Tribunal allows deductions for specific projects, dismisses disallowance appeal, directs recalculations.

The Tribunal partly allowed the assessee's appeals for statistical purposes, setting aside the denial of deduction under Section 80-IB for the "Ram Laxman Tower" project and directing reevaluation of indirect expenses for the "Sai Jyot" project. The revenue's appeal, concerning disallowance under Section 40A(2)(b), was dismissed as covered by a previous decision. The Tribunal upheld the CIT(A)'s directions based on prior cases and ordered recalculations to avoid double deductions. The decision was issued on 19.10.2011.

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Issues Involved:
1. Deduction under Section 80-IB for the "Ram Laxman Tower" project.
2. Exclusion of other income while granting deduction under Section 80-IB for the "Sai Jyot" project.
3. Disallowance of indirect expenses related to the "Sai Jyot" project.
4. Proportionate allocation of indirect expenses to the "Sai Jyot" project.
5. Payments made under Section 40A(2)(b) for services rendered by sister concern.

Issue-wise Detailed Analysis:

1. Deduction under Section 80-IB for the "Ram Laxman Tower" project:
The assessee claimed a deduction under Section 80-IB of Rs. 1,14,91,144/- for profits from the "Ram Laxman Tower" project, which was completed in the financial year relevant to A.Y. 2003-04. The Assessing Officer (A.O.) denied this deduction, referencing the assessment order for A.Y. 2003-04. The Tribunal previously allowed the assessee's claim for A.Y. 2003-04, following the decision in M/s. Brahma Associates. Thus, the order of the Commissioner of Income Tax (Appeals) [CIT(A)] denying the deduction was set aside, and the ground was allowed in favor of the assessee.

2. Exclusion of other income while granting deduction under Section 80-IB for the "Sai Jyot" project:
The assessee claimed a deduction under Section 80-IB(10) for the "Sai Jyot" project, including other income of Rs. 83,82,964/- in the eligible profits. The A.O. excluded this other income, arguing it had no direct relationship with the construction activity. The CIT(A) upheld this exclusion. Upon review, the Tribunal found that certain components of the other income, such as development charges, extra work, interest from flat buyers, car parking, grill charges, and video door security charges, had a direct nexus with the housing project and should be included in the eligible profit. However, other components like electricity charges, society deposit, water charges, society maintenance, share application money, society formation charges, and legal charges did not have a first-degree nexus and should be excluded. The A.O. was directed to rework the eligible profit accordingly, and the ground was partly allowed.

3. Disallowance of indirect expenses related to the "Sai Jyot" project:
The A.O. noticed that proportionate indirect expenses were not considered while working out the profit for the "Sai Jyot" project, leading to an inflated profit. The A.O. calculated the proportionate indirect expenses as Rs. 23,96,673/- and reduced the profit accordingly. The CIT(A) directed the A.O. to examine the issue in light of a similar case involving the assessee's sister concern, M/s. Ganga Developers. The Tribunal found no reason to interfere with this direction but asked the A.O. to ensure no double deduction of indirect expenses. The ground was allowed for statistical purposes.

4. Proportionate allocation of indirect expenses to the "Sai Jyot" project:
For A.Y. 2007-08, the issue of allocation of indirect expenses was similar to the previous year. The CIT(A) had directed the A.O. to decide the issue based on the Tribunal's decision in the case of M/s. Ganga Developers. The Tribunal upheld this direction, finding no reason to interfere, and dismissed the ground.

5. Payments made under Section 40A(2)(b) for services rendered by sister concern:
The revenue's appeal included a ground regarding the disallowance of Rs. 1,60,000/- and Rs. 40,000/- for payments made under Section 40A(2)(b) to M/s. Kukreja Services Pvt. Ltd. for business center and administrative charges. The CIT(A) had deleted this disallowance, and the Tribunal found the issue covered in favor of the assessee by a previous decision for A.Y. 2005-06. Hence, this ground was dismissed.

Conclusion:
The appeals of the assessee were partly allowed for statistical purposes, and the revenue's appeal was dismissed. The Tribunal directed the A.O. to rework certain calculations and ensure no double deductions, while upholding the CIT(A)'s directions based on previous similar cases. The order was pronounced on 19.10.2011.

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