2015 (5) TMI 401 - AT - Income Tax

Partial allowance of appeal grants pro-rata deduction under section 80IB(10) for certain buildings.

The appeal was partly allowed, granting the assessee a pro-rata deduction under section 80IB(10) for Buildings A, B, and C, while denying the deduction ... Disallowance of the claim u/s 80IB(10) - assessee had claimed the deduction under section 80IB(10) of the Act against the sale proceeds of residential project ‘Daffodil Avenue’ - Held that:- As relying on Siddhivinayak Kohinoor Venture Vs. ACIT [2013 (10) TMI 1295 - ITAT PUNE ] merely because the assessee had not completed the building No.D within prescribed time under the provisions of Act, the deduction under section 80IB(10) could not be denied in entirety. The assessee is entitled to the prorata deduction under section 80IB(10) of the Act in respect of building Nos.A, B and C which have been constructed as per the conditions laid down in section 80IB(10) of the Act. Reversing the order of CIT(A), the Assessing Officer is directed to allow the prorata claim of assessee under section 80IB(10) of the Act in respect of building Nos.A, B and C. Thus, the grounds of appeal raised by the assessee are allowed. Issues Involved:1. Disallowance of the claim under section 80IB(10) for the project 'Daffodils Avenue.'2. Denial of the claim under section 80IB(10) for Buildings A, B, and C.3. Denial of a pro-rata claim for the eligible portion of the project.Issue-wise Detailed Analysis:1. Disallowance of the claim under section 80IB(10) for the project 'Daffodils Avenue':The assessee, a partnership firm engaged in property development, claimed a deduction under section 80IB(10) for its project 'Daffodils Avenue.' The project originally included Buildings A, B, and C, with a commencement certificate issued on 31.10.2005. Later, the layout was revised to include Building D, with a revised commencement certificate dated 29.03.2007. The Assessing Officer (AO) disallowed the claim, noting deviations in the original plan and a reduction in the plot area from 4638.65 sq. mtrs. to 3443 sq. mtrs., which did not meet the minimum one-acre requirement under section 80IB(10)(b). The AO also noted that the project was not completed within five years from the end of the financial year in which the first commencement certificate was obtained, i.e., by 31.03.2011, as Building D was not completed by this date.2. Denial of the claim under section 80IB(10) for Buildings A, B, and C:The CIT(A) upheld the AO's decision, stating that the housing project, initially approved on 31.10.2005, was to be completed by 31.03.2011. Since Building D was not completed by this date, the deduction under section 80IB(10) was denied. The assessee argued that Buildings A, B, and C were completed on time and should be considered separately from Building D, which was sanctioned later on 29.03.2007. The assessee provided evidence such as the Architecture certificate, sale revenue recognition, and electricity bills to support the completion of Buildings A, B, and C before 31.03.2011. However, the AO, with information from the Pune Municipal Corporation (PMC), confirmed that Building D was not completed by 31.03.2011.3. Denial of a pro-rata claim for the eligible portion of the project:The assessee alternatively claimed a pro-rata deduction for Buildings A, B, and C, which were completed on time. The Tribunal considered precedents and held that the assessee is entitled to a pro-rata deduction under section 80IB(10) for the completed buildings. The Tribunal cited cases such as Pharande Developers and D.S. Kulkarni Developers Ltd., where proportionate deductions were allowed for completed portions of the project. The Tribunal directed the AO to allow the pro-rata claim for Buildings A, B, and C, reversing the CIT(A)'s order.Conclusion:The appeal was partly allowed, granting the assessee a pro-rata deduction under section 80IB(10) for Buildings A, B, and C, while denying the deduction for Building D, which was not completed within the stipulated time. The Tribunal emphasized that the deduction under section 80IB(10) should not be denied in its entirety due to the non-completion of one part of the project.