2014 (3) TMI 529 - AT - Income Tax

Tribunal Remands Issue for Verification of Deduction Compliance (10)

The ITO Ward-2(2), Baroda Versus M/s. Om Enterprise

The Tribunal remanded the issue back to the CIT(A) for a detailed verification of compliance with conditions for claiming deduction u/s. 80IB(10) by the ... Allowability of deduction u/s 80IB(10) r.w.s. 80IB(1) of the Act - Revenue was of the view that the assessee is not the owner of the land but has acted only as a contractor – Held that:- The CIT(A) has passed a cryptic order while allowing the claim of deduction of Assessee –the decision in DY. COMMISSIONER OF INCOME TAX Versus RADHE DEVELOPERS INDIA LTD. [2009 (4) TMI 21 - GUJARAT HIGH COURT] followed - various requirements needs to be fulfilled by a developer so as to become eligible for claiming deduction u/s. 80IB(10) - there is no finding by the lower authorities in the case of Assessee about the compliance of all the conditions prescribed u/s 80IB(10) - To verify the compliance of the conditions as stipulated by the co-ordinate Bench, the matter needs re-examination – thus, the matter is remitted back to the CIT(A) for verification of compliance of the conditions – Decided in favour of Revenue. Issues:Appeal against order of CIT(A) for A.Y. 2006-07 regarding deduction u/s. 80IB(10) for a partnership firm engaged in construction of residential houses.Analysis:1. The appeal by the Revenue challenged the CIT(A)'s decision to allow deduction u/s. 80IB(10) for the Assessee. The Revenue contended that the Assessee, a partnership firm, did not meet the criteria as it was not the landowner, did not have approval from the local authority, and did not transfer dwelling units directly. The Revenue also argued that the profit from the unutilized Floor Space Index (FSI) was not eligible for deduction under 80IB(10).2. The Assessing Officer (A.O.) denied the deduction under 80IB(10) to the Assessee, stating that the Assessee acted as a contractor, not the landowner, and did not fulfill all conditions. However, the CIT(A) allowed the deduction citing a similar case decided by the ITAT previously. The Revenue appealed, presenting arguments based on the A.O.'s findings, while the Assessee defended its eligibility for the deduction.3. The Tribunal noted discrepancies in the CIT(A)'s order and referred to guidelines from a previous case regarding conditions for claiming deduction u/s. 80IB(10). The Tribunal found that the lower authorities did not adequately examine the Assessee's compliance with these conditions. Consequently, the Tribunal remanded the issue back to the CIT(A) for a detailed verification of compliance and a specific finding on the matter, emphasizing the need for a thorough examination and granting both parties a fair hearing.4. The Tribunal allowed the Revenue's appeal for statistical purposes, highlighting the importance of ensuring proper assessment of compliance with statutory conditions before allowing deductions under 80IB(10). The decision aimed at ensuring a comprehensive review of the Assessee's eligibility for the deduction based on the established guidelines and previous judgments, emphasizing the significance of fulfilling all prescribed conditions for claiming such deductions.