ITAT affirms CIT(A) on Tower T4 deductions, remands T5 & T6 for review. Revenue's appeal partly allowed.

The ITAT upheld the CIT(A)'s decision to allow proportionate deductions for Tower T4, following the precedent set by the Hon'ble Bombay High Court. The issue of deductions for Towers T5 and T6 was remanded back to the CIT(A) for re-examination based on the specific provisions of section 80IB(10), without considering revenue neutrality under section 115JB. The appeal by the revenue was partly allowed for statistical purposes, and the cross-objection by the assessee was allowed.

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Issues Involved:
1. Eligibility for deduction under section 80IB(10) of the Income-tax Act, 1961.
2. Proportionate deduction for flats within specified size limits.
3. Revenue neutrality of deductions under section 80IB(10).
4. Delay in filing cross-objection and its condonation.

Detailed Analysis:

1. Eligibility for Deduction under Section 80IB(10):
The primary issue revolves around whether the assessee fulfilled the conditions prescribed under section 80IB(10) to claim deductions. The Assessing Officer (AO) disallowed the deduction claimed by the assessee, arguing that the flats in Towers T5 and T6 exceeded the stipulated area of 1500 sq.ft. and that the assessee failed to provide necessary details for verification. The CIT(A), however, allowed the deduction based on precedents set by the Hon’ble Bombay High Court in CIT vs Vandana Properties and the ITAT Kolkata in Bengal Ambuja Housing Development Ltd., which permitted proportionate deductions for eligible units.

2. Proportionate Deduction for Flats within Specified Size Limits:
The CIT(A) directed the AO to allow proportionate deductions for Tower T4, where the flat sizes met the conditions under section 80IB(10). This decision was supported by the Hon’ble Bombay High Court's ruling in Vandana Properties, which allowed deductions for units satisfying the built-up area criteria. The ITAT upheld this view, confirming that the assessee is entitled to proportionate deductions for eligible units in Tower T4, as the flat sizes were within the prescribed limits.

3. Revenue Neutrality of Deductions under Section 80IB(10):
The CIT(A) considered the disallowance of deductions for Towers T5 and T6 as revenue neutral, stating that the regular tax liability was less than the tax paid on book profit. However, this view was contested by the assessee, who argued that the eligibility for deductions should be examined based on the provisions of section 80IB(10) rather than the revenue neutrality concept under section 115JB. The ITAT agreed, noting that the deduction eligibility should be determined by the specific provisions of section 80IB(10) and not influenced by the revenue neutrality under section 115JB.

4. Delay in Filing Cross-Objection and Its Condonation:
The assessee filed a cross-objection with a delay of 10 days, attributing the delay to the ill health of the director responsible for tax matters. The ITAT condoned the delay, considering the reasons genuine and reasonable, and proceeded to address the merits of the cross-objection.

Conclusion:
The ITAT upheld the CIT(A)’s decision to allow proportionate deductions for Tower T4, aligning with the precedent set by the Hon’ble Bombay High Court in Vandana Properties. However, it remanded the issue of deductions for Towers T5 and T6 back to the CIT(A) for re-examination based on the specific provisions of section 80IB(10), without considering the revenue neutrality under section 115JB. The appeal by the revenue was partly allowed for statistical purposes, and the cross-objection by the assessee was allowed for statistical purposes. The order was pronounced in the open court on 31st May 2018.

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