Tribunal affirms deduction for housing project under section 80IB(10) pre-amendment.

The Tribunal upheld the Commissioner of Income Tax (Appeals) decision to allow the deduction under section 80IB(10) for the appellant's housing project, approved before the amendment's effective date. The appellant was entitled to the deduction and could also claim exemption for profits from commercial areas, as per relevant Tribunal and High Court judgments. The Tribunal dismissed the Revenue's appeals for both years, affirming the allowance of the deduction for the assessment years 2005-06 and 2006-07.

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Issues:
- Disallowance of claim of deduction under section 80IB(10) for assessment years 2005-06 and 2006-07.

Analysis:
1. The appellant, engaged in the business of builders and developers, claimed deduction under section 80IB(10) for the mentioned assessment years. The Assessing Officer (AO) observed that the project included commercial areas exceeding the limit specified by law. The appellant initially withdrew the claim but later refiled it during assessment proceedings based on Tribunal decisions allowing similar claims despite commercial elements. However, the AO disallowed the claim citing the amended provisions of section 80IB(10) by Finance Act 2004.

2. The appellant contended that withdrawing the claim during assessment proceedings did not prevent them from reasserting it during the case hearing. The Commissioner of Income Tax (Appeals) [CIT(A)] agreed, stating that there was no legal impediment to reasserting the claim. CIT(A) also noted that the amended provisions were not applicable to projects approved before 1.4.2005, as clarified by Tribunal and High Court judgments. Consequently, CIT(A) allowed the deduction after excluding profits from the sale of commercial areas for the relevant assessment years.

3. The Revenue challenged CIT(A)'s decision, arguing that the provisions of clause (d) of section 80IB(10) were violated due to the commercial area exceeding the limit. However, the Tribunal upheld CIT(A)'s decision, emphasizing that the project had been approved before the effective date of the amended provisions. Citing relevant Tribunal and High Court judgments, the Tribunal confirmed that the appellant was entitled to the deduction and could have also claimed exemption for profits from commercial areas. Since the appellant did not appeal, the Tribunal dismissed the Revenue's appeals for both years.

In conclusion, the Tribunal dismissed the Revenue's appeals, upholding CIT(A)'s decision to allow the deduction under section 80IB(10) for the appellant's housing project, approved before the amendment's effective date.

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