2015 (6) TMI 408 - AT - Income Tax

Eligibility for deduction u/s 80-IB(10) - additional income - Held that - Provisions of sec. 80-IB(10)(e) and (f) are not applicable to all the above transactions of the assessee but are applicable to the allotment and bookings done after 1/4/2010. In the case of Brahma Associates vs. Joint CIT reported in (2009 (4) TMI 215 - ITAT PUNE ) wherein it has been held that the assessee shall be eligible for deduction u/s 80-IB(10) insofar as there is compliance with the conditions of sec.80-IB(10) of the Act. Therefore we confirm the finding of the CIT(A) that proportionate disallowance is to be made in respect of the transactions which have been made subsequent to the introduction of clauses (e) and (f) to sec. 80- IB(10) as well as the flats where there is violation u/s 80-IB(10)(c) of the Act. We find that sub-sec.(5) of sec.80A prohibits the allowability of any claim u/s 10A 10AA or 10B or sec.10BA C or under chapter C of the Act unless and until the assessee had made such a claim in its return of income. In the case before us there is no dispute that the assessee had made a claim of deduction 80-IB(10) and the question is only about quantification of the deduction and not the deduction itself. In such circumstances we are of the opinion that the assessee is eligible for deduction u/s 80-IB(10 of the additional income also. - Decided partly in favour of assessee.

Summary

Issues:
Cross appeals against the common order of CIT(A)-VI, Bangalore for assessment years 2010-11 and 2011-12 regarding deduction u/s 80-IB(10) of the Income-tax Act, 1961.

Analysis:
1. Assessment Year 2010-11:
- The assessee, a property development firm, claimed deduction u/s 80-IB(10) for its income. The AO found violations of sec. 80-IB(10)(c), (e), and (f), denying the deduction.
- The CIT(A) upheld the violations but directed proportionate deduction. The assessee sought full deduction, arguing against the retrospective application of clauses (e) and (f).
- The Tribunal found violations in the sale of 10 flats, but clauses (e) and (f) applied only post-2010. Citing precedents, it allowed proportionate deduction for compliant transactions.
- The Tribunal confirmed the CIT(A)'s decision on proportionate disallowance for post-2010 transactions and violations under sec. 80-IB(10)(c).

2. Additional Income Issue (2010-11):
- The AO treated on-money received as business income. The CIT(A) disallowed deduction u/s 80-IB(10) based on sec. 80A(5) introduced retrospectively.
- The Tribunal held that sec. 80A(5) doesn't bar quantification of deduction, allowing deduction for the additional income under sec. 80-IB(10).

3. Assessment Year 2011-12:
- The appeal focused on the applicability of sec. 80-IB(10)(e) and (f). Following the decision for 2010-11, the Tribunal partly allowed the assessee's appeal and dismissed the revenue's appeal for both years.

In conclusion, the Tribunal allowed proportionate deduction for compliant transactions, upheld disallowance for violations under sec. 80-IB(10)(c), and permitted deduction for additional income under sec. 80-IB(10). The appeals for both assessment years were partly allowed for the assessee and dismissed for the revenue.