Tribunal found that the AO's approach of treating adjacent flats sold to family members as a single unit was incorrect. The Tribunal noted that each flat, as per the approved building plan, was less than 1,000 sq.ft. and should be treated as an independent residential unit. The Tribunal emphasized that the legislative amendment restricting the sale of multiple units to family members was prospective, effective from 1-4-2010, and did not apply to the assessment years in question. Therefore, the Tribunal allowed the appellant's claim for deduction under section 80-IB(10) for the entire project, modifying the CIT(A)'s order to grant full relief to the appellant.

2. Interest Levied under Section 234B:
The appellant contended that the CIT(A) should have deleted the interest levied under section 234B or, alternatively, should have limited the interest to the period between the original assessment and reassessment. The Tribunal did not provide a detailed discussion on this issue, implying that the primary focus was on the deduction under section 80-IB(10). Consequently, the Tribunal's decision to allow the deduction in full would inherently affect the computation of interest under section 234B.

3. Reopening of Assessment:
The appellant also raised grievances against the reopening of the assessment. However, the Tribunal noted the absence of specific arguments supporting this grievance. As a result, the Tribunal treated these grievances as abandoned and dismissed them.

Conclusion:
The Tribunal allowed the appellant's appeals by granting full deduction under section 80-IB(10) for the entire project, thereby modifying the CIT(A)'s order. The revenue's appeals were dismissed as infructuous. The Tribunal's decision was based on the interpretation that each residential unit, as approved by the local authorities and less than 1,000 sq.ft., should be considered independently, and the legislative amendment restricting multiple sales to family members was prospective and not applicable to the assessment years in question.

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