Tribunal grants deduction under section 80IB(10) for completed housing project units.

The Tribunal allowed the appeal in favor of the assessee, holding that the assessee is entitled to the deduction under section 80IB(10) for the completed portion of the housing project. The Tribunal overturned the CIT(A)'s decision and directed the Assessing Officer to allow the prorata deduction under section 80IB(10) for the completed units, emphasizing the legislative intent to permit deductions for finished segments of a project.

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Issues Involved:
1. Claim of deduction under section 80IB(10) of the Income-tax Act, 1961.
2. Size of the plot for the housing project.
3. Commercial area exceeding permissible limits.
4. Completion of the housing project within the stipulated time.

Issue-wise Analysis:

1. Claim of Deduction under Section 80IB(10):
The primary issue in the appeal is the assessee's claim for deduction under section 80IB(10) of the Income-tax Act, 1961. The assessee, a builder and developer, had filed a return of income declaring total income and agricultural income, and claimed a deduction under section 80IB(10) for a specific amount. The Assessing Officer (AO) denied this claim on several grounds, including the size of the plot, the extent of commercial area, and the completion status of the housing project.

2. Size of the Plot for the Housing Project:
The AO contended that the size of the plot on which the housing project was approved was less than one acre after accounting for the area acquired for road widening. The CIT(A), however, observed that the total size of the plot available at the time of sanction was more than one acre, thus fulfilling the condition laid down in section 80IB(10). The Tribunal upheld this view, noting that the area earmarked for road widening is included in the project plan as approved by the local authority, making the total plot area more than one acre.

3. Commercial Area Exceeding Permissible Limits:
The AO rejected the claim of deduction on the basis that the commercial area in the housing project exceeded 3% of the aggregate built-up area, which is the limit prescribed under section 80IB(10). The CIT(A) noted that the amendments to section 80IB(10) regarding commercial area limits were not applicable to projects approved before 01.04.2005. The Tribunal supported this view, referencing the decision in the assessee's own case from the previous assessment year, and the Hon’ble Supreme Court's ruling in CIT Vs. Sarkar Builders, which clarified that amendments introduced after 01.04.2005 do not apply retrospectively to projects approved before that date.

4. Completion of the Housing Project within the Stipulated Time:
The AO argued that the housing project was not completed within the prescribed four years from the date of first approval. The CIT(A) and the Tribunal considered the fact that the assessee had completed two out of three buildings by the stipulated date and had not received the necessary FSI to complete the third building. The Tribunal ruled that the assessee is entitled to prorata deduction for the completed units, referencing the decision in the case of Ramsukh Properties and the legislative intent to allow deductions for completed portions of a project.

Conclusion:
The Tribunal concluded that the assessee is entitled to the claim of deduction under section 80IB(10) for the completed part of the project, reversing the CIT(A)'s denial of the deduction. The AO was directed to allow the prorata claim of deduction under section 80IB(10). The appeal was allowed in favor of the assessee.

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