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2017 (9) TMI 1855 - AT - Income TaxDeduction u/s 80IB(10) - proportionate deduction - HELD THAT:- On the issue of proportionate deduction, we also find that Hon’ble Madras High Court in the case of CIT Vs. Arun Excello Foundations (P.) Ltd [2012 (12) TMI 415 - MADRAS HIGH COURT] has approved the principle of proportionate deduction to the extent the assessee has complied with the provisions of Sec.80IB(10) of the Act. Following the aforesaid decision of Hon’ble Madras High Court we are of the view that the assessee cannot be denied the deduction for the complete housing project and therefore find no fault in the order of Ld.CIT(A) and thus the grounds of Revenue are dismissed. Denial of deduction u/s 80IB(10) on account of non compliance of the condition stipulated in clause (f) to Sec. 80IB(10) clauses (e) and (f) were inserted to Sec.80IB(10) by Finance (No.2) Act, 2009 w.e.f 01.04.2010 - The object behind the introduction as explained by the Memorandum explaining the provisions is that the objective of the tax benefit for housing projects was to build housing stock for low and medium income households by ensuring the size of the residential unit. It was circumvented by the developers by entering into agreement to sell multiple adjacent units to a single buyer. Accordingly the new clause was inserted to provide that the undertaking which develops and builds the housing project shall not be allowed to allot more than one residential unit in the housing project to the same person not being an individual and where the person is an individual, no other residential unit in such housing project to spouse or minor children of such individual, to HUF in which the individual is a karta. In the present case at the time of making sale/booking a unit and for complying with the requirement of clause (e) and (f), the assessee is required to exercise normal due diligence expected of a normal businessman and proceed on the basis of the documents/information furnished by the other person and is not supposed to act like a detective and microscopically investigate and go behind the documents and verify the background of those submissions. Further no guidelines have issued by Revenue Department to show as to what and how the verification has to be conducted and therefore it is not a case of Revenue that the required guidelines issued by Revenue Department so as to check the compliance of clause (e) and (f) have not been followed by assess Assessee had prima facie exercised normal due diligence expected of a normal businessman more so when the purchasers at the time of booking had given different addresses, were having different surnames and then later on they turned out to be closely related. In such a situation, we are of the view that the assessee cannot be denied the deduction u/s 80IB(10). Claim of deduction u/s 80IB(10) be allowed and thus the grounds of assessee are allowed.
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