COMMISSIONER OF INCOME TAX Vs. RAGHAVENDRA CONSTRUCTIONS

JUDGEMENT

(1.) THE Revenue has preferred this appeal challenging the order passed by the Tribunal wherein it has been held that the assessee is entitled to claim deduction under S. 80-IB(10) of the IT Act, 1961 (hereinafter referred to as "the Act") on pro rata basis in respect of those flats, the built-up area of which was not more than 1500 sq. ft.

(2.) THE assessee is a partnership firm engaged in the business of construction and sale of flats. The assessee entered into joint development agreement with Sri Mahaveer Ranka for building a residential project called 'Paramount Raghavendra Arisht' which -consists of 160 flats. The assessee had claimed deduction of the entire net profit of Rs. 36 crores relating to the said residential complex under S. 80-IB (10) of the Act for the asst. yr. 2007-08, which was rejected by the assessing authority for the reason that the built-up area of some of the flats exceeded 1500 sq. ft. The said order was challenged before the CIT (A). The appellate authority partly allowed the appeals holding that the assessee is entitled for the said deduction on pro rata basis. The Revenue challenged the said order before the Tribunal. The Tribunal dismissed the appeal holding that the assessee is entitled to the said deduction on pro rata basis in respect of those flats, the built-up area of which does not exceed 1500 sq. ft. Aggrieved by the said order, the Revenue is in appeal.

(3.) THE learned counsel for the Revenue contends that when once the violation of S. 80-IB(10) of the Act is established, the assessee forfeits his right to claim exemption. When that being the case the appellate authority committed a serious error in extending the benefit proportionately, which is outside the scope of s. 80-IB(10) of the Act. Therefore, he submits that the said order requires to be set aside.