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2014 (2) TMI 740 - AT - Income TaxDeduction of business income – Claim u/s 80IB(10) of the Act – Held that:- The decision in M/s FORTALEZA DEVELOPERS Versus THE COMMISSIONER OF INCOME TAX 15, MUMBAI [2012 (12) TMI 693 - ITAT MUMBAI] followed - The assessment order is neither erroneous nor prejudicial to the interest of revenue on account of allocation of profit between members as per accounts of the assessee as allocation of profit in the accounts of the assessee is in accordance with clause-7 of the agreement and manner of allocation of profit in the account cannot alter the quantum of deduction available to AOP under section 80IB(10) - The quantum of deduction under section 80 IB (10) will depend on the income earned from eligible project - The quantum of deduction will not depend upon the mode of distribution of shares amongst the members of AOP as income of AOP is taxable at maximum marginal rate - thus, the manner in which the AOP distribute its project has no bearing over eligible quantum of deduction u/s 80IB (10) as the eligible quantum will be gross receipts from the project reduced by expenses incurred on the project – Decided in favour of Assessee. Deduction u/s. 80IB(10) of the Act allowed in contravention - Area of the flats exceeds the area qualified for exemption - Held that:- The decision in M/s FORTALEZA DEVELOPERS Versus THE COMMISSIONER OF INCOME TAX 15, MUMBAI [2012 (12) TMI 693 - ITAT MUMBAI] followed - The project has been sanctioned and the completion certificate has been issued as per the sanctioned plant which is for the residential flats having less than 1500 sq.ft, then even if the assessee has received the consideration for more than 1500 sq.ft in some of the flats, which would not constitute violation of conditions as prescribed u/s 80IB(10)(c) because the built up area is less than 1500 sq.ft. - each of the flats have been constructed as per the building plan duly approved by the local authorities and also completed as per the completion certificate, wherein the built up area of each flats has been shown less than 1500 sq.ft, then receiving the consideration by the assessee for more than 1500 sq.ft showing as saleable area of the flats would not enhance the built up area of the flats/residential units as per the sanctioned plant and completion certificate – there was no error in the order of the CIT(A). Disallowance of deduction u/s 80IB(10) of the Act - Commercial project in contravention of provisions of sec. 80IB(10)(d) – Held that:- As per the pre- amended provisions of sec. 80IB(10), there is no such condition of commercial area in the project; therefore, once a project has been approved prior to 1.4.2005 by the Municipal Authorities, then in the absence of any such condition in the provisions of sec. 80IB(10) as exits at the relevant point of time, the subsequent amendment w.e.f 1.4.2005 cannot be applied with retrospective effect - When the amendment itself takes effect from 1.4.2005, then it cannot be presumed to be applied from retrospective effect - Relying upon Saroj Sales Organisation vs ITO [2008 (1) TMI 420 - ITAT BOMBAY-E] - the build up area of each flat was less than 1500 square feet and further the commercial project was found a separate project - the issue of deduction u/s 80IB in favour of the assessee and against the revenue.
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