DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE (7), PUNE vs. KUNAL SHELTERS PVT.LTD,, PUNE

Per S.S.Godara, JM:

Heard both the parties. Case file perused. 2. It emerges at the outset that the Revenue’s instant appeal raising the sole substantive issue of section 80IB(10) deduction hardly requires us to delve deeper in the relevant factual matrix. This is for A.Y. 2005-06 M/s. Kunal Shelters Pvt. Ltd., the reason that we are dealing with second round of proceedings between the parties qua the very issue. And that the learned coordinate bench’s former round of remand directions in assessee’s appeal dated 30-08-2013 had restored the foregoing issue of section 80IB(10) deduction back to the Assessing Officer as follows :

“8.3 The next objection of the Assessing Officer is that the assessee has combined the two flats into one flat in many cases. The assessee submitted that they are combined by the flat purchasers.Without prejudice, in most of the cases, even after combining the two flats, the built up area does not exceed 1500 sq.ft, after excluding balcony, terrace, etc. Hence the deduction is allowable in respect of these flats. According to the learned authorizedrepresentative at the most the deduction may be denied in respect of the flats wherein after excluding balcony, terrace, etc. the built up area of the combined flats exceeds 1500 sq.ft. The question of including garden area in the built up area of a row house does not arise as no construction was done thereon and it is a part of the plot. All these aspects need to be looked into by the Assessing Officer based on facts and circumstances. We therefore, set aside this issue to the file of the Assessing Officer with a direction to decide the same on facts and in law after giving reasonable opportunity of being heard to the assessee. In case certain flats are found to exceed limit of 1500 sq.ft, then disallowance of claim should be restricted to that extent and assessee should be allowed deduction on prorata basis for flats not exceeding prescribed limit u/s 80-IB(10) of the Act. 8.4 The next objection is with regard to the amenities area/additional parking’s. The assessee has got the plan approved later on and regularized the construction done. The assessee has given the circular of the Corporation for regularization of such work. Accordingly, the Corporation granted the sanction post facto. The assessee has relied on ITAT Bangalore Bench decision in the case of ITO Vs. Mahaveer Calyx 126 Taxmann 181 for the proposition that even if such work is not regularized and the assessee has .constructed some excess area, the deduction should not be denied. The assessee submitted that work has been regularized and that such work did not pertain to the individual flats but to the portion like multipurpose hall/tennis court. We find that the Assessing Officer has not looked

A.Y. 2005-06 M/s. Kunal Shelters Pvt. Ltd., into the details furnished by the assessee. In 'view of decision in the case of Mahaveer Calyx (supra), assessee should not be denied deduction once same has been regularized as stated above. The Assessing Officer is directed accordingly.

8.5 Next issue is with regards to disallowance of claim of deduction on the ground that assessee has not received completion certificate in respect of 4 row houses and 62 commercial units. Assessee claims to have made application for obtaining the completion certificate in respect of above units before prescribed in the section but due to ULC disputes, the assessee received the completion certificate in 2011. In case construction of above units was complete and possession thereof was handed over to the customers, assessee’s claim should be allowed. In case, plea of the assessee is not found correct then deduction u/s 80-IB(10) of the Act should be allowed on prorata basis. Assessing Officer is directed accordingly.”

“13.7 As mentioned earlier, the assessee has claimed entire profits on sale of flats/shops/row houses in Kunal estate Icon and Kunal Puram projects as eligible for deduction u/s.80IB(10). But in view of the violations discussed above, the project constructed by assessee does not qualifies for deduction u/s.80IB(10) of the Act as the basic conditions stipulated under this section are not satisfied in the case of the assessee for the following reasons summarized below : (i) Built up area of row houses exceed 1500 sq.ft. (ii) Built up area of 7 flats in C-3 and all 14 flats in D3 exceed 1500 sq.ft. (iii) Built up area of flat D5/103 exceeds 1500 sq.ft. (iv) Brochures of C-3 building and row houses indicated that built-up area of 7 flats in C3 building and all the Row houses exceed 1500 sq.ft.

A.Y. 2005-06 M/s. Kunal Shelters Pvt. Ltd.,

Flats in C3/D3 are merged in violation of plans. Thus, construction is not as per approved plans.”

4. Learned authorized representative vehemently argued that the CIT(A) has rightly held the assessee as entitled for the impugned 80IB(10) deduction once the former remand directions had rejected the Revenue’s corresponding arguments. All these assessee’s averments fail to convince us once the Assessing Officer’s clinching findings holding its residential units having exceeded the prescribed area of “1500 sqft.” have obtained finality since not challenged before the CIT(A) in form 35. Faced with this situation, we quote hon’ble jurisdictional high court’s recent decision in Pr. CIT Vs. Kumar Builders Consortium dated 18-07-2022 in Tax Appeal No.82/2018 and Devashri Nirman Ltd. Vs. ACIT (2020) 429 ITR 597 (Bom.) granting proportionate deduction to the concerned assessee and direct the Assessing Officer to frame his fresh consequential computation denying the assessee section 80IB(10) deduction in the corresponding residential units in Para 13.7 pertaining to assessee’s units exceeding 1500 sq.ft. area. Ordered accordingly.

A.Y. 2005-06 M/s. Kunal Shelters Pvt. Ltd.,

Order pronounced in the open Court on 23rd September, 2022.

Sd/- Sd/- (DIPAK P.RIPOTE) (S S GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; �दनांक / Dated : 23rd September, 2022 Satish आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2.

3. The CIT(A) concerned.

A.Y. 2005-06 M/s. Kunal Shelters Pvt. Ltd.,

S.No Details Date Initials Designation 1 Draft dictated on 16.09.2022 Sr. PS/PS 2 Draft placed before author 19.09.2022 Sr. PS/PS 3 Draft proposed & placed JM/AM before the Second Member 4 Draft discussed/approved by AM/AM Second Member 5 Approved Draft comes to the 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 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order