2008 (8) TMI 453 - ITAT BANGALORE-A

Eligibility for deduction u/s 80IB - housing projects - assessee formed a single project by name 'Brigade Millennium' - claimed deduction for two blocks separately viz., Mayflower and Cassia among other 5 residential blocks - authorities like BESCOM, BWSSB and Fire Service Department duly inspected the plot and sanctioned plans for each of the blocks separately, after satisfying themselves -

As could be seen, the project by name 'Brigade Millennium' as a whole does not qualify for deduction u/s. 80IB - Hence, the AO disallowed the claim of deduction u/s. 80IB for the whole project - CIT(A) allowed the claim.

HELD THAT:- In the case in hand, each of the blocks 'A' and 'C' constructed by the assessee, after obtaining plan sanction from the local authority namely BDA and plan approval from other departments, are within the conditions stipulated under the Act. This fact is not denied by the Revenue. Further, in view of the fact that the assessee was granted approval separately for each of the blocks 'A' and 'C' by the BDA shows that though it was a group project, the consideration therefrom is a separate and independent unit.

We have had the benefit of each of the approvals, plan sanction and certificates issued by the Government authorities. Even though the projects of the assessee are bigger ones consisting of independent units, the assessee had claimed the benefit u/s 80IB only in respect of blocks 'A' and 'C' namely 'Mayflower' and 'Cassia', In respect of other units viz. Magnolia, Jacaranda and Laburnum the assessee did not avail or claim the benefit u/s. 80IB.

The ld CIT(A), after having considered the facts in detail, is justified in concluding that 'Mayflower' and 'Cassia' are independent projects for the purposes of s. 80IB. Further, profits from the units will have to be arrived, based on the method of, accounting employed. Accounting principles would mandate recognition of profits from each unit separately. It is with reference to such profits that the deduction u/s. 80IB would be allowed. The manner of accounting for profits would also support a conclusion that the deduction u/s. 80IB is to be computed qua each residential unit.

The cardinal rule for interpretation of any provision relating to exemption, allowance, deduction, rebate or relief is that they should be interpreted liberally and broadly so as to advance the object sought to be achieved and not frustrate it.

Therefore, the deduction u/s 80IB(10) is available in respect of both the blocks and the ld CIT(A) was justified in upholding the claim of the assessee. It is ordered accordingly.

In the result, the appeal filed by the Revenue is dismissed.