INCOME TAX ACT, 1961

Section 80-IB(10)

Deduction under section 80-IB(10) - Income from developing and building housing project - One out of sixty residential units of housing project did not comply with condition prescribed in section 80-IB(10)(f) -

AO disallowed deduction to assessee-company under section 80-IB(10) in respect of its housing project on the ground that four, out of sixty residential units in the said project, did not comply with the condition prescribed in section 80-IB(10)(f). That was because the two flats, i.e., Flat No. 1 and Flat No. 2 out of said four flats were allotted to same individual and rest two flats, i.e., Flat No. 3 and Flat No. 4 were allotted to a husband and his wife respectively. Further, CIT (A) granted pro-rata deduction under section 80-IB(10) to the assessee. However, Tribunal denied pro-rata deduction under section 80-IB(10) to the assessee as granted by the CIT (A). Held: Provisions of section 80-IB(10)(f) came into force on 19-8-2009. Therefore, the allotment of Flat No. 1 and Flat No. 2 to the same individual on 13-3-2009 and 29-6-2009, would not constitute a breach of condition in section 80-IB(10)(f). Further, the same was the position about allotment of Flat No. 4. At the highest, there might be some issue about the allotment of Flat No. 3 on 10-10-2009 because clause (f) to section 80-IB(10) came into force on 19-8-2009, in terms of which there was a prohibition for allotment in favour of a spouse. Therefore, deduction proportionate to the amount involved for allotment of Flat No. 3 could have been denied to the assessee but certainly not the deduction in respect of the entire housing project comprising of 60 residential units. Hence, there was no justification in disallowing deduction under section 80-IB(10) in respect of the assessee's housing project, except on pro rata basis in respect of Flat No. 3.

REFERRED :

FAVOUR : Partly in favour of assessee.

A.Y. : 2012-13

SUBSCRIBE FOR FULL CONTENT