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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI SUNIL KUMAR YADAV & SHRI INTURI RAMA RAO
O R D E R Per Sunil Kumar Yadav, Judicial Member These appeals are preferred by the revenue against the order of the CIT(Appeals) inter alia on common grounds, which are as under:-
“1. The Order of the Ld. CIT (A), in so far as it is prejudicial to the interest of the revenue, is opposed to law and the fact and circumstances of the case. 2. The Ld. CIT (A) has not appreciated the fact that the condition specified u/s 80IB(10) of I T Act that the built-up area of each flat should be less than 1500 Sqft. to claim the deduction u/s 80IB of the I T Act.
3. The Ld.CIT (A) has erred in allowing the deduction u/s 80IB treating the issue liberally when the facts of the case are otherwise.
4. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT (A) in so far as it relates to the above grounds may be reversed and that of the Assessing Officer may be restored.
5. The appellant craves leave to add, alter, amend and / or delete any of the grounds that may be urged.”
During the course of hearing, the ld. Counsel for the assessee has contended that the impugned issue is squarely covered by the order of the Tribunal and the Hon’ble jurisdictional High Court in favour of the assessee. The CIT(Appeals) while adjudicating the issue has followed the order of the Tribunal in which identical issue has been adjudicated following the judgment of the Hon'ble High Court in the case of CIT v. SJR Builders in dated 19.03.2012. Since the CIT(Appeals) has decided the issue in the light of the judgment of jurisdictional High Court, no interference in the order of CIT(Appeals) is called for.
The ld. DR did not dispute these factual aspects.
Having carefully examined the order of CIT(Appeals), we find that the CIT(Appeals) has adjudicated the issue following the order of the Tribunal and the judgment of the jurisdictional High Court. For the sake of reference, we extract the relevant observations of the CIT(Appeals) as under:-
“6. The AO's observations / findings, the Assessee's submissions and the judicial precedents on the issue (including decisions of ITAT-Bangalore, in Assessee's own case) have been duly considered. The adjudication is accordingly made hereunder in the ensuing paras: The Assessee is a partnership firm in the business of developing and constructing residential and commercial building projects. For the current AY: 2013-14 under consideration assessee declared a total income of Rs. 9.02,72,260/- after claiming deduction of Rs. 4,02,06,560/- u/s 80IB of the I.T. Act. The AO, completed the assessment u/s 143(3), assuming the income at the figure of Rs. 13,04,78,815/- after denying the claim of deduction u/s 80IB. The disallowance was made on the ground that, the Appellant had violated the said provision by building a certain number of flats exceeding the built-up area of 1500 sqft. Even though the Assessee had statedly claimed deduction u/s 80IB only in respect of the flats below the benchmarked size of 1500 sq.ft; the AO denied the claim u/s 80IB in its entirely. The AO, in doing so, did not also accede to the appellant's plea that, the issue stood covered in its favour by virtue of the judgment in its own case for AY: 2009-10 of the jurisdictional Bangalore Tribunal in (dated 11/04/2014) wherein the revenue's appeal, against the proportionate allowance u/s 80IB was dismissed. The identical issue was adjudicated in Assessee's favour by the jurisdictional Bangalore ITAT, in Assessee's own case, in the A.Yrs. 2009-10 & 2010-11, in ITA No. 1366 & ITA No. 1707/Bang/2013, respectively. In this context it would be appropriate to reproduce the operative part of the Hon'ble Tribunal order at para 11, as under: "11. We have considered the rival submissions. As far as the appeal of the revenue is concerned, we are of the view that the question as to whether deduction u/s. 80IB(10) of the Act has to be allowed proportionate to the profits derived from sale of residential units whose built-up areas is less than 1500 sq.ft., even though some of the residential units in the very same projects exceeds the built-up area of 1500 sq.ft., the same has been decided by the Hon'ble High Court of Karnataka in the case of CIT V SJR Builders in of 2010 dated 19.03.2012. the Hon'ble High Court has taken the view confirming the order of the Tribunal, by holding that where residential units exceeds the built-up area of 1500 sq.ft, such units may be excluded for deduction, but the assessee will not lose the benefit of deduction u/s 80IB(10) in its entirety. It is only with reference to the flats which is more than the prescribed area that the assessee will lose the benefit of deduction. The Tribunal in its decision had followed the ruling of the Special Bench of the Tribunal in the case of Brahma Associates V JCIT (313 ITR (AT) 268 (Pune) (SB). Several other decisions of various benchers of the Tribunal were filed in the paper book taking similar view. In view of the aforesaid decision of the Hon'ble High Court of Karnataka we are not making any reference to those decisions. In view of the aforesaid decision of the Hon'ble Karnataka High Court, we are of the view that there is no merit in the appeals of the revenue and the same are dismissed."
In background of the judicial precedent on the issue of proportional allowability deduction u/s 80IB(10) being in favour of the appellant, it is clear that, the deduction cannot be denied in its entirety. The Assessee on the other hand has submitted that its claim u/s 80IB, during the year under consideration, was restricted only to the units falling below the threshold of 1500 sqft. The AO has not disputed this position of the Assessee. In the facts and circumstances of the case the Assessee's appeal is allowed.
Since the CIT(Appeals) has adjudicated the issue following the order of the Tribunal, we find no infirmity in the order of the CIT(Appeals). Accordingly, we confirm the same.
In the result, the appeal of the revenue stands dismissed.
Pronounced in the open court on this 20th day of April, 2018.
Sd/- Sd/-
( INTURI RAMA RAO ) ( SUNIL KUMAR YADAV) Accountant Member Judicial Member Bangalore, Dated, the 20th April, 2018.