Tribunal restores assessment order, allows assessee's appeal. CIT's decision overturned.

The Tribunal set aside the CIT's order and restored the assessment order passed by the AO, allowing the appeal of the assessee. The Tribunal found that the CIT had misdirected himself on both counts and that there was no justification for holding the assessment order as erroneous and prejudicial to the interests of the Revenue. The assessee satisfied all conditions for claiming deduction under section 80IB(10).

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Issues Involved:
1. Whether the assessment order dated 13/01/2014 was erroneous and prejudicial to the interests of the Revenue under section 263 of the Income Tax Act, 1961.
2. Whether the project “Balaji Garden” consisting of Buildings No.2 & 5 qualifies for deduction under section 80IB(10) of the Act.
3. Whether the built-up area of some residential units exceeded the permissible limit of 1000 sq. ft., violating section 80IB(10)(c) of the Act.

Issue-wise Detailed Analysis:

1. Erroneous and Prejudicial Assessment Order:
The primary grievance of the assessee was against the CIT's action in holding the assessment order dated 13/01/2014 as erroneous and prejudicial to the interests of the Revenue under section 263 of the Act. The CIT argued that the assessee did not satisfy certain conditions prescribed in section 80IB(10) and that the Assessing Officer (AO) failed to make the required enquiry and verification regarding the deduction claim under section 80IB(10). The Tribunal concluded that the CIT misdirected himself on both counts and found no justification for the CIT to uphold that the assessment order was erroneous and prejudicial to the interests of the Revenue.

2. Qualification of Buildings No.2 & 5 for Deduction under Section 80IB(10):
The CIT contended that the entire “Balaji Garden” complex should be treated as one project and that the completion certificate for some buildings was not received before the stipulated date. The Tribunal referred to the judgment of the Hon'ble Bombay High Court in CIT vs. Vandana Properties, which held that even one building with several residential units could constitute a housing project for section 80IB(10) purposes. The Tribunal found that Buildings No.2 & 5 could be considered a separate project and that the completion certificate was deemed granted on 19/03/2010, fulfilling the conditions of section 80IB(10).

3. Built-up Area of Residential Units:
The CIT raised concerns that the built-up area of some units might exceed 1000 sq. ft. if the balcony area was included, violating section 80IB(10)(c). The Tribunal examined the architect's certificate, which confirmed that the built-up area, including balconies, was within the permissible limit. The Tribunal found no evidence to contradict the architect's certificate and noted that the AO had inspected the project site in the earlier assessment year without finding discrepancies. Thus, the Tribunal concluded that the CIT's presumption was unfounded.

Conclusion:
The Tribunal set aside the CIT's order and restored the assessment order passed by the AO, allowing the appeal of the assessee. The Tribunal found that the CIT had misdirected himself on both counts and that there was no justification for holding the assessment order as erroneous and prejudicial to the interests of the Revenue. The Tribunal concluded that the assessee satisfied all conditions for claiming deduction under section 80IB(10). The order was pronounced in the open court on 28/12/2016.

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