INCOME TAX ACT, 1961

Section 80-IB(10)

Deduction under section 80-IB(10) - Income from developing and building housing project - Assessee violated conditions of section 80-IB(10)(f) in respect of some units -

Assessee claimed deduction under section 80-IB(10). As called for, the assessee furnished books of accounts, copies of sale deeds, copies of construction agreement, confirmation letters from buyers having paid booking advances for the purchase of flats and copies of allotment letters, etc. AO rejected the claim of deduction under section 80-IB(10). On appeal, CIT(A) directed the AO to work out pro-rata deduction in respect of the units satisfying conditions under section 80-IB(10). Aggrieved, Revenue was in appeal. It was contended by Revenue that construction agreement was made on 17-5-2011 and the assessee failed to prove that part of the amount had been received prior to 1-4-2010. It was further contended that the assessee was trying to take advantage of the fact that section 80-IB (10)(f) was inserted with effect from 1-4-2010 and it was an after thought to substantiate the deduction claimed.Held: AO nowhere in the assessment order, stated that the construction agreement was made on 17-5-2011. In fact, in the assessment order, the AO mentioned that a person 'P' purchased the flat vide sale deed, dated 7-2-2011 and a person 'K' purchased the flat vide sale deed, dated 7-2-2011. Once the sale deed document for the purchase of flats had been executed on 7-2-2011, the construction agreement could not have been executed on a latter date of 17-5-2011. Thus, the contention of Revenue stood ruled out. Further, merely because assessee violated conditions of section 80-IB(10)(f) in respect of some units, deduction under section 80-IB(10) could not be disallowed for entire housing project and, the assessee was entitled to deduction proportionately in respect of the units, which fulfilled conditions of section 80-IB(10). Hence, CIT (A) was justified in directing the AO to work out pro-rata deduction in respect of the units satisfying conditions under section 80-IB(10).

Followed:CIT v. Elegant Estates (2016) 383 ITR 49 (Mad-HC) : 2016 TaxPub(DT) 1501 (Mad-HC) and CIT v. Arun Excello Foundations (P) Ltd. (2013) 29 Taxman.com 149 (Mad-HC) : 2013 TaxPub(DT) 373 (Mad-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14

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