TMI Blog2011 (9) TMI 1017X X X X Extracts X X X X X X X X Extracts X X X X ..... also challenging the disallowance made by the learned CIT(A) in regard to the application of the provisions of section 40a(ia) of the Act in respect of the work-in-progress claimed by the assessee. It was submitted by the learned authorised representative that the assessee was a company which was doing the business of purchase and sale of lands; purchasing, developing and selling of plots and purchasing, developing, construction and sale of flats. It was the submission that during the assessment year 2003-04 the assessee company had started a project by name Lavanyaa Brindavanam at State Bank Officers Colony and the project consisted of 5 blocks , namely, Padmavathi Block, Sapphire Block, Balaji Block, Raghavendra Block and Alamelumangai Block. It was the submission that the total land area purchased by the assessee was 1.5 acres. Out of the said area, the assessee had sold 5.5 cents as plot to one individual and got approval for 1.445 acres. As money was required for developing the flats, the assessee company had sold off the land pertaining to one of the approved blocks, viz. D Block which was the Sapphire Block Thus the assessee was left with a balance area of 1.2 acres, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation by M/s. Lavens Construction Pvt. Ltd. and the assessee had nothing to do with the said Sapphire Block or the land appurtenant to the said Sapphire Block. It was the submission that the learned CIT(A) had not accepted the assessee s claim on the ground that the approval obtained from the local authorities for developing the project included the land in relation to the Sapphire Block. The Sapphire Block was held to be part of the assessee s project and consequently denied the assessee the benefit of deduction u/s 80-IB(10). It was the submission that as the Sapphire Block was not belonging to the assessee, the same should not be considered in the hands of the assessee for the purpose of denying the assessee the claim of deduction under section 80-IB(10) of the Act. 4. In reply, the learned DR submitted that the approval for the project was composite approval and the construction of the Sapphire Block was done on the basis of the approval obtained by the assessee for the total project. It was the submission that the common facilities such as drainage etc. had been done by the assessee which included that for the Sapphire Block. The approval had not been modified to exclude th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fully complied with, just because the assessee hives off one Block in the project and the hived off Block has violated the conditions prescribed u/s 80-IB(10), it would not disentitle the complete project from the deduction under section 80-IB(10), especially when the hived off Block is not in any way connected with the assessee s balance project and the balance project complies with all the conditions u/s 80-IB(10). In fact, this is not a case where some of the units in the project have violated the conditions of section 80-IB(10) of the Act. This is the case where there has been a complete hiving off of a particular Block from the project itself. In the circumstances, we are of the view that the assessee is entitled to the claim of deduction under section 80-IB(10) in respect of the housing project developed and constructed by the assessee. 7. Coming to the issue as to whether the undivided interest in the land can be considered for the claim of deduction under section 80-IB(10), it is noticed that the deduction is in relation to the residential units in the housing project and the residential unit would include the undivided share in the land which is sold along with the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction of Padmavathi Block. Subject to the finalisation of the contract price between the assessee company and M/s. Balaji Builders the amount of ₹ 2,30,52,000/-had been credited to the account of M/s. Balaji Builders on the basis of the bills raised by M/s. Balaji Builders as, if the same was not shown in the accounts, the accounts of the assessee would not show a true and clear picture. It was the submission that the same was also shown in the Balance Sheet as work-in-progress. It was the submission that the action of the learned CIT(A) in confirming the disallowance by invoking the provisions of section 40a(ia) was liable to be reversed. 9. In reply, the learned DR submitted that in the Income Expenditure Account the assessee had shown the amount as expenditure though it had also shown the same in the work-in-progress in the income side. It was the submission that even assuming that the same was not an expenditure on account of the dispute, as the same was a contractual liability which was not crystallized in view of the decision of the Hon'ble Gujarat High Court in the case of Alembic Chemical Works Ltd. v. Deputy Commissioner of Income-tax, reported in 266 ITR 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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