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2012 (11) TMI 583 - AT - Income TaxEligibility of prorata claim u/s.80IB(10) with reference to area of residential portion of housing project – Whether assessee’s housing project undisputedly including some residential units, which are of an area exceeding 1,000 sq.ft. (built-up),the whole of the profit of the housing project is not eligible for deduction under section 80IB(10)- Deduction under section 80IB(10) allowed earlier is hereby withdrawn. Since the assessee has furnished inaccurate particulars of income and concealed the particulars of income, the penalty proceedings are initiated under section 271(1)(c) for wrong claim of deduction under section 80IB(10). As decided by Tribunal that, in case, some residential house have a built up area in excess of 1,000 sq.ft., the assessee would not lose the total exemption under section 80IB(10) in its entirety but will only lose the proportionate exemption, under section 80IB(10). Hon'ble High Court has observed that when the local authority approved a plan as a housing project or a residential cum commercial project, the assessee would be entitled to claim for deduction under section 80IB(10)even if the project had commercial element in excess of 10%. section 80IB(10) allows deduction to the entire project approved by the local authority and not to a part of the project. If the conditions set out in section 80IB(10) are satisfied, then deduction is allowable on the entire project approved by the local authority and there is no question of allowing deduction to a part of the project.In the present case hold that assessee is entitled for deduction under section 80IB on pro-rata basis. The A.O. is therefore, directed to allow the deduction under section 80IB(10) on pro-rata basis as discussed above. This ground of appeal is allowed. In the result, Revenue’s appeal is dismissed. Rectification order – Court has specifically mentioned that the writ petition was misconceived and therefore liable to be dismissed. The ratio laid down by the High Court in the said case was that writ petition against order under s. 254(2) cannot be rejected on the ground of availability of alternate remedy. The Madras High Court has not considered anything concerning the merit of the issue that whether in the circumstances stated above the assessee could claim deduction under s.80IB(10) or not. the judicial result is the same that the High Court has upheld the reasonings and findings given by the Tribunal in its order. Lower authorities were not having advantage of above legal decision to apply to the facts of the assessee’s case to reach a conclusion. So in the interest of justice Order of the CIT(A)is set aside on the issue and restore the same to the Assessing Officer with a direction to decide the same as per fact and law after providing due opportunity to the assessee of being heard - both the appeals filed by the assessee are allowed for statistical purposes.
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