Tribunal Allows Partial Deduction Review for Assessee; Confirms Plot Size and Residential Unit Sale Compliance.

The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's cross-objection. It directed the AO to re-examine the built-up area excluding balconies and to allow a proportionate deduction if some units exceed the built-up area limit. The Tribunal upheld the CIT(A)'s findings regarding the plot size, confirming it exceeded one acre, and that the sale included constructed bungalows, fulfilling the requirement of selling residential units. The Tribunal also upheld the CIT(A)'s decision that the audit report requirement in Form CCB does not adversely affect the deduction claim.

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Issues Involved:
1. Eligibility for deduction under Section 80-IB(10) of the Income Tax Act.
2. Size of the plot for the housing project.
3. Sale of plots without constructing tenements.
4. Built-up area exceeding 1,500 sq. ft.
5. Pro rata deduction eligibility.
6. Requirement of furnishing audit report in Form CCB.

Detailed Analysis:

1. Eligibility for Deduction under Section 80-IB(10):
The primary issue is whether the assessee is entitled to deduction under Section 80-IB(10). The relevant section provides a 100% deduction on profits derived from housing projects approved before March 31, 2005, subject to certain conditions. The conditions include the commencement of the project after October 1, 1998, the project being on a plot of at least one acre, and the residential unit not exceeding a built-up area of 1,500 sq. ft.

2. Size of the Plot for the Housing Project:
The Revenue contended that the project was developed on plots less than one acre, thus not fulfilling the conditions of Section 80-IB(10). However, the assessee provided a certificate from the Nagpur Improvement Trust (NIT) confirming the development of 8,370 sq. mtrs. (2.06 acres). The Tribunal agreed with the CIT(A) that the project was developed on a single plot exceeding one acre, despite multiple sanctions.

3. Sale of Plots without Constructing Tenements:
The Revenue argued that the assessee sold plots without constructing residential units. The Tribunal, however, found that the assessee sold bungalows and not just plots. The plot area was mentioned for identification purposes, but the sale included constructed bungalows, thus fulfilling the requirement of selling residential units.

4. Built-up Area Exceeding 1,500 sq. ft.:
The AO included the area of balconies in the built-up area, resulting in some units exceeding 1,500 sq. ft. The CIT(A) and the Tribunal noted that the definition of built-up area, as per the Development Control Regulation, 2000 for Nagpur City, excludes balconies. The Tribunal directed the AO to re-examine the built-up area excluding balconies as per local regulations.

5. Pro Rata Deduction Eligibility:
The Revenue argued that any violation of the built-up area condition should result in the denial of the entire deduction. The Tribunal, however, referred to the case of Bengal Ambuja Housing Development Ltd., where it was held that deduction should be allowed on a proportionate basis if the majority of units comply with the size limit. The Tribunal directed the AO to allow proportionate deduction if some units exceeded the built-up area limit.

6. Requirement of Furnishing Audit Report in Form CCB:
The CIT(A) held that the mandatory requirement of furnishing an audit report in Form CCB for each layout separately would not adversely affect the claim for deduction. The Tribunal did not find any specific contention from the Revenue on this issue and upheld the CIT(A)'s decision.

Conclusion:
The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's cross-objection. It directed the AO to re-examine the built-up area excluding balconies and to allow proportionate deduction if some units exceed the built-up area limit. The Tribunal upheld the CIT(A)'s findings on the size of the plot, sale of residential units, and the audit report requirement.

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