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2018 (1) TMI 1646 - AT - Income TaxDisallowance of deduction claimed u/s 80IB(10) in respect of housing project - AO has disallowed assessee’s claim of deduction alleging violation of conditions of clause–(f) of section 80IB(10) which provides that more than one residential unit in a housing project cannot be sold to a person / individual - whether for violation of the conditions of clause–(f) of section 80IB(10) of the Act in respect of two flats, assessee’s claim of deduction in respect of entire housing project can be disallowed? - HELD THAT:- Undisputedly, except violation of conditions of clause–(f) of section 80IB(10) of the Act in respect of two flats, all other conditions of section 80IB(10) of the Act are fulfilled in respect of the housing project which is evident from the fact that there is no other allegation made by the AO. In our view, for violation of conditions of clause–(f) of section 80IB(10) of the Act in respect of two flats, the deduction for the entire housing project or in respect of other flats which otherwise are complying to the conditions of section 80IB(10) cannot be disallowed. The disallowance, if any, has to be restricted to the flats which violate the conditions of section 80IB(10). The Hon'ble Jurisdictional High Court in CIT v/s Bramha Associates [2011 (2) TMI 373 - BOMBAY HIGH COURT] has held that deduction under section 80IB(10) can be allowed on proportionate basis in respect of flats which fulfilled the conditions of section 80IB(10). The ratio laid down in the aforesaid decisions, though, are in the context of clause–(c) of section 80IB(10) of the Act, however, they will apply to the facts of the present case as there is not much difference in the object for which section 80IB(10) was introduced, even after introduction of clause–(e) and (f) to section 80IB(10) by Finance Act, 2009. Therefore, applying the ratio laid down in the decisions cited before us, we hold that the assessee will be entitled to deduction under section 80IB(10) of the Act proportionately in respect of flats which fulfilled all the conditions of section 80IB(10).
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