DEPUTY COMMISSIONER OF INCOME-TAX, PUNE vs. M/S. SURANA MUTHA BHANSALI DEVELOPERS, PUNE

आदेश / ORDER

PER ANIL CHATURVEDI, AM :

of the order of Commissioner of Income-Tax (A) – 4, Pune dated

01.12.2016 for A.Y. 2012-13.

as under :-

Assessee is a partnership firm stated to be engaged as Promoters

and Builders. Assessee electronically filed its return of income for A.Y.

2012-13 on 03.09.2012 declaring total income of Rs.53,12,627/-. The

case was selected for scrutiny and thereafter assessment was framed

u/s 143(3) of the Act vide order dt.31.03.2015 and the total income

was determined at Rs.11,67,11,331/-. Aggrieved by the order of AO,

assessee carried the matter before Ld.CIT(A), who vide order

dt.01.12.2016 (in appeal No.PN/CIT(A)-4/ITO, Wd-5(2),

Pune/32/2015-16) granted partial relief to the assessee. Aggrieved by

the order of Ld.CIT(A), assessee and Revenue are now in appeal before

us.

A.Y. 2012-13 reads as under :

“The Ld.CIT(A) has erred in law and on facts in confirming the proportionate disallowance under Section 80IB(10) for the reason that the built-up area of some of the units exceeded 1500 Sq.Ft if and when the area of Open Terrace is included in measuring the built up area, inspite of the fact that the issue is fully covered by the decisions of the Madras High Court in Ceebros Hotels Pvt. Ltd. and of the Pune Tribunal in the case of N.T. Wadhwani.”

No.1216/PUN/2017 reads as under :

“1. Whether on the facts and circumstances of the case, and in law, the Ld. CIT(A) is correct in allowing assessee’s claim of deduction u/s 80Ib(10) of the IT Act, 1961 on pro-rata basis, when the built up area of 40 units have exceeded 1500 sq. ft and there is no provision in the IT Act for claiming proportionate deduction u/s 80IB(10) of the IT Act, 1961 ? 2.For this and such other reasons as may be urged at the time of hearing, the order of the CIT(A) be vacated and that of the Assessing Officer be restored.”

No.568/PUN/2017 for A.Y. 2012-13.

5.1. During the course of assessment proceedings AO noticed that

assessee had constructed a residential housing project known as

“Shree Shantinagar” at S.No.63, Kondhwa Bruduk, Pune and the net

profit of Rs.11,13,98,704/- earned from the project was claimed to be

as exempt income u/s 80IB(10) of the Act. To verify as to whether the

assessee’s project has satisfied the required conditions u/s 80IB(10) of

the Act for claiming the deduction, commission to the Approved Valuer

Shri Nitin M. Lele was given and he was asked to submit the report on

the matter. On the basis of the report submitted by him, AO noted that

one of the conditions stipulated u/s 80IB(10) of the Act was that the

built up area of the flats should not exceed 1500 Sq. ft. AO on the

basis of the valuation report noted that out of 176 flats constructed by

the assessee, in respect of 40 flats, projected terrace (open to sky) was

given exclusively to the assessee and thus the area of flats was in

excess of 1500 Sq. ft. in those 40 flats. He noted that if the area of

the flat and the terrace are considered together, the total area of the flat

exceeds 1500 Sq. Ft. The assessee was asked to show cause as to why

the deduction u/s 80IB(10) of the Act not be granted in view of the

contravention of the provisions about the area stipulated as per the Act.

The submissions made by the assessee were not found acceptable to

the AO. The alternate submission of the assessee of allowing deduction

on proportionate basis was also not found acceptable to the AO. AO

thereafter denied the claim of deduction u/s 80IB(10) in entirety.

Aggrieved by the order of AO, assessee carried the matter before

Ld.CIT(A), who granted partial relief to the assessee.

