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ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by revenue under section 253 of Income-tax Act (‘Act’) is directed against the order of ld. Commissioner of Income-tax (Appeals)- 36, Mumbai [hereinafter referred as ld. CIT(A)] dated 22.01.2018 for Assessment Year 2013-14. The revenue has raised the following grounds of appeal:
1. "Whether on facts and circumstances of the case and in law, the Ld. CIT(A) is justified in allowing the benefit of deduction u/s 80IB of the Act to the assessee notwithstanding that the assessee did not satisfy the provisions laid down in clauses (e) and (f) of the section 80IB(10) of the Act." 2. "Whether on the facts and circumstances of the case, and in law, the Ld. CIT(A) erred in not considering similar issue considered by Hon'ble ITAT, 1 Mum 2018-M/s Chamunda Builders & Developers Mumbai, in the case of M/s Everest Home Construction (India) (Pvt.) Ltd. on the issue of allowability of deduction u/s 80IB(10)(d) of the Income tax Act." 3. "Whether on facts and circumstances of the case and in law, the Ld. CIT(A) erred deleting the addition of Rs. 30,000/- on account of interest on interest free loans of Rs. 2,50,000/-, without appreciating that the assessee could not either prove the nexus of these interest free loans with the surplus interest free funds lying with it, or establish any commercial expediency to extend such loans as free of interest."
At the outset of hearing, the ld. Authorized Representative (AR) of the assessee submits that all the grounds of appeal raised by revenue are covered in favour of assessee by the order of the Tribunal in assessee’s own case for Assessment Year 2012-13 in dated 21.01.2019. The ld. AR of the assessee further submits that ground no. 1 & 2 relates to deduction under section 80IB and ground No.3 relates to interest disallowance. The ld. AR of the assessee submits that on grounds of appeal, the appeal of revenue for Assessment Year 2012- 13 was dismissed vide ITA No. 2604/Mum/2017 dated 21.01.2019. The ld. AR of the assessee furnished the copy of decision of Tribunal as stated above.
On the other hand, the ld. Departmental Representative (DR) for the revenue supported the order of Assessing Officer.
We have considered the submission of both the parties and have gone through the orders of lower authorities. We have noted that the similar deduction under section 80IB was disallowed by Assessing Officer for Mum 2018-M/s Chamunda Builders & Developers Assessment Year 2012-13. However, on appeal before the ld. CIT(A), the deduction was allowed and on appeal before the Tribunal, the appeal of revenue was dismissed with the following order:
“6. We have heard the rival submissions and perused the relevant materials on record. We find that a similar issue has been decided in favour of the assessee in Om Swami Smaran Developers Pvt. Ltd. (supra). The Tribunal vide order dated 31.01.2018 held as under: “8. We have heard rival submission and perused the material available on record. As could be seen from the facts available on record, the assessee has developed a housing project under the slum rehabilitation scheme of the Government. It is also a fact that in the impugned assessment year for the first time, the assessee had offered profit from the said housing project amounting to Rs. 1,48,66,701/- and has claimed deduction thereof under section 80IB(10) of the Act. There is no dispute that the assessee has sold three flats to a single individual in the said housing project. The Assessing Officer has disallowed assessee’s claim of deduction alleging violation of conditions of clause–(f) of section 80IB(10) of the Act, which provides that more than one residential unit in a housing project cannot be sold to a person / individual. The factual matrix of the case reveals that except violation of conditions of clause–(f) of section 80IB(10) of the Act, in the sense that the assessee has sold three flats to a single individual, there is no allegation by the Departmental Authorities that any other conditions of section 80IB(10) of the Act in respect of any other flats of the housing project are violated. Thus, the issue before us is whether for violation of the conditions of clause–(f) of section 80IB(10) of the Act in respect of two flats, assessee’s claim of deduction in respect of entire housing project can be disallowed. In our view, reading the provisions of section 80IB(10) as a whole and the legislative intent / object behind introducing such provision into the statute would reveal that it is a beneficial provision introduced by the legislature to deal with the housing problem. Thus, such provision has to be construed liberally. Undisputedly, except violation of conditions of clause–(f) of section 80IB(10) of the Act in respect of two flats, all other Mum 2018-M/s Chamunda Builders & Developers conditions of section 80IB(10) of the Act are fulfilled in respect of the housing project which is evident from the fact that there is no other allegation made by the Assessing Officer. Therefore, in our view, for violation of conditions of clause–(f) of section 80IB(10) of the Act in respect of two flats, the deduction for the entire housing project or in respect of other flats which otherwise are complying to the conditions of section 80IB(10) cannot be disallowed. The disallowance, if any, has to be restricted to the flats which violate the conditions of section 80IB(10). The Hon'ble Jurisdictional High Court in CIT v/s Bramha Associates, 333 ITR 289, has held that deduction under section 80IB(10) can be allowed on proportionate basis in respect of flats which fulfilled the conditions of section 80IB(10). The same view was expressed by the Hon'ble Madras High Court in the decisions cited by the learned Authorised Representative. In our view, the ratio laid down in the aforesaid decisions, M/s Chamunda Builders 6 though, are in the context of clause– (c) of section 80IB(10) of the Act, however, they will apply to the facts of the present case as there is not much difference in the object for which section 80IB(10) was introduced, even after introduction of clause–(e) and (f) to section 80IB(10) by Finance Act, 2009. Therefore, applying the ratio laid down in the decisions cited before us, we hold that the assessee will be entitled to deduction under section 80IB(10) of the Act proportionately in respect of flats which fulfilled all the conditions of section 80IB(10) of the Act. Accordingly, we direct the Assessing Officer to compute deduction under section 80IB(10) of the Act. Ground raised is partly allowed.” 6.1 Facts being identical, we follow the above order of the Co-ordinate Bench and uphold the order of the Ld. CIT(A). Thus the 1st, 2nd and 3rd grounds of appeal are dismissed.
5. Considering the decision of Tribunal in assessee’s own case, wherein no variation in the facts, therefore, considering the decision of Tribunal, the ground no(s) 1 & 2 of the appeal are dismissed. Mum 2018-M/s Chamunda Builders & Developers
Ground No.3 relates to deleting the addition of Rs. 30,000/- on account of interest free loan of Rs. 2,50,000/-. The ld. AR of the assessee submits that this ground of appeal is also covered by the decision of Tribunal in assessee’s own case for Assessment Year 2012-13 in dated 21.01.2019.
On the other hand, the ld. DR for the revenue relied upon the order of Assessing Officer.
We have noted that on similar facts, the co-ordinate bench of Tribunal dismissed the appeal of the revenue for AY 2012-13 by following the decision of Reliance Utility and Power [313 ITR 340 (Bom)]. The coordinate bench confirmed the deletion of similar disallowance for AY 2012-13 by passing the following order:
“11. We have heard the rival submissions and perused the relevant materials on record. In the case of CIT v. Reliance Utilities & Power Ltd. 313 ITR 340 (Bom), it has been held that where an assessee is having own funds more than the interest-free loans, it should be presumed that interest-free loans have been given out of own funds and no disallowance of interest is called for. In the instant case, the assessee was having more own funds than interest-free loans. Therefore, following the decision in Reliance Utilities & Power Ltd. (supra), we uphold the order of the Ld. CIT(A).”
Considering the decision of Tribunal in assessee’s own case almost on similar facts, we do not find any illegality or infirmity in the order passed by ld. CIT(A). No contrary fact to take other decision is brought to our notice. Therefore, the ground no.4 of the appeal is also dismissed. 5 Mum 2018-M/s Chamunda Builders & Developers
In the result, appeal of the revenue is dismissed.
Order pronounced in the open court on 23/04/2019.
Sd/- Sd/- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER Mumbai, Date: 23.04.2019 SK Copy of the Order forwarded to : 1. Assessee 2. Respondent 3. The concerned CIT(A) 4. The concerned CIT 5. DR “C” Bench, ITAT, Mumbai 6. Guard File