2010 (11) TMI 1009 - AT - Income Tax

Summary

Issues Involved:
1. Non-fulfillment of the provisions of Sec.80IB(10)(a) of the Act.
2. Non-fulfillment of the provisions of Sec.80IB(10)(b) of the Act.
3. Non-fulfillment of the provisions of Sec.80IB(10)(c) of the Act.
4. Non-fulfillment of the provisions of Sec.80IB(10)(d) of the Act.
5. Addition of unexplained receipts of money.

Issue-wise Detailed Analysis:

1. Non-fulfillment of the provisions of Sec.80IB(10)(a) of the Act:
The AO contended that the project commenced before 01.10.1998, based on work-in-progress shown in the balance sheet and the letter of intent from SRA dated 17.01.1997. Additionally, the project was not completed by 31.03.2005. The CIT(A) held that the development commenced only after receiving the commencement certificate on 02.12.1998 and that expenses shown as work-in-progress were related to conveyance charges, not construction. The Tribunal upheld the CIT(A)'s view that the project commenced after 01.10.1998 but agreed with the AO that the project was not completed by 31.03.2005, thus denying the deduction.

2. Non-fulfillment of the provisions of Sec.80IB(10)(b) of the Act:
The AO argued that the project was on a plot less than one acre and was not notified by the CBDT. The CIT(A) found that the total plot area was 5700 sq. meters, including both rehabilitation and saleable buildings, satisfying the one-acre requirement. The Tribunal upheld the CIT(A)'s findings, confirming that the plot size met the statutory requirement.

3. Non-fulfillment of the provisions of Sec.80IB(10)(c) of the Act:
The AO claimed that some flats exceeded the 1000 sq. ft. limit by combining two flats into one. The CIT(A) found that the agreements and approved plans showed each unit was below 1000 sq. ft. and that any combination of flats was done by buyers post-purchase. The Tribunal upheld the CIT(A)'s findings, confirming compliance with the size requirement.

4. Non-fulfillment of the provisions of Sec.80IB(10)(d) of the Act:
The AO noted that the commercial area exceeded the 5% limit. The CIT(A) accepted the Assessee's argument that the shops were mandated by SRA for rehabilitation purposes and constructed before the amendment. The Tribunal, following the precedent set in Saroj Sales Organization, held that the law as it existed when the project was approved should apply, confirming compliance with the commercial area restriction.

5. Addition of unexplained receipts of money:
The AO added &8377; 59,20,000/- based on impounded documents. The CIT(A) upheld &8377; 7,00,000/- and &8377; 1,20,000/- as unaccounted but deleted &8377; 51,00,000/- after finding that the flats were eventually sold to different buyers at higher prices, duly recorded in the books. The Tribunal confirmed the CIT(A)'s deletion of &8377; 51,00,000/- due to lack of evidence of receipt from the named persons and upheld the addition of &8377; 7,00,000/- and &8377; 1,20,000/-.

Conclusion:
The Tribunal allowed the revenue's appeal partly, denying the deduction under Sec.80IB(10) due to non-completion of the project by 31.03.2005 and confirming the addition of &8377; 7,00,000/- and &8377; 1,20,000/- as unexplained money.