Assessee's Appeal Allowed: Deduction under Section 80IB(10) Granted for Eligible Project (10)

The Tribunal allowed the assessee's appeal, directing the AO to allow the deduction under section 80IB(10) for the profits of the eligible project comprising 148 flats. The grounds of appeal raised by the assessee were thus allowed, and the addition of Rs. 88,02,525/- was set aside.

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Issues Involved:
1. Addition of Rs. 88,02,525/- to the returned income.
2. Disallowance under section 80IB(10) of the Income Tax Act, 1961.
3. Legality of the assessment order under section 143(3) of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Addition of Rs. 88,02,525/- to the Returned Income:
The assessee, an AOP consisting of two members, developed a project at Dhanori and claimed a deduction under section 80IB(10) of the Income Tax Act, 1961, amounting to Rs. 88,02,525/-. The project initially had a sanctioned layout plan for 7 buildings comprising 160 units, later revised to 6 buildings with 148 units. A subsequent revision added 20 units to building F and sanctioned building G with 40 units. The assessee contended that phase 1 (148 units) was eligible for the deduction, while phase 2 (additional 60 units) was taxable. The Assessing Officer (AO) disagreed, stating the project was incomplete by the stipulated date of 31.03.2008 due to the additional units sanctioned later, thus denying the deduction.

2. Disallowance under Section 80IB(10) of the Income Tax Act, 1961:
The assessee argued before the Commissioner of Income Tax (Appeals) [CIT(A)] that the completion certificates for 148 units in phase 1 were obtained before 31.03.2008, fulfilling the conditions for the deduction. The additional FSI utilized for phase 2 was sanctioned after 31.03.2008, thus forming a separate project. The CIT(A) observed that the construction of additional 60 flats was not completed within the stipulated period, and the project was considered as one housing project, making the assessee ineligible for the deduction.

3. Legality of the Assessment Order under Section 143(3) of the Income Tax Act, 1961:
The Tribunal examined whether the additional flats in phase 2 formed part of the original project. It was noted that the initial project, sanctioned in 2003 and revised in 2006, utilized the available FSI for 148 flats, completed by 31.03.2008. The additional FSI, sanctioned in 2008, allowed for further construction, which the assessee did not include in the deduction claim. The Tribunal held that phase 1 (148 flats) was an independent project completed within the stipulated period, making the assessee eligible for the deduction under section 80IB(10). The additional units in phase 2 were considered a separate project, and their non-completion did not affect the deduction claim for phase 1.

Conclusion:
The Tribunal allowed the assessee's appeal, directing the AO to allow the deduction under section 80IB(10) for the profits of the eligible project comprising 148 flats. The grounds of appeal raised by the assessee were thus allowed, and the addition of Rs. 88,02,525/- was set aside. The order was pronounced on 3rd March 2017.

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