2012 (6) TMI 600 - AT - Income Tax

Appeal success: Deduction allowed under section 80IB(10) for housing project. Expense disallowance upheld.

The Tribunal partially allowed the appeal in the case. The disallowance of deduction under section 80IB(10) was overturned, allowing the assessee to claim ... Deduction u/s 80IB - dis-allowance on ground that assessee is developer and not the owner of the land - Held that:- Ownership of property is not a condition precedent for granting deduction u/s 80IB(10), hence, appellant as a developer is entitled to claim aforesaid deduction. See CIT vs. Radhe Developers(2011 (12) TMI 248 (HC)), ACIT v. Smt.C Rajini (2010 (12) TMI 248 (Tri)) - Decided in favor of assessee. Dis-allowance of expenditure - Held that:- It has been observed that AO had resorted to make lump sum additions under each head, however, the basis or yardstick for such additions have not been spelt out. At the same time, the assessee had also failed to bring any documentary evidence on record to belie the AO’s stand. Hence, there is no justifiable scope to interfere with the AO’s action on this point. Issues Involved:1. Disallowance of deduction of Rs. 27,51,23,476/- u/s 80IB(10) of the Act.2. Disallowance of expenditure amounting to Rs. 11.60 lakhs.Issue-wise Detailed Analysis:1. Disallowance of Deduction u/s 80IB(10):The assessee-company, a developer, claimed a deduction of Rs. 27.51 crores u/s 80IB(10) for a housing project in Yeshwantpur, Bangalore. The AO denied the deduction, stating that the project was not completed within the stipulated time. The project approval was received on 15.10.2005, and as per the law, it should have been completed by 31.3.2010. However, the occupancy certificate was issued on 22.4.2010, beyond the prescribed time limit. The AO also noted that the amendment extending the completion period to five years was effective from AY 2010-11 and did not apply to the assessee's case.The assessee argued that the project was completed within the stipulated time, supported by a completion certificate from the architect dated 21.1.2010 and a letter from the local authority dated 6.3.2010 confirming project completion. The delay in issuing the occupancy certificate was due to administrative procedures, and the assessee should not be penalized for this delay. Additionally, the assessee contended that the amendment extending the completion period should apply retrospectively due to the global recession.The Tribunal observed that the local authority's endorsement dated 6.3.2010 confirmed the project's completion before the due date. The Tribunal also noted that the law only required a completion certificate, not an occupancy certificate, for claiming the deduction. Therefore, the assessee was entitled to the deduction u/s 80IB(10).2. Disallowance of Expenditure Amounting to Rs. 11.60 Lakhs:The AO disallowed Rs. 11.60 lakhs claimed under various heads like repairs and maintenance, general expenses, workman and staff welfare, carriage inwards, and watch and ward, stating that these were supported by self-made vouchers and were unverifiable.The assessee argued that the expenses were genuine and supported by internal vouchers authenticated by the cashier. The AO had not provided a basis for the disallowance, and the assessee's books of accounts were audited.The Tribunal noted that the AO had made lump sum additions without specifying the basis or yardstick for such additions. However, the assessee failed to provide any documentary evidence to support their claim. Therefore, the Tribunal upheld the AO's disallowance of Rs. 11.60 lakhs.Conclusion:The Tribunal partly allowed the appeal. The disallowance of deduction u/s 80IB(10) was overturned, granting the assessee the deduction of Rs. 27.51 crores. However, the disallowance of Rs. 11.60 lakhs in expenses was upheld due to the lack of verifiable evidence.