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 ... Deduction u/s.80IB(10) - commencement certificate - completion certificate - project (phase-wise project versus single integrated project) - transfer of development rights (TDR) and change in permissible FSIDeduction u/s.80IB(10) - project (phase-wise project versus single integrated project) - commencement certificate - completion certificate - transfer of development rights (TDR) and change in permissible FSI - Whether the assessee was entitled to deduction under section 80IB(10) in respect of the first phase of the construction project completed within the statutory time-limit - HELD THAT: - The Tribunal accepted the view of the Ld. CIT(A) that the works approved by the original commencement certificate dated 14.12.2004 constituted a distinct first phase or separate 'project' for the purposes of section 80IB(10). The assessee's original approval showed permissible built-up area and consumption of FSI (97%) for constructions described in the first plan; subsequent additional construction was enabled only after purchase and approval of TDR (revised commencement certificate dated 30.03.2007), which constituted a second, independent phase. The assessee completed the buildings shown in the first phase within four years from the end of the financial year in which the original commencement certificate was issued and obtained part-completion certificates from municipal authorities because the plot was common to both phases. The Assessing Officer's objection that completion certificates referred to part completion was addressed by noting that municipal practice issues part-completion certificates where phases share common land and that the other statutory criteria for deduction were not disputed by the AO. The Tribunal held that the liberal interpretation of 'project' in earlier decisions applies and, therefore, the claim in respect of Phase-1 satisfied the time-limit and other conditions for deduction under section 80IB(10). [Paras 5, 6]The Tribunal confirmed the CIT(A)'s order allowing the deduction in respect of the first phase as a separate project completed within the prescribed time; revenue's appeal dismissed.Final Conclusion: The order of the CIT(A) upholding the claim of deduction under section 80IB(10) in respect of the first phase of the project is confirmed and the revenue's appeal is dismissed; the assessee's cross-objection was not pressed and is dismissed as not pressed. 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.