Exemption under s 80-IB(10)

The assessee-petitioner has filed the present writ petition seeking the quashing of the impugned order passed by the revenue under s 264 by issuing a writ of certiorari and to issue a writ of mandamus directing the assessee to reinstate the project completion method in computing the income of the petitioner and to allow a deduction under s 80-IB(10). The assessee is an Association Of Persons (AOP) engaged in development and construction of apartments. For the years 2006–2007 and 2007–2008, petitioner filed income tax returns. Thereafter, a revised statement was said to have been filed for the AYs 2006–2007 and 2007–2008. The AO passed an order of assessment exercising power under s 143(3). The CIT(A) in exercise of power under s 264 declined to interfere with the orders passed by the AO.

 The main grievance of the petitioner was that neither the AO nor the CIT(A) had taken into consideration the tax holidays and the exemption granted as per s 80-IB(10), and the registration that was made after completion ought to have been taken into consideration apart from the exemption that was available to the petitioner insofar as the plots/residential building which were constructed and which were below the dimension of 1500 sq. ft. He had filed the revised assessment statement after having calculated all the exemptions and tax holidays into consideration.

The issue is whether the assessee’s claim of an exemption under s 80-IB(10) can be denied without commenting on the assessee’s claim.

In view of the submission made, to consider whether the calculations have to be made on the completion of the project after registering the plots in favour of the intended purchasers or customers, who had invested the amount from time to time, or as and when the amount is paid and accrued to the benefit of the petitioner for each assessment years, and also to consider the deductions available as per s 80-IB(10) and to pass appropriate orders in accordance with the law, the matter is remanded to the AO by quashing the impugned orders passed by the AO as well as by the Revisional Authority.

Matter remitted to AO to consider assessee’s claim of exemption under s 80-IB(10) after considering submission made by assessee — as held by KarHC in Varun Developers v CIT — In favour of: Others ; Writ Petition Nos. 26344-45 of 2010

Decided on: 14 February 2011