2013 (3) TMI 512 - AT - Income Tax

Tribunal affirms Section 80IB(10) deductions for KKT project, dismissing revenue's appeals.

The Tribunal upheld the CIT(A)'s order allowing deductions under Section 80IB(10) for the KKT project. The project was considered independent, with ... Deduction u/s. 80IB(10) of the I.T. Act 1961 - Requirements of Sec. 80 IB(10) of the Act - Commercial space - Waiver of applicability of Urban Land Ceiling Act - Continuation of the old project - Date of approval of the building plan to - Held that :- From the very reading of the Explanation (i) makes it clear that the date on which building plan of such housing project is approved shall be deemed the date of approval of the housing project. - the assessee is very much eligible for the claimed deduction u/s. 80 IB (10) on the project ‘KKT’ in view of the above cited decisions including decision of Pune Bench of the Tribunal in the case of Nirmiti Construction Vs. DCIT (2004 (8) TMI 370 - ITAT PUNE ), following which, in our view, the Ld CIT(A) has rightly allowed the claimed deduction. The same is upheld. - Decided in favor of assessee. Issues Involved:1. Entitlement to deduction under Section 80IB(10) of the Income Tax Act, 1961.2. Treatment of the project as an extension of an old project.3. Impact of waiver of applicability of the Urban Land Ceiling Act on profits.4. Validity of the order passed by the CIT(A) and whether it should be vacated.Issue-wise Detailed Analysis:1. Entitlement to Deduction under Section 80IB(10):The primary issue was whether the assessee was entitled to the claimed deduction under Section 80IB(10) of the Income Tax Act during the assessment years in question. The assessee, engaged in the business of building and development, had claimed deductions amounting to Rs. 6,90,51,536/- for A.Y. 2003-04 and Rs. 2,31,65,627/- for A.Y. 2004-05. The Assessing Officer (A.O.) denied these deductions, arguing that the project was merely an extension of an old project. The assessee contended that it had developed an independent housing project named Krishna Keval Township (KKT) in Pune, meeting all the requirements of Section 80IB(10). The CIT(A) verified the facts and allowed the deductions, which led to the revenue's appeal.2. Treatment of the Project as an Extension of an Old Project:The A.O. argued that the project was a continuation of an old project based on a proposed building layout plan approved by the Pune Municipal Corporation in 1990. The A.O. believed that the project did not qualify as a new housing project under Section 80IB(10). The assessee countered that the KKT project was developed on a separate plot of land (8966 sq. mtrs.) and that the building plans were approved in 2001. The Tribunal found that the A.O. had confused the layout plan with the building plan and clarified that the building plans for KKT were approved separately in 2001, making it an independent project eligible for deduction under Section 80IB(10).3. Impact of Waiver of Applicability of the Urban Land Ceiling Act on Profits:The A.O. argued that the extra profit earned due to the waiver of the Urban Land Ceiling Act was not derived from the housing project, thus not qualifying for deduction under Section 80IB(10). The Tribunal did not find merit in this argument, as the assessee had complied with all statutory conditions listed in Section 80IB(10), including maintaining separate books of accounts for the KKT project.4. Validity of the Order Passed by the CIT(A):The revenue sought to vacate the order passed by the CIT(A) and restore the A.O.'s order. The Tribunal, after considering the submissions and reviewing the decisions cited, upheld the CIT(A)'s order. The Tribunal noted that the CIT(A) had correctly interpreted the provisions of Section 80IB(10) and the relevant facts, including the approval of building plans and the completion dates of the project wings.Conclusion:The Tribunal concluded that the assessee was entitled to the claimed deductions under Section 80IB(10) for the KKT project. The project was treated as an independent housing project, with separate building plans approved in 2001, and it met all the statutory requirements. The Tribunal dismissed the appeals filed by the revenue, thereby upholding the CIT(A)'s order allowing the deductions.