Tribunal remands cases for fresh adjudication on 'built-up area' definition under Section 80IB(10)

The Tribunal allowed the appeals for statistical purposes, remanding the cases to the Assessing Officer for fresh adjudication. The Tribunal directed the Assessing Officer to consider the Supreme Court's ruling regarding the application of the amended definition of 'built-up area' under Section 80IB(10) based on the project's approval date. The decision emphasized the importance of assessing deductions in accordance with the legal framework applicable at the time of project approval. The orders for A.Y. 2009-10 and A.Y. 2010-11 were pronounced on 28.08.2019.

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Issues Involved:
1. Disallowance of deduction under Section 80IB(10) of the Income Tax Act, 1961.
2. Application of amended provisions of Section 80IB(10) regarding the definition of 'built-up area'.

Issue-wise Detailed Analysis:

1. Disallowance of Deduction under Section 80IB(10):

The assessee, a builder and developer, filed appeals against the orders of the CIT(A) for A.Y. 2009-10 and A.Y. 2010-11, which upheld the disallowance of deductions claimed under Section 80IB(10) of Rs. 40,50,078 and Rs. 21,81,135 respectively. The disallowance was based on the finding that the combined built-up area of certain flats exceeded the prescribed limit of 1000 sq. ft., thus violating the conditions for deduction under Section 80IB(10).

The Tribunal noted that the assessee's project was approved on 19.07.2003, prior to the amendment effective from 01.04.2005, which introduced the definition of 'built-up area'. The assessee argued that the definition should not apply retroactively to projects approved before the amendment. The Tribunal acknowledged the assessee's reliance on the Supreme Court's judgment in CIT-19, Mumbai Vs. Sarkar Builder (2015) 375 ITR 392 (SC), which held that the amended definition of 'built-up area' applies only to projects approved after 01.04.2005.

2. Application of Amended Provisions of Section 80IB(10):

The Tribunal examined whether the amended definition of 'built-up area' should apply to the assessee's project. The assessee contended that the definition inserted by the Finance (No.2) Act, 2004, w.e.f. 01.04.2005, should not apply to its project approved in 2003. The Tribunal found merit in this argument, referencing the Supreme Court's ruling that the amended definition is linked to the approval and construction timeline of the project.

The Tribunal directed the Assessing Officer (A.O) to re-evaluate the assessee's entitlement to the deduction under Section 80IB(10) in light of the Supreme Court's judgment. The matter was remanded to the A.O for fresh adjudication, ensuring that the conditions for deduction are assessed based on the legal framework applicable at the time of the project's approval.

Conclusion:

The Tribunal allowed the appeals for statistical purposes, remanding the cases to the A.O for fresh adjudication. The A.O was instructed to consider the Supreme Court's ruling in CIT-19, Mumbai Vs. Sarkar Builder and verify the factual position regarding the project's approval date and the applicable definition of 'built-up area'. The Tribunal's decision emphasized the need for a fair assessment based on the legal provisions in effect when the project was approved.

Order Pronouncement:

The appeals for A.Y. 2009-10 and A.Y. 2010-11 were allowed for statistical purposes, and the orders were pronounced in the open court on 28.08.2019.

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