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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
आदेश / ORDER
PER ANIL CHATURVEDI, AM :
These cross-appeals filed by assessee and Revenue emanate out
of the order of Commissioner of Income-Tax (A) – 4, Pune dated
01.12.2016 for A.Y. 2012-13.
The relevant facts as culled out from the material on record are
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.
The ground raised by the assessee in ITA No.568/PUN/2017 for
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.”
On the other hand, the grounds raised by the Revenue in ITA
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.”
We first proceed to decide the assessee’s appeal in ITA
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.
Before us, Ld.A.R. reiterated the submissions made before AO
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.
We have heard the rival submissions and perused the material on
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.
In the result, the appeal of assessee is allowed.
Now we take up the appeal of Revenue in ITA
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).
Before us, Ld. D.R. supported the order of AO. Ld. A.R. on the
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).
We have heard the rival submissions and perused the material on
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.
In the result, the appeal of Revenue is dismissed.
To sum up, the appeal of assessee is allowed and the appeal of Revenue is 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