M/S. COMMONWEALTH DEVELOPERS CD FOUNTAINHEAD Vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1, MARGAO GOA

JUDGEMENT

(1.) The above appeal was fixed for final disposal on the following substantial questions of law by order dated 23.01.2014.

(2.) We have heard Mr. Chythanya, learned counsel appearing for the appellant and Ms. A. Desai, learned counsel appearing for the respondent.

(3.) Briefly, the facts of the case are that the appellant/assessee submitted its return of income declaring a total income of Rs.53,620/- on 30.10.2006. An order was passed under Section 143(3) of the Income Tax Act on 21.11.2008 on the returned income of Rs.53,620/-. Thereafter, CIT invoked its jurisdiction under Section 263 and set aside the order passed under Section 143(3) vide order dated 30.3.2011 with a direction to the AO to examine the relevant facts in connection with the claim of deduction of the assessee under Section 80-IB(10) of the Income Tax Act. The AO proceeded to examine the claim of deduction of the appellant under Section 80-IB(10) amounting to Rs.1,71,24,680/-. The AO ultimately came to the conclusion that the appellant was granted permission on 07.07.2003 by the Margao Municipal Council for construction of row villas with built-up area of 1500 square feet comprising of ground floor and first floor and the compound wall in the property bearing Chalta Nos. 34 and 35 of P. T. Sheet No. 77 situated at Fatorda,Margao. The AO noted that the appellant did not fulfill the conditions specified under Section 80-IB(10) of the said Act essentially on the ground that only flats/apartments constructed on the land will have common areas sharing with other residential units and as such since the construction of villas/bungalows/row houses are independent and do not share common areas, the appellant did not fulfill one of the conditions specified under Section 80-IB(10) of the said Act and as such invited the objections of the appellant. A reply was filed by the appellant disputing the said contention and inter-alia pointed out that all the conditions specified in Section 80-IB(10) of the said Act were duly satisfied by the appellant. But however, the AO disallowed the claim of the appellant under Section 80-IB(10) of the said Act. The appellant preferred an appeal before CIT (A). The CIT(A) ultimately deleted the disallowance by the AO inter-alia observing that there was nothing in the Act to suggest that such deduction was available only to the projects to construct apartments or flats and that the absence of common areas cannot disqualify the appellant from claiming the deduction under Section 80-IB(10). It was further observed that the intention of the legislature has been ensured by limiting the size of the residential unit to 1500 square feet. Accordingly, the deduction refused by the AO was ordered to be deleted and the appeal was allowed. Thereafter, the respondent preferred an appeal before the Income Tax Appellate Tribunal.