2012 (7) TMI 70 - AT - Income Tax

Appellate Tribunal affirms deduction for builders' project under section 80IB(10)

The Appellate Tribunal ITAT MUMBAI upheld the Ld. CIT (A)'s decision to allow the deduction u/s.80IB(10) for a builders and developers firm's project. The ... Justification in allowing the deduction u/s.80IB(10) - AO observed that as per the Completion certificate produced by the assessee was in respect of Part Completion of the project the assessee is not entitled for deduction - Held that:- The assessee originally obtained the Commencement Certificate on 14.12.2004 to construct 19,328.40 sq. mtrs. of FSI for the construction of buildings i.e. A-1 to A-6, B-1 to B-3 and C-4. The assessee purchased TDR and got the plan modified vide new commencement certificate dated 30.03.2007 for additional construction of 12,166.09 sq. mtrs. and the said approval was given for construction of four buildings i.e. C-1 to C-3 and D, thus those were two independent projects though the land was the same i.e. project utilising the original FSI and project by purchasing by obtaining TDR - admittedly, the first phase itself is a separate “project” and the assessee completed the building shown in the first phase within four years from the financial year in which the commencement certificate was issued i.e. in F.Y. 2004-05 and as the plot of land is common for both the phases, hence, as per their regulations the Municipal authorities have issued part completion certificate - in favour of assessee. Issues involved:1. Deduction u/s.80IB(10) allowance.2. Application of ratio from a specific case in the judgment.Issue 1: Deduction u/s.80IB(10) allowanceThe Appellate Tribunal ITAT MUMBAI addressed the issue of deduction u/s.80IB(10) in the case for the A.Y. 2007-08. The assessee, a builders and developers firm, claimed a deduction of Rs. 1,49,05,079 under this section. The Assessing Officer (A.O.) scrutinized the claim and requested commencement and completion certificates. The A.O. noted that the project commenced on 14.12.2004 and required completion within four years from the end of the financial year. The A.O. found the completion certificate provided by the assessee only pertained to a partial completion of the project, leading to denial of the deduction claimed. However, the Ld. CIT (A) allowed the deduction, considering the original and revised commencement certificates and the nature of the project. The Ld. CIT (A) concluded that the project consisted of two independent phases, each eligible for deduction u/s.80IB(10). The Tribunal upheld the Ld. CIT (A)'s decision, emphasizing that the first phase was completed within the prescribed time frame, and the second phase, based on Transfer of Development Rights (TDR), did not seek any deduction under the relevant section. The Tribunal found no merit in the revenue's appeal and confirmed the Ld. CIT (A)'s order.Issue 2: Application of ratio from a specific caseThe second issue revolved around the application of a ratio from a specific case, M/s. Saroj Sales Organization vs. ITO (2008) 115 TTJ 485 (Mum), in the judgment. The Ld. CIT (A) relied on this case to support the decision regarding the independent nature of the project's phases for deduction u/s.80IB(10). The Tribunal, after considering the facts and legal provisions, agreed with the Ld. CIT (A)'s interpretation and reasoning based on the mentioned case law. The Tribunal dismissed the Cross Objection as not pressed and ultimately dismissed both the revenue's appeal and the assessee's cross objection.This detailed analysis of the judgment highlights the key issues addressed by the Appellate Tribunal ITAT MUMBAI regarding the deduction u/s.80IB(10) and the application of a specific case's ratio in the decision-making process.