Tribunal affirms CIT(A)'s decision on Section 80IB(10) for Sapphire Park project for assessment years 2010-11 & 2011-12.

The Tribunal upheld the Ld. CIT(Appeal)'s decision, dismissing the Revenue's grounds for the assessment years 2010-11 & 2011-12. The judgments, pronounced on October 7, 2021, affirmed the allowability of proportionate deduction under Section 80IB(10) for the "Sapphire Park" project, in line with the principle of proportionality established by previous judicial decisions.

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Issues:
Whether proportionate deduction u/s.80IB(10) of the Income Tax Act, 1961 would be allowed to the assessee for the project "Sapphire Park."

Analysis:
The appeals by the Revenue stemmed from the orders of the Ld. CIT(Appeal) for the assessment years 2010-11 & 2011-12, focusing on the issue of allowing proportionate deduction u/s.80IB(10) for the "Sapphire Park" project. The Revenue contended that Section 80IB(10) grants deduction for the entire housing project, while the assessee argued for proportionate deduction, citing support from various Judicial Forums.

In the lead case of ITA No.2939/PUN/2017 for the assessment year 2011-12, the Ld. CIT(Appeal) reasoned that even if some units exceeded 1500 sq. ft., the deduction under 80IB(10) should not be disallowed for the entire project. The Ld. CIT(Appeal) directed the AO to calculate the deduction on a proportionate basis, excluding units with built-up areas exceeding 1500 sq. ft., in line with decisions from different forums.

Referring to a similar case before the Hon'ble High Court, it was established that the principle of proportionality should apply in determining the allowability of deduction under Section 80IB(10). The decision of the Ld. CIT(Appeal) in allowing proportionate deduction was affirmed, aligning with the settled legal position that proportionality cannot be disregarded in such cases.

Consequently, the Tribunal upheld the Ld. CIT(Appeal)'s decision, dismissing the Revenue's grounds for the assessment year 2011-12. The same rationale was applied to ITA No.2938/PUN/2017 for the assessment year 2010-11, leading to the dismissal of the Revenue's appeal in both cases. The judgments were pronounced on October 7, 2021, sustaining the relief provided to the assessee based on the principle of proportionate deduction under Section 80IB(10) of the Act.

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