INCOME TAX ACT, 1961

Section 80-IB

Deduction under section 80-IB - Applicability of clause (e) and (f) of section 80-IB(10) - Conditions being prospective in nature -

Assessee was involved in business of building and developing housing projects and claimed deduction under section 80-IB(10). A search under section 152 was conducted in the business premises of assessee and various documents were seized. During the course of assessment proceeding under section 153(c) read with section 143(3), on verification of deduction claimed under section 80-IB(10) AO held that the housing project consist of 195 flats and some owners have joined two flats, reducing the number of flats to 186. It was also held that some residential units were having a floor area of more than 1,500 square feet and some of the flats were sold to single or related persons or a single person. The transactions according to AO constituted violation of section 80-IB(10) and disallowed the claim in respect of both the assessment years. Held: In case a residential unit was allotted prior to 1-4-2010, the conveyance in such a residential unit can be registered subsequently also and in such a case also assessee would be entitled to the benefit of deduction under section 80-IB(10). Clauses (e) and (f) of section 80-IB(10) are prospective in nature and apply in respect of transactions entered on or after 1-4-2010, which is evident from Circular No. 5/2010, dated 3-6-2010. From perusal of order passed by AO, it was evident that unaccounted money during the search proceedings was treated to be business income by AO. Tribunal itself had found that all transactions except in respect of two flats have been entered into by the assessee in the year 2007-08 and therefore, the provisions cannot be applied to transactions entered into by the assessee prior to introduction of clauses (e) and (f) of section 80-IB(10), accordingly, appeal of Revenue was dismissed.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2010-11

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