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2013 (6) TMI 690 - AT - Income TaxEntitlement to deduction under Section 80-IB(10) - Held that:- Prior to 01.04.2005, the expression ‘built-up area’ has to be understood in the context of the relevant Development Control Rules of the local authority. The insertion of the definition of the ‘builtup area’ in Section 80-IB(14)(a) by the Finance (No.2) Act, 2004 w.e.f. 01.04.2005 was held to be prospective in nature and not applicable for the evaluating the claim of deduction under Section 80-IB(10) of the Act in relation to projects approved by the local authority prior to 01.04.2005. Following the aforesaid precedent, as in the present case the ‘Samarth Nagari’ project of the assessee has been approved by the local authority prior to 01.04.2005, the ‘built-up area’ of the units is required to be calculated as per the relevant Development Control Rules of the local authority and on that basis the area covered by canopy and balcony are not includible. In view of the aforesaid position, the objection of the Assessing Officer, in our view is untenable. Accordingly, the order of the CIT(A) for assessment order 2005-06 is set-aside and the Assessing Officer is directed to re-compute the assessee’s claim for deduction under Section 80-IB(10) on the aforesaid lines. Disallowance made under Section 40(a)(ia) - Held that:- The only source of profits declared by the assessee during the year is from undertaking development of its housing project ‘Lakshdweep’. Therefore, even if the expenditure of ₹ 5,22,600/- is found to be not allowable on account of Section 40(a)(ia) of the Act as assessee has not complied with the requirements of deducting/depositing the TDS, it cannot be denied that such disallowance ultimately increases the profits of the assessee derived from its housing project ‘Lakshdweep’. According to the parity of reasoning laid down by the Hon’ble Gujarat High Court in the case of Keval Construction (2013 (7) TMI 291 - GUJARAT HIGH COURT) the aforesaid profit reflected by the disallowance under Section 40(a)(ia) of the Act, qualified for deduction under Section 80-IB(10) of the Act in the present case. Thus, on this aspect, assessee has to succeed. - Decided in favour of assessee.
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