2014 (8) TMI 152 - AT - Income Tax

Tribunal directs reassessment on deduction claim, stresses legal compliance and fair opportunities.

M/s. Om Trinetri Builders & Contractors Versus The ITO, Ward 20(2) (3), Mumbai

The Tribunal partially allowed the appeals, directing the Assessing Officer to reconsider the issues related to the deduction claim under section ... Claim of deduction u/s 80IB(10) – Failure to satisfy various condition – Held that:- CBDT has issued a notification dated 3/8/10, whereby it is now notified that any scheme approved under Regulation 33(10) of DCR for Greater Mumbai 1991, and by the SRE for Slum Rehabilitation would be valid for the purpose of Clause- a and b of section 80 IB (10) of the Act - the amended provisions of law will not apply and so long as per the plans approved by the concerned authorities, the built up area of each flat is less than 1000 sq.ft. the deduction u/s 80IB(10) of the Act cannot be denied to the Assessee on the ground that two flats as per approved plan lying adjacent to each other have been combined into one flat and owned by one owner or jointly with some of the members of his family - the rejection of the claim of the assessee for deduction u/s 80 IB(10) on this account cannot be sustained - the rejection of the claim of the assessee for deduction u/s 80 IB(10) cannot be sustained – Decided partly in favour of Assessee. Issues:Appeal under ITA No.7147/M/2010 and ITA No.7148/M/2010 against CIT(A) orders relating to assessment years 2006-07 and 2007-08 respectively.Issue 1: Opportunity to AppellantThe appeal raised concerns about the CIT(A) passing orders without granting an opportunity to the appellant and rejecting adjournment requests. The grounds of appeal highlighted the error in the CIT(A)'s actions and the insufficiency of reasons provided.Issue 2: Claim for Deduction under Section 80-IB(10)The main issue revolved around the denial of the claim for deduction under section 80-IB(10) of the Income Tax Act, 1961 by the Assessing Officer (AO). The AO denied the deduction due to non-fulfillment of specific conditions, including the absence of a CBDT notification for the project and the built-up area exceeding the specified limits for residential units.Analysis for Issue 1:The appellant contested the CIT(A)'s decision on the grounds of lack of opportunity and improper rejection of adjournment requests. The Tribunal acknowledged the concerns raised and decided to set aside the CIT(A)'s order for reconsideration by the AO in light of a notification issued by the CBDT, emphasizing the importance of providing a fair opportunity to the appellant.Analysis for Issue 2:Regarding the deduction claim under section 80-IB(10), the AO had denied it based on the absence of a CBDT notification for the project and the built-up area exceeding the specified limits for residential units. However, the Tribunal referred to a precedent where it was clarified that as long as each flat met the approved plan's specifications, the deduction could not be denied even if adjacent flats were combined. The Tribunal held that the denial of the deduction based on this ground was not sustainable, as the approved plan's specifications were met.Conclusion:The Tribunal partially allowed the appeals, directing the AO to reconsider the issues related to the deduction claim under section 80-IB(10) in both assessment years. The decision emphasized the importance of adhering to legal requirements and ensuring fair opportunities for appellants in tax matters.