ITAT remands deduction quantification, upholds deletion of disallowance, maintains labor charge disallowance.

The ITAT partially allowed the assessee's appeal by remanding the quantification of the deduction under Section 80IB(10) back to the AO. The ITAT upheld the deletion of the disallowance under Section 40(a)(ia) and maintained the disallowance of 30% of labor charges.

---

---

Issues Involved:
1. Deduction under Section 80IB(10) of the Income-tax Act, 1961.
2. Disallowance of 30% of labor charges.
3. Disallowance under Section 40(a)(ia) of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Deduction under Section 80IB(10) of the Income-tax Act, 1961:
The assessee, a builder and developer, claimed a deduction of Rs. 1,41,62,188/- under Section 80IB(10) for a property constructed in Survey No.50/11, Santhamarenahalli, K R Puram, Bangalore. The AO, based on the DVO's report, disallowed the claim, noting that the land area for the three blocks referred to was less than one acre, and some land was developed as individual plots. The CIT (A) upheld the AO's decision, stating that the project did not meet the conditions under Section 80IB(10). However, the assessee argued that the entire project, named Lake City Residency, was constructed on a land area of 3 acres and 36 guntas, and the DVO's report was incorrect. The ITAT referred to the Bombay High Court judgment in CIT v. Vandana Properties, which emphasized that the area of the plot of land is relevant and multiple housing projects on a plot of more than one acre can qualify for the deduction. The ITAT held that the assessee was eligible for the deduction but remanded the issue back to the AO for quantification of the claim.

2. Disallowance of 30% of labor charges:
The assessee claimed labor charges of Rs. 5,25,704/- for the Manju Anugraha project and Rs. 2,55,765/- for the Lake City Residency project. The AO disallowed 30% of the labor charges, amounting to Rs. 2,34,414/-, as the claims were supported only by self-made vouchers without the addresses of the payees. The CIT (A) upheld the AO's decision. The ITAT agreed with the lower authorities, stating that the assessee failed to provide proper addresses of the recipients, and thus, the disallowance of 30% was justified.

3. Disallowance under Section 40(a)(ia) of the Income-tax Act, 1961:
The Revenue appealed against the CIT (A)'s decision to delete the disallowance under Section 40(a)(ia), arguing that the amendment to the section through the Finance Act, 2010, should be applied prospectively. The assessee had deducted tax at source on Rs. 4,83,79,766/- but remitted it with substantial delay. The CIT (A) applied the amendment retrospectively, following the jurisdictional High Court's judgment in Anil Kumar & Co. v. ITO, which held that the benefit of the amendment should be extended retrospectively. The ITAT upheld the CIT (A)'s decision, stating that the disallowance was rightly deleted as the tax was remitted before the due date of filing the return of income.

Conclusion:
The ITAT allowed the assessee's appeal partly for statistical purposes by remanding the issue of quantification of the deduction under Section 80IB(10) back to the AO. The ITAT dismissed the Revenue's appeal, upholding the deletion of the disallowance under Section 40(a)(ia) and maintaining the disallowance of 30% of labor charges.

---