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Income Tax Appellate Tribunal, HYDERABAD BENCHES “B”: HYDERABAD
Before: SHRI SATBEER SINGH GODARA & SHRI LAXMI PRASAD SAHU
O R D E R PER L.P. SAHU, A.M.: Both these appeals are cross appeals filed by the assessee and revenue are directed against CIT(A) - 4, Hyderabad’s order dated 24/09/2015 for AY 2011-12
:- 2 -: & 1355//Hyd/2015 Giridhari Constructions, Hyderabad. involving proceedings u/s 143(3) of the Income- Tax Act, 1961; in short “the Act”.
Briefly the facts of the case are that the appellant firm, M/s Giridhari Constructions, is in the business of construction of flats and for the assessment year 2011-12 it had filed its return of income on 30.09.2011 admitting Rs. Nil income after claiming a deduction of Rs. 2,65,22,346/- as deductions under the provisions of section 80IB(10). The case was selected for scrutiny and notices u/ s 143(2) and 142(1) were issued and assessment was completed u/s 143(3) of the Act vide order dated 24.03.2014 by disallowing the claim of deduction u/s 80IB (10) and determining the total taxable income of Rs. 2,65,22,346/- and tax payable of Rs. 1,11,45,750/-. 2.1 The assessee firm had under taken construction of a housing project by name "Girdhari Hari Executive Park" on a plot area of Ac. 08.09 guntas and the project was approved by local authority on 26.03.2008. A reference was made to the District valuation officer of the department to inspect the housing property and verify the eligibility of the housing project for claim of deduction u/ s 80AB(10) of the Act. The report had substantiated the fact that 7 buildings (Blocks) out of 10 buildings (Blocks) are complete and 322 flats out of 518 flats are completed. The AO based on the valuation report of DVO of the department disallowed the claim of deduction u/ s 80IB(10) of the Act based on the following reasons:
:- 3 -: & 1355//Hyd/2015 Giridhari Constructions, Hyderabad.
(i) Only 7 blocks out of 10 blocks are completed (ii) Out of the constructed 322 flats, it was reported by the District valuation officer that 168 flats have plinth are of more than 1500 s.ft.
Aggrieved by the order AO, the assessee preferred an appeal before the CIT(A) and filed written submissions before the CIT(A), which were extracted by the CIT(A) in his order at pages 4 & 5 The CIT(A) after considering the written submissions, directed the AO to allow the 80IB deduction proportionately on all flats except the 7 flats where 1500 s.ft. exceeded, by observing as under: “5. I have carefully considered the facts of the case, submissions of the appellant and the assessment order. During the A.Y. 2011-12, Flat Nos. bearing A-402, I-302, J-0202, J-402, J-702, J-204 and J-304 were sold which exceed 1500 sft and the income was reflected in the A.Y. 2011-12. During this assessment year, the appellant disclosed profits from 76 flats out of these only 7 flats exceeded more than 1500 sft. The appellant explained that this is because of considering the common areas like balcony etc. which exceeds more than 1500 sft. Since only 7 flats out of 76 flats exceeded 1500 sft, the remaining 69 flats are within limit and are sold and the appellant disclosed profit. Therefore, disallowing deduction on flats is not proper. In the remand report also the AD mentioned that only 7 flats were deviated which are above 1500 sft. 5.1 Regarding the above issue, the appellant relied upon the following case laws: a) Decision of ITAT Pune in the case of layant Maniklal Lunavat vs. ACIT Circle 3 vide and :- 4 -: & 1355//Hyd/2015 Giridhari Constructions, Hyderabad.
1149/Pn/2010 vide order dated 13-092012 wherein it was held that the assessee can take the benefits of deduction u/s 8016(10) on the blocks of flats which are completed before stipulated time. b) Decision of ITAT Pune in the case of Magarpatta Township Development and Construction Co. vs. DCIT vide and CO.No.04/PN/2012 wherein it was held that whatever portion of the housing project satisfies the conditions of the section 80IB(10) should be considered as a housing project for the purpose of section 80IB(10). c) Decision of Bangalore Bench of the Tribunal in the case of Brigade Enterprises (P) Ltd., reported in 119 TTJ 269(Bangalore) wherein it has been held that where some of the residential units in a bigger housing project treated independently are eligible for relief u/s 80IB(1), relief should be given pro-rata and should not be denied by treating the bigger project as a single unit. It has been held in the said decision that if a particular unit satisfies the condition of section 8016(10), the assessee is entitled to deduction and it should be denied in respect of those units only which do not satisfy the condition. d) Decision of Nagpur Bench of the Tribunal in the case of ITO vs. AIR Developers, (2010) 122 ITO 125(Nag.) wherein it was held that if it was found that the built up area of some of the residential units exceeded 1500 sft then it would be reasonable to allow proportionate deduction and if same did not exceed 1500 sft. then entire deduction u/s 8016(10) is allowable. 5.2 Keeping in view of the facts of the case and several case laws relied upon by the appellant, and also relying on the case law in the case of M/s Kura Homes Pvt. Ltd., of ITAT, 'A' Bench, Hyderabad, order in ITA No.216/Hyd/2010 dated 21-12-2012 wherein it was held as under:
:- 5 -: & 1355//Hyd/2015 Giridhari Constructions, Hyderabad.
