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2012 (10) TMI 19 - AT - Income TaxDisallowance of deduction u/s. 80IA - sale of complete residential flat versus semi finished flat - held that:- The stand of the Revenue with regard to semi-finished condition of flats is devoid of merit inasmuch as what is sought to be constructed and sold by the assessee is residential units and what is sought to be purchased by the individual buyer is the ownership of a residential unit and registration of flat in semi finished condition is only to facilitate the convenience of the parties and agreement for development and completion of the balance work in relation to the flats registered, is only an incidental formality to protect the interest of the parties which need not be viewed as fatal to the claim of the assessee for deduction u/s. 80IB(10) of the Act. - Ultimately, the entire work from the stage of commencement to the stage of making residential units habitable has been carried out by the assessee only and the Revenue has no dispute whatsoever on this count. - Decided in favor of assessee. Separate books of accounts - held that:- Expenses incurred for the project are known and all incomes, including indirect income arising to the project have been considered. The accounts have also been audited and a certificate, as required, has been filed. This being so, the Assessing Officer has erred in holding that separate accounts were not maintained for the eligible business and that the assessee is, therefore, not eligible for deduction u/s. 80IB(10) of the Act. - In favor of assessee. Disallowance of claim u/s. 36(1)(iii) read with section 14A - Held that:- Once it is borne out from the record that the assessee had borrowed certain funds on which liability to pay tax is being incurred and on the other hand, certain amounts had been advanced to sister concerns or others without carrying any interest and without any business purpose, the interest to the extent the advance had been made without carrying any interest is to be disallowed under Section 36(1)(iii) - as the income received from M/s. SMR Builders (firm) is exempted income and as such provisions of section 14A are applicable - against assessee.
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