Aggrieved by the order of Ld.CIT(A), assessee is now in appeal

before us.

and Ld.CIT(A) and further submitted that for the purpose of computing

built-up area, the area of the projected terrace (open to sky) is to be

excluded as held by the decision of Pune Tribunal in the case of Shri

Naresh T. Wadhwani Vs. DCIT (ITA Nos.18, 19 & 20/PN/2013 order

dated 28.10.2014). He submitted that if the aforesaid area of open

terrace is excluded, then the area of the 40 flats will be within 1500 Sq.

ft. He placed on record the copy of the aforesaid decision and pointed

to the observations of the Tribunal wherein it has held that the area of

the projected terrace needs to be excluded for the purpose of

computing the built-up area while examining the condition prescribed

under Clause (c) of Sec.80IB(10) of the Act. He therefore submitted

that the order of AO be set aside. Ld. D.R. on the other hand, supported

the order of lower authorities.

record. The issue in the present ground is with respect to the denial of

claim of deduction u/s 80IB(10) of the Act. It is the case of the

Revenue that the area of the 40 flats exceeds 1500 Sq. ft. which is the

maximum area stipulated under the provisions of the Act. Revenue has

concluded that the area of the 40 flats exceed 1500 Sq. ft. by including

the area of the open terrace which is available to those 40 flat owners.

The assessee’s contention is that if the area of open terrace is excluded

then the area of each of the 40 flats is within the prescribed limit of

1500 Sq.ft. stipulated under the provisions of the Act. We find that the

Co-ordinate Bench of the Tribunal in the case of Naresh T. Wadhwani

(supra) after considering various decisions cited in the order has

concluded that the area of the projected terrace (open to sky) is not to

be included for the purpose of computing the built-up area while

examining the condition prescribed in clause (c) of Section 80IB(10) of

the Act. Before us, Revenue has not controverted the submissions of

the assessee that if the area of projected terrace (open to sky) is

excluded, the size of each of the flat is within the prescribed limit of

1500 Sq.ft. stipulated under the provisions of Sec.80IB(10) of the Act.

Further, Revenue has also not placed any material on record to

demonstrate that the order of the Co-ordinate Bench of the Tribunal in

the case of Naresh T. Wadhwani (supra) has been set aside or stayed by

Higher Judicial Authorities nor has brought on record any contrary

binding decision in its support. In view of the aforesaid facts, we are of

the view that the assessee is eligible for deduction u/s 80IB(10) of the

Act on the profits earned from the aforesaid housing project. We

therefore direct the AO to grant the deduction. Thus, the ground of

the assessee is allowed.

No.1216/PUN/2017 for A.Y. 2012-3.

9.1. Revenue is aggrieved by the order of Ld.CIT(A) as he had granted

the deduction u/s 80IB(10) of the Act on proportionate basis.

Ld.CIT(A) had held that since assessee has failed to comply the

conditions stipulated u/s 80IB(10) of the Act for claim of deduction in

respect of only 40 flats where the permissible area had exceeded 1500

Sq. ft. then the assessee cannot be denied the benefit of deduction in

totality and therefore the deduction is to be denied only with respect to

profits earned from those 40 flats. He accordingly directed the AO to

grant proportionate deduction u/s 80IB(10) of the Act. Revenue is

aggrieved with those directions of Ld.CIT(A).

other hand, reiterated the submissions made before AO and Ld.CIT(A)

and also relied on the decisions placed before Ld.CIT(A). He thus

supported the order of Ld.CIT(A).

record. We find that Ld.CIT(A) while granting partial relief to the

assessee u/s 80IB(10) has noted that since assessee has violated the

conditions for claim of deduction u/s 80IB(10) with respect to only 40

units which had exceeded the permissible area, the deduction has to be

denied only for those 40 flats meaning thereby that the assessee was

granted deduction on proportionate basis. For arriving at such

conclusion, Ld.CIT(A) had relied on the decisions cited in his order.

Before us, Revenue has not pointed out any fallacy in the findings of

Ld.CIT(A) nor has brought on record any contrary binding decision in

its support. We therefore do not find any reason to interfere with the

findings of Ld.CIT(A). Thus, the grounds of Revenue are dismissed.

Order pronounced on 16th day of October, 2019.

Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 16th October, 2019. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-4, Pune. 4. Pr.CIT-3, Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “ए” / DR, 5. ITAT, “A” Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER,स �या // True Copy //

व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune