2018 (3) TMI 297 - AT - Income Tax

Tribunal allows deduction for completed project despite another not commencing

The Tribunal allowed a proportionate deduction under section 80IB(10) for completed units in project 'A', despite project 'B' not commencing. The Tribunal ... Deduction u/s.80IB(10) eligibility - Held that:- The assessee is entitled for deduction on proportionate basis. However, it is the decision of the Tribunal that AO needs to verify on the aspects narrated in the order of the Tribunal. Considering the settled nature of the issue, we are of the opinion that assessee is entitled to proportion deduction u/s.80IB(1) of the Act in view of the directions given by the Tribunal in the assessee’s own case for A.Y. 2010-11. We therefore direct the AO accordingly. Thus, the grounds of appeal raised by the Revenue are dismissed. Issues Involved:1. Allowability of deduction under section 80IB(10) of the Income Tax Act, 1961.2. Proportionate deduction for completed units of a housing project.Issue-wise Detailed Analysis:1. Allowability of Deduction under Section 80IB(10):The primary issue in this appeal is the allowability of deduction under section 80IB(10) of the Income Tax Act, 1961. The assessee, an Association of Persons (AOP) engaged in the business of Builders and Developers, filed a return of income declaring a total income of Rs. 3,22,31,984 and claimed a deduction of Rs. 3,75,97,564 for units sold in buildings A1 to A6, part of project 'A'. The construction of these buildings was claimed to be completed before the due date of 31.03.2008. However, the initial plan included two projects, 'A' and 'B', and since project 'B' had not started, the deduction was denied for the Assessment Years (A.Y.) 2009-10 and 2010-11 by the Assessing Officer (AO). The CIT(A) confirmed this denial. The Tribunal, in the assessee's appeals for A.Y. 2009-10 and 2010-11, allowed a proportionate claim of deduction under section 80IB(10) for the completed units in project 'A'.2. Proportionate Deduction for Completed Units:The Tribunal's previous orders for A.Y. 2009-10 and 2010-11 were pivotal in this case. The Tribunal had allowed proportionate deductions for completed units in project 'A', even though project 'B' had not commenced. The Tribunal considered the factual aspects, such as the purchase of land, statutory provisions under the Urban Land Ceiling & Regulation Act, 1976 (ULCA), and the various commencement certificates issued by the Pune Municipal Corporation (PMC). The Tribunal noted that the construction and development of project 'A' could only commence after the clear area of 12094 sq. meters was available post the ULCA order dated 22.12.1998. The Tribunal held that the plans approved on 09.06.1999 were subject to ULCA conditions, and the actual commencement certificate was issued on 17.04.2004. The Tribunal concluded that the project 'A' was to be considered approved on 09.06.1999, and the construction had to be completed by 31.03.2008.The Tribunal directed the AO to verify whether the building in project 'A' was completed by 31.03.2008. If completed, the assessee was entitled to the deduction under section 80IB(10). If not, the assessee was entitled to a proportionate deduction for the completed units. The Tribunal dismissed the AO's argument that the project 'B' not being completed would affect the deduction for project 'A', as the land for project 'B' was under ULCA until 21.10.2005.In the present appeal for A.Y. 2011-12, the assessee claimed the same deduction. The Tribunal reiterated its previous findings, directing the AO to allow proportionate deduction under section 80IB(10) for the completed units in project 'A', following the same reasoning as in the earlier years.Conclusion:The Tribunal concluded that the assessee is entitled to a proportionate deduction under section 80IB(10) for the completed units in project 'A'. The AO was directed to verify the completion status as per the Tribunal's directions. The appeal by the Revenue was dismissed, upholding the CIT(A)'s order allowing the deduction. The order was pronounced on 28th February 2018.