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2015 (7) TMI 325 - ITAT AHMEDABAD

2015 (7) TMI 325 - ITAT AHMEDABAD - TMI - Disallowance of deduction u/s 80IB(10) - appellant ineligible to claim deduction in absence of project completion certificate from VMSS in totality - Held that:- the assessee is eligible for deduction under section 80IB(10) in absence of project completion certificate from VMSS in totality because the project was completed within four years, the time prescribed. The CIT(A) was not justified in upholding the action of A.O. when the assessee not only submi .....

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11 - Dated:- 24-6-2015 - Shri Shailendra Kumar Yadav and Shri Anil Chaturvedi, JJ. For the Petitioner : Shri S. N. Soparkar, AR For the Respondent : Shri B. L. Yadav, Sr.DR ORDER PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER. This is an appeal filed by the assessee against the order of CIT(A) dated 01/09/2011 for AY 2008-09 on the following grounds:- 1. Ld. CIT(A) erred in law and on facts in confirming disallowance of deduction u/s 80IB(10) of the Act holding the appellant ineligible to claim ded .....

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he submissions of the appellant by deleting the disallowance made by AO. 3. Ld. CIT(A) further erred in not appreciating the fact that the application for issuance of project completion certificate was already made to the competent authority and in absence of failure on the part of the authority to issue the same denial of legitimate deduction amounts to denial of justice. 4. Alternatively and without prejudice ld. CIT(A) ought to have taken into consideration the fact that the appellant was ent .....

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(c) of the Act is not justified. 2. The assessee in its return of income has claimed deduction under section 80IB(10) which was disallowed by the Assessing Officer on the ground that the assessee was not the owner of the property and the permission was not granted in the assessee s name. The approval by the Vadodara Municipal Corporation was in the name of the original land owners and not in the name of assessee developer and as per the Assessing Officer the original land owner had merely obtain .....

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n. In essence deduction u/s 80IB(1) was denied on account of ownership not being in the name of the assessee and in the alternate the deduction was limited to sale of utilized FSI of 7293 sq.mtrs. The claim of deduction was also denied as the assessee had not acquired completion certificate for the project within the stipulated time. The completion certificate was received only for 20 out of the 43 units in the project. Thus the claim of assessee was not allowed. 3. The assessee went in appeal b .....

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n paragraph 115 above the assessee is eligible for deduction in respect of profits of the residential units segment of the project. In such a situation, since residential unit segment is being treated on a standalone basis for eligibility to deduction under section 80IB(10), the eligibility for such deduction can only be for the profits which are in respect of residential unit segment of the overall project, because, in the light of the discussions, only that part of the overall project can be s .....

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owed in AIR Developer (supra), relied upon by the Assessing Officer the deduction in respect of smaller units were allowed, because they fulfilled all the conditions laid down in section 80IB on stand alone basis. In the case of the appellant, certified completed portion fails the test to be considered as stand alone project on several counts, the first and foremost being area of 20 completed unit being less than one acre. The 20 completed units are not on one acre of land to be considered a sta .....

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laimed by the assessee cannot be allowed in view of the assessee not fulfilling this essential condition for the grant. There is no question of proportional allowance. Hence the action of the Assessing Officer in denying deduction for the entire project is upheld and ground no.2 fails. and thus confirmed the action of AO. The assessee is now in appeal before us. 4. Before us the ld. counsel for the assessee at the outset submitted that the issue is covered in favour of the assessee by the decisi .....

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ccordingly in view of the above decisions. The ld. DR on the other hand supported the orders of lower authorities. 5. After considering the rival submissions and going through the record, we find that the Tribunal vide its order dated 14/08/2014 has allowed the claim of assessee. The view taken by the Tribunal has been upheld by the Hon ble Gujarat High Court vide its order in Tax Appeal No.107 of 2015, dated 5/5/2015 with the following observations :- 2.06. At the outset, it is required to be n .....

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uction of the same were completed and though the assessee applied for completion certificate within a period of four years from the date of approval by the competent authority. Completion certificate was not issued for the reasons best known to the authority. Therefore, both, the AO as well as the learned CIT(A) disallowed the deduction claimed under section 80IB(10) of the Act. However, the learned ITAT deleted the disallowance made by the A.O. and held that the assessee shall be entitled to th .....

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r being eligible for deduction u/s 80IB(10) is not applicable. The Departmental Representative could not point out any good reason as to why the aforesaid decision of the Hon ble Delhi High Court should not be followed in the instant case. 2.07 In the case of CIT vs. Tarnetar Corporation, reported in (2014) 363 ITR 174 (Gujarat), the Division Bench of this Court has allowed deduction under section 80IB(10) of the Act by holding that if the assessee has completed construction within the prescribe .....

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roval by the competent authority and also applied for B.U. permission within a period of four years with respect to all 43 units, however, could obtain B.U. permission with respect to 20 units only and for whatever reasons, with respect to remaining 23 units, B.U. permission was not issued by the authority and as observed hereinabove, construction of all 43 units was completed, the assessee is entitled to deduction under section 80IB(10) of the Act, no error has been committed by the learned tri .....

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