Tribunal allows deduction under S.80IB(10) for assessee despite violations in some units.

The Tribunal held that the assessee did not violate the conditions for claiming deduction under S.80IB(10). It directed the AO to allow the deduction, setting aside the CIT(A)'s order. The Tribunal noted that even if there were violations in one or two units, the deduction should be proportionately disallowed, not entirely. Consequently, the appeal filed by the assessee was allowed.

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Issues Involved:
1. Disallowance of deduction under S.80IB(10) due to alleged non-completion of the project within the stipulated time.
2. Violation of the condition of maximum built-up area of residential units.
3. Violation of the condition of maximum permissible commercial area within the project.

Issue-wise Detailed Analysis:

1. Disallowance of deduction under S.80IB(10) due to alleged non-completion of the project within the stipulated time:
The assessee filed a return of income declaring a total income of Rs. 6,38,627 after claiming a deduction of Rs. 3,29,78,844 under S.80IB(10) for the profits derived from a housing project. The Assessing Officer (AO) disallowed the deduction on the grounds that the project was not completed, as only 91 residential units were sold by the assessment date. The assessee argued that the project was nearing completion with a deadline of 31st March 2012. The CIT(A) accepted the completion certificate dated 12.3.2012, confirming that the project was completed before the stipulated date, satisfying the condition for claiming deduction under S.80IB(10).

2. Violation of the condition of maximum built-up area of residential units:
The AO found that the built-up area of residential unit No.118 exceeded 1,500 sq. ft., as the ground floor was 1,430.97 sq. ft. and the first floor was under construction. Similarly, unit No.121 was a duplex with an area exceeding 1,500 sq. ft. The assessee contended that unit No.118 was sold with only the ground floor completed, and the first floor construction was undertaken by the plot owner. For unit No.121, the assessee claimed the total built-up area was less than 1,500 sq. ft. The CIT(A) did not accept these explanations due to a lack of documentary evidence. However, the Tribunal found that the sale deeds and approved plans provided by the assessee supported her claims, showing no violation of the 1,500 sq. ft. norm.

3. Violation of the condition of maximum permissible commercial area within the project:
The AO observed a commercial complex of 11,913 sq. ft. within the project, exceeding the 5% limit of the total built-up area. The assessee explained that the plot for the commercial complex was sold to third parties who constructed it independently. The CIT(A) held that the commercial complex was part of the project, as indicated in the completion certificate. The Tribunal, referencing a similar case (Lavanya Property Developers Pvt. Ltd. V/s. ACIT), concluded that since the commercial complex was developed by third parties and not by the assessee, it should not be considered part of the project. Therefore, the project independently complied with all conditions for claiming deduction under S.80IB(10).

Conclusion:
The Tribunal concluded that there was no violation of the conditions for claiming deduction under S.80IB(10) by the assessee. It directed the AO to allow the deduction, setting aside the CIT(A)'s order. The Tribunal also noted that even if there were violations in one or two units, the deduction should be proportionately disallowed, not entirely.

Result:
The appeal filed by the assessee was allowed.

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