Rule 27 support and corroboration requirements governed the deduction dispute, with untested statements found insufficient to deny relief.

Rule 27 of the ITAT Rules permits a respondent to support the impugned order on any ground decided against it without filing a separate appeal or cross-objection, and that plea was held maintainable. A deduction under section 80IB(10)(f) could not be denied on the basis of an untested third-party statement where no independent corroboration was produced and effective cross-examination was not granted. Documentary records showed allotment in the buyers' own names, payments through their bank accounts, and registered sale deeds. The alleged violation was also said to relate to a later year and could not justify denial for the year under review.

---

---

Issues: (i) Whether the assessee could, under Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963, support the impugned order on grounds decided against it without filing a separate appeal or cross-objection; (ii) whether disallowance of deduction under section 80IB(10)(f) of the Income-tax Act, 1961 was justified on the basis of an untested third-party statement and the alleged allotment of flats to employees.

Issue (i): Whether the assessee could, under Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963, support the impugned order on grounds decided against it without filing a separate appeal or cross-objection.

Analysis: Rule 27 permits a respondent to support the order appealed against on any ground decided against it, even without filing an appeal or cross-objection. The assessee's additional plea that the alleged violation, if any, related to a later assessment year was a legal ground available to sustain the relief granted by the first appellate authority.

Conclusion: The Rule 27 application was held maintainable and was allowed.

Issue (ii): Whether disallowance of deduction under section 80IB(10)(f) of the Income-tax Act, 1961 was justified on the basis of an untested third-party statement and the alleged allotment of flats to employees.

Analysis: Denial of a beneficial deduction requires the Revenue to prove violation of the statutory condition with cogent and reliable evidence. The assessment rested mainly on a statement recorded under section 132(4), but no independent corroborative material was brought on record to show that the flats were in substance allotted to the same individual through representatives. No effective cross-examination was granted despite reliance on the statement. The documentary evidence showed allotment to different purchasers in their own names, payments through their bank accounts, registered sale deeds, and subsequent taxation of capital gains in their hands. The alleged violation was also stated to pertain to a later year and could not justify disallowance in the year under appeal.

Conclusion: The disallowance under section 80IB(10)(f) was not justified and the relief granted by the first appellate authority was upheld.

Final Conclusion: The Revenue failed to establish a statutory violation warranting denial of deduction, and both appeals were rejected, leaving the assessee's deduction undisturbed.

Ratio Decidendi: A deduction under a beneficial provision cannot be denied on the basis of an uncorroborated third-party statement without cross-examination; the Revenue must prove the statutory violation by reliable evidence, and a later-year event cannot be used to disallow deduction for an earlier year absent statutory warrant.

---