A division bench of the Bombay High Court comprising Justice Dhiraj Singh Thakur and Justice Abhay Ahuja has upheld an order of the Mumbai ITAT allowing directing the Assessing Officer to work-out the pro rata deduction under Section 80IB(10) of the Act, 1961, in regard to the eligible residential units.
The assessee, Kumar Builders Consortium, is a firm engaged in the business of developing residential projects in Pune. Returns of income for the assessment year 2011-12 was fled on 30th September, 2011, declaring a total income ofRs.18,83,540/- after claiming deduction of Rs.28,49,87,583/- underSection 80IB(10) of the Act, 1961. The deduction claimed was in respectof two projects namely (A) Kumar Shantiniketan and (B) Kumar Kruti. On appeal, the Tribunal directed the AO toworkout the pro rata deduction under Section 80IB(10) of the Act, 1961.The assessee challenged the order before the High Court.
Analyzing the provisions of the section, the Court observed that“In our opinion, a plain reading of the said section does not support that interpretation at all. Learned Counsel for the appellant would have been perfectly justified, had the legislature in its wisdom, in clause ‘c’ used the words “each residential unit has a maximum built-up area ….”. This would then clearly indicate that the intention was to ensure that each and every residential unit in such a housing project confirms inter alia to the size prescribed with a view to make an assessee eligible for claiming thededuction.”
The bench further clarified that “clause ‘c’ only qualifies an eligible residential unit and no more and further that if there issuch a residential unit, which confirms to the requirement as to size in ahousing project, all other conditions being fulfilled, the benefit of deductioncannot be denied in regard to a such residential unit. Section 80IB(10),nowhere even remotely aims to deny the benefit of deduction in regard to aresidential unit, which otherwise confrms the requirement of size at the costof an ineligible residential unit with a built-up area of more than 1500 sq.ft.”
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