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2015 (7) TMI 611 - AT - Income TaxEligibility for deduction u/s.80IB(10) - CIT(A) allowed claim - assessee is engaged in the business of real estate development and construction - Held that:- All the conditions for claiming deduction u/s.80IB has been fulfilled and the CIT(A) has denied the claim in respect of flat No.1602 & 1603 on the plea that their area was more than 1000 sq.ft. We had verified the copies of the relevant pages of the agreement for sale in respect of flat no.1602 wherein the area is mentioned at page no.9 and the relevant clause no.(j) relied on by AO and ld.CIT(A) is as under :- "Flat 1602 admeasuring 921 sq.ft. built up (including area of balconies where applicable) (with the adjoining terrace if applicable) on the 16th floor in the said building being constructed on the said property and also car parking space admeasuring (nil. Sq.ft. thereabout)." On page No.20, the plan of the flat is also attached with the agreement which shows that terrace is separate and not attached with the flat and that has not marked as the area sold. For Flat No.1603, similar clause (j) is on page no.28 and the similar plan attached with the agreement is also at page no.39 which also indicates that area of the terrace is not sold to the flat owner and further from the plan it is clear that terrace is not openable from the flat while the way to the terrace is from the passage of the 16th floor. We had also verified the sanctioned plan of the building placed at page 2 of the paper book from which it is also clear that flat no.1602 and 1603 are separate and the terrace is not openable from inside of any flat and access to the terrace is from the staircase and passage of the 16th floor. The terrace is not part of the built-up area, though balcony is part of the built-up area; terrace is a common area shared with the other residential areas, and accordingly, the finding of the AO and CIT(A) merely relying on the higher sale price of flat no.1603, that the terrace has been exclusively given to flat no.1603 is not correct as, from the agreement and the plan and the certificate of the architect, it is clear that terrace is neither attached with the flat nor this has been given to flat no.1603 for exclusive use and it is for the use of all the members. Furthermore, the amended provision with regard to calculating the area of flat is not applicable in respect of the projects approved and started prior to 01.04.2005 and it is very clear that the commencement certificate for the project was issued on 11-6-2001 when the construction was started and it was completed on 5.11.2004. Thus following the proposition of law laid down in the case of Saroj Sales Corp. [2008 (1) TMI 420 - ITAT BOMBAY-E ] we direct the AO to allow assessee's claim of deduction u/s.80IB in respect of all the 61 flats in Ganga Tower II. - Decided in favour of assessee. Disallowance u/s.40A(2) - Held that:- Respectfully following the decision of the Tribunal in group cases of the assessee vis-à-vis the finding recorded by the CIT(A), we do not find any reason to interfere in the order of CIT(A) with regard to deletion of disallowance made u/s.40A(2). Distribution of proportionate indirect expenses on the basis of work-in-progress in place of profit of each year - The tribunal in assessee's own case for the assessment year 1994-95 dismissed revenue's appeal by relying on the finding of CIT(A) to the effect that assessee had not diverted its interest bearing funds for advancing interest free loans to sister concern, by relying on the decision of Bombay Samachar Ltd. [1969 (6) TMI 2 - BOMBAY High Court] and Indian Explosive Ltd. [1990 (12) TMI 21 - CALCUTTA High Court ]. In view of the above, we restore the matter with regard to disallowance of interest to the file of AO with a direction to decide afresh keeping in view the proposition of law laid down by jurisdictional High Court in the case of Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY], wherein it was held that in case of availability of interest free funds presumption is that the same has been utilized for advancing interest free loans, therefore, no disallowance is to be made. The AO is directed to decide the issue after verifying interest free funds available with the assessee in terms of decision of Hon'ble jurisdictional High Court as well as other High Courts cited hereinabove. - Decided in favour of assessee for statistical purposes. Disallowance of sales promotion expenses - CIT(A) restricted the disallowance to 25% - Held that:- The hotel is situated at New Bombay and the assessee has paid cash to auto rickshaw and taxi drivers to get customers to the hotel. These expenses are genuine. Keeping in view the totality of facts and circumstances of the case, we restrict the disallowance to the extent of 10% of the expenses. - Decided partly in favour of assessee.
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