ITAT Directs Re-adjudication for Deduction u/s 80IB(10) on Combined Residential & Commercial Project
Case Law Details
Gajanana Developers Vs ITO (ITAT Pune)
Introduction: The case of Gajanana Developers vs. ITO is centered on an appeal that arises from an order issued by the National Faceless Appeal Centre (NFAC), Delhi, dated 25th March 2023, for the assessment year 2009-10. The central issue pertains to the disallowance of a deduction claimed under Section 80IB(10) of the Income Tax Act, 1961.
Detailed Analysis: The appellant, Gajanana Developers, had claimed a deduction of Rs. 18,23,653 under Section 80IB(10) of the Income Tax Act, 1961. This deduction is aimed at encouraging the development of housing projects. However, one of the key contentions raised by the tax authorities is that the appellant, while undertaking a residential project, also incorporated a commercial component comprising 11 shops with a built-up area exceeding 2000 sq. ft.
The debate revolves around the primary objective of Section 80IB(10) – promoting residential projects. While the provision does allow for certain commercial establishments within the project, there are limits imposed. The issue with the present case seems to stem from the lack of submission of specific details related to the residential units by the appellant. In the absence of such information, it becomes challenging to determine whether the deduction under Section 80IB(10) was validly claimed or if there was a violation of the provision.
The Order issued by NFAC indicates that the appellant did not furnish adequate details regarding the number of residential units. This has led to a situation where the Revenue authority denied the deduction on grounds of the violation. The absence of specific details on the residential units makes it difficult to assess compliance with Section 80IB(10). In light of this, the Tax Tribunal has opted to restore the matter to the NFAC for reevaluation in accordance with the law.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
