Tribunal allows assessee's appeal, disallows Revenue's appeal on deduction eligibility.

The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeal, confirming the eligibility of the deduction under Section 80IB(10). The Tribunal rejected the application of Section 80IA(10) in conjunction with Section 80IB(13) due to the absence of a close connection between the parties, overturning the CIT(A)'s decision on this matter.

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Issues Involved:
1. Deduction claimed by the assessee under Section 80IB(10) of the Income Tax Act.
2. Eligibility of the housing project for the deduction under Section 80IB(10) based on the size of the plot.
3. Determination of whether the housing project is an independent project.
4. Application of Section 80IA(10) read with Section 80IB(13) regarding unreasonable profits.

Issue-wise Detailed Analysis:

1. Deduction Claimed by the Assessee under Section 80IB(10) of the Income Tax Act:
The primary issue in the cross-appeals is the deduction claimed by the assessee under Section 80IB(10) amounting to Rs. 19,83,97,563/-. The Assessing Officer (AO) disallowed the deduction, questioning the eligibility of the assessee and the quantum of profits declared. The CIT(A) upheld the eligibility for the deduction but partially agreed with the AO on recomputing the profit, reducing the deduction by Rs. 1,02,02,930/- instead of Rs. 6,18,67,801/- as determined by the AO.

2. Eligibility of the Housing Project for the Deduction under Section 80IB(10) Based on the Size of the Plot:
The AO argued that the FSI used for the three buildings (MN-6, MN-7, MN-8) was 4067.45 sq.mtrs, less than one acre, thus not meeting the criteria under Section 80IB(10)(b). However, the CIT(A) found that the total area covered by the housing project was 8952.45 sq.mtrs, which is more than one acre. The Tribunal affirmed the CIT(A)'s findings, noting that the total land area with the assessee was 12,484 sq.mtrs with an FSI of 9,581.82 sq.mtrs, fulfilling the requirement of being more than one acre.

3. Determination of Whether the Housing Project is an Independent Project:
The AO contended that the project was part of an existing housing project and thus ineligible for the deduction. The CIT(A) disagreed, citing a CBDT communication that allowed deduction for additional housing projects consuming TDR on an existing project site, provided it was undertaken by a separate entity with distinct books of accounts. The Tribunal upheld the CIT(A)'s conclusion, noting that the project was indeed an independent project eligible for the benefits of Section 80IB(10).

4. Application of Section 80IA(10) Read with Section 80IB(13) Regarding Unreasonable Profits:
The AO applied Section 80IA(10) read with Section 80IB(13), alleging that the assessee acquired development rights at a price lower than the market rate, resulting in unreasonable profits. The CIT(A) partially upheld this, reducing the addition to Rs. 1,02,02,930/-. The Tribunal found that the AO failed to establish a "close connection" between the assessee and M/s. FGP Ltd., a prerequisite for invoking Section 80IA(10). Since the parties were unrelated, the Tribunal held that the application of Section 80IA(10) was untenable and set aside the CIT(A)'s order to this extent, fully allowing the assessee's appeal.

Conclusion:
The Tribunal dismissed the appeal of the Revenue and allowed the appeal of the assessee, affirming the CIT(A)'s decision on the eligibility of the deduction under Section 80IB(10) and rejecting the application of Section 80IA(10) read with Section 80IB(13) due to the lack of a close connection between the parties involved.

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