ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, AURANGABAD, AURANGABAD vs. JAGRUT SARA ASSOCIATES, AURANGABAD

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ITA 2151/PUN/2026Status: DisposedITAT Pune15 October 2026AY 2020-2125 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeal, upholding the order of the Ld. CIT(A)/NFAC. The Tribunal held that the primary purpose of maintaining separate books of account is to enable the AO to verify the correct computation of deduction. In the present era of technological evolution, where entities maintain records on Enterprise Resource Planning (ERP) systems like SAP, old notions of physically separate ledgers are outdated. If separate accounts relatable to a particular unit or undertaking are discernible and can be generated from the system, it constitutes sufficient compliance. The Tribunal found that the assessee had provided overwhelming evidence, including profit and loss accounts and balance sheets, which demonstrated that correct profits could be deduced at any time for the eligible undertaking. This view was supported by decisions in SMR Builders and the High Courts of Patna, Karnataka, Calcutta, and Bombay, which held that common management or maintenance of common books of account does not per se deny deduction if the investment or profit can be reasonably determined from available material. Therefore, the Tribunal rejected the AO's contention that separate books were not maintained and held that the assessee had maintained separate books from which correct profit could be deduced. The Ld. CIT(A)'s order was upheld.

What were the facts?

The assessee, a partnership firm engaged in construction, claimed a deduction of Rs. 5,47,69,430/- under Section 80IBA of the Income Tax Act, 1961, for the assessment year 2020-21. The Assessing Officer (AO) disallowed this claim, noting that the assessee maintained common books of accounts for the entire land parcel (2 Hectares 72 R) but had obtained development permission and claimed deduction only for a portion (Plot No. 2, 10036.3 Sq Mtr). The AO concluded that the conditions for Section 80IBA were not fulfilled. The Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC) deleted the disallowance. The Revenue appealed this decision to the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether, on facts and in law, the Ld. CIT(A)/NFAC erred in allowing deduction under Section 80-IBA of Rs. 5,47,69,430/- by ignoring the mandatory condition of maintaining separate books of account as required under Section 80-IBA(2)(i)? (Revenue's contention: The assessee failed to maintain separate books of account, which is a mandatory condition. Consolidated books with post-facto project-wise details are insufficient. The correctness of eligible profits could not be verified, and the burden of proof was on the assessee.) 2. Whether, on facts and in law, the Ld. CIT(A) erred in treating consolidated books with post-facto project-wise details as sufficient compliance, thereby diluting a mandatory statutory requirement? (Revenue's contention: This dilutes a mandatory statutory requirement.) 3. Whether, on facts and in law, the Ld. CIT(A) failed to appreciate that the assessee was engaged in multiple transactions and, in the absence of separate books, the correctness of eligible profits could not be verified? (Revenue's contention: Multiple transactions and lack of separate books prevent verification of profits.) 4. Whether, on facts and in law, the Ld. CIT(A) erred in accepting reconstructed financials and shifting the burden on the AO, whereas the onus to prove eligibility lies on the assessee? (Revenue's contention: The AO was wrongly burdened with proving ineligibility.) 5. Whether, on facts and in law, the Ld. CIT(A) incorrectly relied on inapplicable judicial precedents and allowed relief without proper verification of project-wise profits? (Revenue's contention: Reliance on precedents was incorrect, and relief was granted without proper verification.) 6. Whether, on facts and in law, the order of the Ld. CIT(A) is erroneous in law as it ignores that deduction provisions are to be strictly construed and mandatory conditions must be strictly complied with? (Revenue's contention: Deduction provisions must be strictly construed.) Assessee's contention: Section 80IBA is a beneficial provision intended to incentivize affordable housing. The requirement of maintaining books referable to the eligible project is a machinery/verification provision, not an end in itself. Profits are verifiable from approval-wise, plot-wise, and phase-wise records. Failure to maintain a physically separate ledger does not vitiate the claim. Relied on Bajaj Tempo Ltd. vs. CIT, DCIT vs. Gujarat Guardian Ltd., and CIT v. Micro Instruments Co.

Which sections of the Income-tax Act were involved?

Section 80IBA,Section 80IA,Section 80IAB,Section 80IAC,Section 80IB,Section 80IC,Section 80ID,Section 80IE,Section 10A,Section 10AA,Section 143(2),Section 142(1),Section 80J,Section 80-IB(10),Section 80-IB,Section 84

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE

Before: SHRI R. K. PANDA & Ms. ASTHA CHANDRA

For Appellant: Shri Suhas P Bora and Sampada Ingale
For Respondent: Shri Rajesh Haladkar, Addl. CIT

आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant; प्रत्यर्थी / The Respondent 2. 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘A’ Bench, Pune ग र्ड फ ईल / Guard file. 5. आदेशानुसार/ BY ORDER, Sunil Kumar Digitally signed by Sunil Kumar More // True Copy // More Date: 2026.10.25 10:59:33 +05'30' Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune

25 ITA No.2151/PUN/2026

S.No. Details Date Initials Designation 1 Draft dictated on 12.10.2026 Sr. PS/PS 2 Draft placed before author 15.10.2026 Sr. PS/PS Draft proposed & placed before 3 JM/AM the Second Member Draft discussed/approved by 4 AM/AM Second Member Approved Draft comes to the 5 Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to 9 the Office Superintendent Date on which file goes to the 10 A.R. 11 Date of Dispatch of order

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