Tribunal grants deduction under section 80IB(10) for compliant units, emphasizes verification for accurate assessment.

The Tribunal partly allowed the appeals, directing the AO to verify the built-up areas of the tenements and grant a proportionate deduction under section 80IB(10) for compliant units. The Tribunal clarified that the project commenced within the permissible period, making the assessee eligible for the deduction. It emphasized compliance with section 80IB(10) conditions and instructed the AO to conduct physical verifications for accurate assessment.

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Issues Involved:
1. Disallowance of deduction under section 80IB(10) of the Income-tax Act, 1961.
2. Commencement of the housing project before 01/10/1998.
3. Built-up area of tenements exceeding 1500 square feet.
4. Construction of tenements not fulfilling conditions laid down in section 80IB(10).
5. Denial of opportunity for cross-verification of parties/customers.
6. Proportionate deduction under section 80IB(10) for compliant tenements.

Detailed Analysis:

1. Disallowance of Deduction under Section 80IB(10):
The core issue in both appeals is the disallowance of the deduction claimed under section 80IB(10) of the Act. The assessee had claimed a deduction of Rs. 4,09,79,023/- for the project 'Parmar Garden'. The Assessing Officer (AO) disallowed the deduction, noting that certain tenements exceeded the built-up area of 1500 square feet, and that the project commenced before the stipulated date of 01/10/1998.

2. Commencement of the Housing Project Before 01/10/1998:
The AO noted that the commencement certificate from Pune Municipal Corporation (PMC) was received on 01/08/1996, and various activities related to the project had started before 01/10/1998. These activities included demolition, road construction, and other developmental works. The CIT(A) upheld this view, stating that the land was fully developed and ready for construction by March 1997. However, the Tribunal found that the first valid building commencement certificate was dated 19/12/1998, which falls within the permissible period for claiming the deduction under section 80IB(10).

3. Built-up Area of Tenements Exceeding 1500 Square Feet:
The AO found that several tenements in buildings B-1, C-1, C-2, C-3, and A-1 exceeded the built-up area of 1500 square feet, which violated the conditions of section 80IB(10). The CIT(A) agreed, noting that the combination of flats resulted in built-up areas exceeding the permissible limit. The Tribunal, however, directed the AO to verify the actual built-up area of each flat through a physical verification exercise and to allow the deduction proportionately for those units that complied with the area restrictions.

4. Construction of Tenements Not Fulfilling Conditions Laid Down in Section 80IB(10):
The AO and CIT(A) noted that the construction of certain tenements did not conform to the approved building plans, and some residential units were converted into commercial spaces. The Tribunal held that the role of the Income Tax authorities is to ensure compliance with the conditions laid down in section 80IB(10), and any violations of building plans should be addressed by the municipal authorities. The Tribunal directed that the deduction should be allowed proportionately for units that met the conditions.

5. Denial of Opportunity for Cross-verification of Parties/Customers:
The assessee contended that it was denied the opportunity to cross-verify the statements of parties/customers. The Tribunal did not specifically address this issue but focused on the verification of the built-up area and compliance with section 80IB(10) conditions.

6. Proportionate Deduction under Section 80IB(10) for Compliant Tenements:
The Tribunal directed the AO to allow a proportionate deduction under section 80IB(10) for those tenements that satisfied the conditions of the section. The AO was instructed to carry out a physical verification of the built-up areas and grant the deduction accordingly.

Conclusion:
The Tribunal partly allowed the appeals, directing the AO to verify the built-up areas of the tenements and grant a proportionate deduction under section 80IB(10) for those units that complied with the conditions. The Tribunal emphasized the distinction between layout plan approval and building plan approval, and held that the project commenced on 19/12/1998, making the assessee eligible for the deduction.

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