"The next question that arise is whether the assessee is entitled to NIL deduction or full deduction or proportionate deduction u/s 80IB of the 'f1et as the size of some of the flats has exceeded the prescribed size limit. This matter has been examined in detail by the 'f1" Bench of this fTAT in the case of oar Vs. Saket Engineers (P) Ltd., supra, and it has been held that the assesseeis eligible for deduction u/s 8018 in respect of those flats whose size is within the prescribed limits. We also concur with the above said decision and accordingly uphold the order of the Learned CIT(A). Therefore, I direct the Assessing Officer to allow the 80lB deduction proportionately on all flats except these 7 flats where 1500 s.ft. exceeds.”
Aggrieved by the order of the CIT(A), both the assessee and revenue are in appeals before the ITAT. 5.1 The grounds raised
by the assessee are as under: “1. The Ld. CIT(A)-4, Hyderabad erred both in law and on facts in partly allowing the appeal.
2. The Ld. CIT(A) erred in sustaining the disallowance of deduction u/s. 801B in respect of 7 flats.
3. The Ld. ClT(A) ought to have allowed the deduction u/s. 80lB in respect of the impugned 7 flats also appreciating that these flats exceeded the limit of 1500 sft due to consideration 0f common areas.
4. The Ld. allowed the deduction u/s. 801B in respect of the impugned 7 flats also appreciating that the Valuation Report of the Valuation Officer is not acceptable in this regard as it has considered common area into account which is not a part of built-up area".
:- 6 -: & 1355//Hyd/2015 Giridhari Constructions, Hyderabad.
The assessee may add, alter or modify or substitute any other points to the grounds of appeal at any time before or at the time of hearing of the appeal.”
5.2 The revenue has raised the following grounds of appeal: “(1). Whether in the facts and circumstances of the case, CIT(A) is correct in allowing the deduction claimed by the assessee u/s 80IB(10) on pro-rata basis when the assessee has not fulfilled the preconditions for claiming the said deduction. (2). Any other ground that may be urged at the time of hearing.”
6. Before us, the ld. AR besides reiterating the submissions made before the CIT(A) and submitted that the appellant gave a break up that out of total 322 flats, the revenue booked only 291 flats, and 28 flats were given to landlord in respect to the development agreement and 3 flats are not yet registered. He submitted that the appellant submitted year wise break up for income booked in respect of 291 flats as per which the revenue has been book in the seven different financial year. Accordingly, for the year under consideration i.e., 2011-12, Rs. 2,65,22,346/- was claimed as deduction u/s 801B(10) for 76 flats whose plinth area is less than 1500 sft. By stating the above, the appellant requested to allow its claim of deduction u/s 801B (10) for an amount of Rs. 2,65,22,346/- for the year under consideration, as 28 flats in which the plinth area is more than 1500 sft were booked in subsequent years.
:- 7 -: & 1355//Hyd/2015 Giridhari Constructions, Hyderabad.
Further, he submitted that the appellant firm has submitted that the complete project was of 10 residential blocks out of which 7 were completed, and project completion certificate was obtained vide certificate No. GP /Peeramcheruvu dated 26.12.2012 from Peeramcheru Gram Panchayat and remaining 3 projects were not completed due to impact of recession in real estate and software market and also political turmoil in the state which affected the real estate sector adversely. He relied on the case law, which were relied on before the CIT(A) quoted supra.
On the other hand, the ld. DR relied on the order of AO and submitted that the condition prescribed in section 80IB(10) has not fulfilled by the assessee for eligibility of deduction and the CIT(A) has overlooked the conditions and DVO report. He, therefore, submitted that the CIT(A) wrongly directed the AO to allow the 80IB deduction proportionately on all flats except these 7 flats where 1500 s.ft. exceeded.
We have considered the rival submissions and perused the material on record. Before giving direction to AO to allow proportionate deduction u/s 80IB, the CIT(A) relied on the decision of the coordinate bench of ITAT, Hyderabad in the case of M/s Kura Homes Pvt. Ltd. cited supra. Therefore, the decision of the CIT(A) is in consonance with the decision of the coordinate bench,
:- 8 -: & 1355//Hyd/2015 Giridhari Constructions, Hyderabad. hence, we do not find any error in the order of the CIT(A) and upholding the same, we dismiss the grounds raised by both the assessee and revenue on this issue.
In the result, appeals of the assessee and revenue are dismissed in above terms. A copy of this common order be placed in the respective case files.
We lastly acknowledge that although the instant appeals, except for the AY 2014-15, are being decided after a period of 90 days from the date of hearing as per Rule 34(5) of the IT(AT) Rules 1963, the same however, does not apply in the covid lockdown situation as per hon'ble apex court's recent directions dated 27-04-2021 in M.A.No.665/2021 in SM(W)C No.3/2020 'In Re Cognizance for extension of limitation' making it clear that in such cases where the limitation period (including that prescribed for institution as well as termination) shall stand excluded from 14th of March, 2021 till further orders.
Pronounced in the open court on 17th September, 2021.