INCOME-TAX OFFICER vs. M/S. SAI SIDDHI ATUL ENTERPRISES,, PUNE

Notice of the appeal was sent to the assessee through RPAD on 17-10-2018 for today i.e. 13-11-2018. The acknowledgment of the notice available on file shows that the notice was duly served on the assessee. Despite service of notice none is present on behalf of the assessee / respondent to defend the impugned order. It seems that the assessee is not keen to defend the impugned order. Under such circumstances we are constrained to proceed with the hearing of appeal with the assistance of ld. DR and material available on record.

The brief facts of the case as emanating from records are : The assessee - partnership firm is a promoter and developer. The assessee developed a housing project named “Paradiso” at S. No. 240/2, Wakad, Tal. Mulshi, Distt. Pune. The said project consists of a building with three wings viz. A, B and C and commercial area. The assessee claimed deduction u/s. 80IB(10) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) in respect of the above said housing project. The Assessing Officer rejected assessee’s claim as the assessee failed to produce completion certificate in respect of entire project. However, part completion certificate dated 31-03-2012 qua Wings A and B was produced by the assessee. The Assessing Officer rejected assessee’s entire claim of deduction u/s. 80IB(10) of the Act. The Assessing Officer further observed that the size of the plot on which the housing project was developed is less than one acre. On both these counts the assessee’s claim of deduction u/s. 80IB(10) was rejected by the Assessing Officer.

Shri S.B. Prasad representing the Department vehemently defended the findings of Assessing Officer and prayed for rejecting assessee’s claim of deduction u/s. 80IB(10) of the Act.

We have heard the submissions made by the ld. DR and have perused the orders of authorities below. The Revenue in appeal has assailed the order of Commissioner of Income Tax (Appeals) on two grounds : i. Allowing pro-rata deduction u/s. 80IB(10) of the Act. ii. Allowing deduction u/s. 80IB(10) considering size of plot as more than one acre after including area acquired for DP road.

In so far as first issue is concerned a perusal of assessment order shows that the assessee has developed housing project with three Wings A, B and C. The housing project was approved on 30-03-2007. As per the provisions of section 80IB(10)(a)(iii) the project should have been completed on or before 31-03-2012. During scrutiny assessment proceedings the assessee furnished part completion certificate issued by the local authority on 31-03-2012 in respect of Wings A and B and commercial units. The assessee could not produce completion certificate in respect of Wing C. The Assessing Officer disallowed assessee’s entire claim of deduction u/s. 80IB(10) of the Act. However, the Commissioner of Income Tax (Appeals) following various judicial rulings of the Hon’ble High Courts and the Tribunal allowed pro-rata deduction in respect of completed unit to the assessee.

The allowability of proportionate deduction u/s. 80IB(10) in respect of completed units is no more res integra. The Hon’ble Bombay High Court in the case of Commissioner of Income Tax Vs. Brahma Associates reported as 333 ITR 289, Commissioner of Income Tax Vs. Vandana Properties (supra), the Hon’ble Madras High Court in the case of Commissioner of Income Tax Vs. Arun Excello Foundations (P) Ltd. reported as 259 CTR 362 have approved allowing of proportionate deduction u/s. 80IB(10) in respect of completed eligible units. The Tribunal in catena of orders have been consistently allowing proportionate deduction u/s. 80IB(10) in respect of units which are complete in every respect in consonance with the conditions set out u/s. 80IB(10) of the Act. The ld. DR has not brought to our knowledge any contrary decision of Hon’ble Jurisdictional High Court or the Hon’ble Apex Court. We do not find any infirmity in the

The second issue raised in ground Nos. 4 and 5 of the appeal is with respect to size of plot. The provisions of Section 80IB(10) mandates that the project should be on the size of plot of land having minimum area of one acre. In the present case, the total area of size of plot on which the housing project has been constructed is 7689 sq. mtrs. After reducing the area of 1502.25 sq. mtrs. acquired by PCMC for construction of approach road, the net area of the plot on which the residential complex has been constructed is 6186.75 sq. mtrs. The Assessing Officer while computing the area of plot only considered saleable area of Wing A and B and further erred in reducing the area ear marked for DP road. The Assessing Officer worked the total area of plot as 3808.56 sq. mtrs. The First Appellate Authority while adjudicating this issue followed the decision rendered in the case of Commissioner of Income Tax Vs. Vandana Properties (supra) and Bunty Builders Vs. Income Tax Officer (supra) and calculated the size of plot by including the area marked for DP road and the other areas excluded by Assessing Officer. We do not find any infirmity in the findings of Commissioner of Income Tax (Appeals). Accordingly, the same are upheld and ground Nos. 4 and 5 of the appeal are dismissed being devoid of any merit.

The ground Nos. 1, 6 and 7 are general in nature, hence, require no adjudication.

In the result, the appeal of Revenue is dismissed.