2013 (11) TMI 465 - AT - Income Tax

Tribunal allows deduction under Section 80IB(10) for Kumar Shantiniketan and Kumar Kruti projects.

KUMAR BUILDERS CONSORTIUM Versus ASSTT COMMISSIONER OF INCOME TAX CIRCLE-4, PUNE

KUMAR BUILDERS CONSORTIUM Versus ASSTT COMMISSIONER OF INCOME TAX CIRCLE-4, PUNE - TMI Issues Involved:1. Disallowance of deduction under Section 80IB(10) for the project Kumar Shantiniketan.2. Inclusion of garden area in the total built-up area for deduction under Section 80IB(10).3. Proportionate deduction under Section 80IB(10) if some units exceed the prescribed built-up area.4. Disallowance of deduction under Section 80IB(10) for the project Kumar Kruti.5. Determination of whether Kumar Kruti is part of a larger project Kumar City.6. Compliance with conditions under Section 80IB(10) regarding the start and completion dates and commercial area limits.Detailed Analysis:1. Disallowance of Deduction for Kumar Shantiniketan:The assessee claimed a deduction under Section 80IB(10) for the project Kumar Shantiniketan, which was disallowed by the Assessing Officer (AO) on the grounds that the built-up area of two flats exceeded 1500 sq.ft. The AO included the garden area in the total built-up area, leading to the disallowance. The CIT(A) upheld this view, stating that the garden area was part of the residential unit and not open to others.2. Inclusion of Garden Area in Built-Up Area:The AO included the garden area in the built-up area calculation, arguing that it was constructed like any other part of the building, well-demarcated, attached to the flats, and sold at a price. The CIT(A) agreed, noting that the garden area was for the exclusive use of the flat owners and thus part of the residential unit. The Tribunal upheld this decision, agreeing that the garden area should be included in the built-up area.3. Proportionate Deduction for Units Within Prescribed Limit:The assessee argued that even if some units exceeded the 1500 sq.ft. limit, the deduction should be allowed on a proportionate basis for the units within the limit. The Tribunal agreed, citing several precedents, including Rohan Homes vs. ACIT and Bengal Ambuja Housing Development Ltd. vs. DCIT, which support the view that deduction should be allowed proportionately for eligible units. The Tribunal directed the AO to rework the deduction accordingly.4. Disallowance of Deduction for Kumar Kruti:The AO disallowed the deduction for Kumar Kruti on multiple grounds: it was part of a larger project Kumar City, the project started before 01.04.2004 and was not completed by 31.03.2008, it included commercial area exceeding the limit, and some residential units exceeded 1500 sq.ft. The CIT(A) upheld the AO's decision, noting that the assessee failed to prove that Kumar Kruti was an independent project.5. Determination of Kumar Kruti as Part of Kumar City:The Tribunal examined whether Kumar Kruti was an independent project or part of Kumar City. The assessee argued that Kumar Kruti had a separate building plan approved on 26.07.2006, independent of Kumar City. The Tribunal agreed, noting that the building plan, not the layout plan, determines the project's approval date. The Tribunal held that Kumar Kruti was an independent project and directed the AO to allow the deduction accordingly.6. Compliance with Section 80IB(10) Conditions:The AO disallowed the deduction for Kumar Kruti, stating that it did not meet the conditions of Section 80IB(10) regarding the start and completion dates and commercial area limits. The Tribunal, however, found that since Kumar Kruti was an independent project with a building plan approved on 26.07.2006, it met the conditions of Section 80IB(10). The Tribunal directed the AO to rework the deduction, excluding the units exceeding 1500 sq.ft.Conclusion:The Tribunal allowed the deduction under Section 80IB(10) on a proportionate basis for both projects, Kumar Shantiniketan and Kumar Kruti, directing the AO to rework the deductions accordingly. The Tribunal emphasized the distinction between layout plans and building plans, determining that Kumar Kruti was an independent project and eligible for the deduction.