Appeal partially allowed on tax disallowance; Section 14A upheld, Sections 80-IB(10) remitted for verification.

The tribunal partly allowed the appeal, dismissing ground no. 1 regarding disallowance under Section 14A of the Income Tax Act based on legal precedent. Ground nos. 2 and 3 concerning disallowance of deduction under Section 80-IB(10) were remitted back to the Assessing Officer for further examination due to lack of detailed verification. The decision was pronounced on 25th September 2018.

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Issues Involved:
1. Disallowance under Section 14A of the Income Tax Act.
2. Disallowance of deduction under Section 80-IB(10) of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Disallowance under Section 14A of the Income Tax Act:
The Assessing Officer (AO) challenged the correctness of the CIT(A)'s order, which deleted the addition of Rs. 3,00,814 made on account of disallowance under Section 14A read with Rule 8D of the Income Tax Rules. Both parties agreed that the issue was covered by the jurisdictional High Court's judgment in CIT Vs Corrtech Energy Pvt Ltd, which held that disallowance under Section 14A cannot exceed the exempt income. The CIT(A)'s decision was in line with this legal precedent. Consequently, the tribunal saw no reason to interfere and dismissed ground no. 1.

2. Disallowance of deduction under Section 80-IB(10) of the Income Tax Act:
The AO disallowed a deduction of Rs. 1,58,94,590 claimed under Section 80-IB(10), arguing that charges collected from customers for AEC, AUDA, and legal fees were not part of the income eligible for deduction. The CIT(A) reversed the AO's decision, noting that these charges were integral to the sale consideration and were recovered from customers as per the sale deed clauses. The CIT(A) cited several judgments, including those from the Hon'ble Kolkata Tribunal and the Hon'ble Gujarat High Court, which supported the inclusion of such charges in the eligible income for deduction under Section 80-IB(10).

The CIT(A) observed that these charges were essential for the development and completion of the housing project and were recovered from customers as per the agreement. Therefore, they were considered part and parcel of the housing project, making them eligible for deduction under Section 80-IB(10).

However, the tribunal noted that the lower authorities had not verified the details related to AUDA charges, electricity connection charges, and legal charges, nor had they elaborately discussed the computation of the Asmakam project. Thus, the tribunal remitted the issue back to the AO for further examination and a fresh decision on merits.

Conclusion:
The appeal was partly allowed for statistical purposes, with ground no. 1 dismissed and ground nos. 2 and 3 remitted back to the AO for further examination. This judgment was pronounced in the open court on 25th September 2018.

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