2013 (3) TMI 535 - AT - Income Tax

Assessee's Deduction Under Section 80IB(10) Confirmed

The Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal. The Tribunal confirmed that the assessee was entitled to the deduction under ... Deduction u/s 80IB(10) of the I.T. Act - construction of building projects - Held that:- In our opinion, the CIT(A) committed an error in simply excluding 656.75 sq.metres from the area of 4600 sq.metres without appreciating that the exclusion is only for the purpose of D.P. Road which does not reduce the size of the plot as a whole. We are therefore satisfied that there is no violation of the conditions prescribed by clause(b). Order of the CIT(A) on this issue has to be reversed. Similarly it was held that:- As far as completion of the construction is concerned, the certificate of KDMC dated 31/3/2008 is clear that Building No.9 to 14 were completed and occupation certificate was given. The AO’s stand that project was only partly completed cannot therefore, be sustained. The deduction under section 80 IB(10) was claimed only in respect of the project Vidhi Complex which comprise of building No.11 to 14. As far as this project is concerned there could be no doubt that the construction was completed on 31/3/2008. We upheld the order of the CIT(A) The appeal of the revenue is dismissed. Issues Involved:1. Denial of assessee's claim of deduction under section 80IB(10) of the Income Tax Act, 1961.2. Plot area being less than one acre.3. Commercial area exceeding the permissible limit.4. Project completion before the deadline.Detailed Analysis:Issue 1: Denial of Deduction under Section 80IB(10)The revenue appealed against the CIT(A)'s order, which deleted an addition of Rs. 33,45,105/- made by the AO on account of denial of the assessee's claim of deduction under section 80IB(10). The AO had denied the deduction based on three grounds: plot area being less than one acre, commercial area exceeding 2000 sq ft, and project not being completed before the deadline of 31/03/08.Issue 2: Plot Area Being Less Than One AcreThe AO found that after surrendering part of the plot for DP road, the remaining plot area was 3461.68 sq. mtr, which is less than one acre. However, the CIT(A) held that the area of the DP road should not be excluded in calculating the plot area. The Tribunal referred to the decision in Umiya Enterprises vs. ITO, which stated that the area given for road setback should not be excluded for calculating the plot size. Therefore, the Tribunal reversed the CIT(A)'s order, concluding that the plot area including the DP road met the one-acre requirement.Issue 3: Commercial Area Exceeding the Permissible LimitThe AO observed that the project had 778.95 sq mtr of commercial area, exceeding the permissible limit of 2000 sq ft. The CIT(A) found that the commercial area in the Vidhi Complex project was less than 2000 sq ft, and the Tribunal noted that the assessee had claimed deduction for the Vidhi Complex, which did not include the commercial area of the Amurt Dham project. The Tribunal directed the AO to verify if the Vidhi Complex had any commercial area and whether it was within the permissible limits.Issue 4: Project Completion Before DeadlineThe AO noted that the project had to be completed before 31/03/08, but only a part completion certificate was issued by the local authority by that date. The CIT(A) found that the completion certificate from KDMC showed that buildings No.9 to 14 were completed by 31/03/08. The Tribunal upheld this finding, stating that the project Vidhi Complex, for which the deduction was claimed, was completed on time.Conclusion:The Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal. The Tribunal directed the AO to verify the commercial area in the Vidhi Complex and confirmed that the assessee was entitled to the deduction under section 80IB(10) of the Act, subject to this verification. The appeal of the revenue was dismissed, and the CIT(A)'s order was upheld.