80ib(10) deduction availability

[hubert fernandes]

We developed a project u/s 80ib(10) and availed 100% deduction till finacial year ended march 2012. However  in the Financial year 2012-2013 two flats less than 1500 sq ft (ie non adjacant flats in two different buildings in the said 80ib(10)project) were sold to one individual. These flats were sold out of inventory, the project being 100% completed in FY 2009-2010. Clause (e) introduced w.e.f  01.04.2010 of section 80ib(10)restricts from 2 flats being sold to one individual or to spouse/children/representative of such individual.

in view of the above violiation of clause (e) whether the assessse would loose deduction for the entire project Or whether it would loose deduction only on these two flats sold to one individual OR whether the ENTIRE UNSOLD AREA as on 31-3-2010 (since clause (e) of 80ib(10) applicable from 01.04.10) would be open for disallowance

 

[DR.MARIAPPAN GOVINDARAJAN]

Whether you have got clarified in the said issue? If not please inform.

AI Summary

Restriction on multiple flat sales under section 80IB(10) may jeopardize project-level tax deduction when two units are sold to one buyer. A developer availed full project deductions under section 80IB(10) for a completed housing project. Clause (e), effective 01.04.2010, bars sale of more than one unit to the same individual or close relatives. Two non-adjacent flats from inventory were sold to one buyer in FY 2012-13. The question is whether this breach nullifies the deduction for the whole project, only the two flats, or the entire unsold area as of 31 03 2010. No conclusive answer is recorded in the document.