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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SRI MAHAVIR SINGH
This appeal by the Revenue is arising out of the order of Commissioner of Income Tax (Appeals)-44, Mumbai [in short CIT(A)], in appeal No. CIT(A)-44/ITO 32(2)(5)/ITA-24/14-15 dated 20.10.2016. The Assessment was framed by the Income Tax Officer, Mumbai Ward 25(2)(2) Mumbai (in short ‘ITO') for the A.Y. 2008-09 vide order dated 03.03.2014 under section 143(3) read with section 147 of the Income Tax Act, 1961 (hereinafter ‘the Act’).
2. The only issue in this appeal of Revenue is against the order of CIT(A) in restricting the disallowance under section 80IB(10) of the Act at ₹ 2,78,749/- as against the claim of assessee of ₹ 47,68,710/-. For this Revenue has raised the following three grounds: -
“1. On the facts and in the circumstances of the case and in Law, the Ld. CIT(A) erred in restricting the disallowance u/s 801B(10) from Rs. 47,68710/- to Rs.2787491- when the tenor of the Section requires that the project be considered as a whole and no proportionate allowance of deduction is envisaged."
On the facts and in the circumstances of the case and in Law, the Ld. CIT(A) was not justified in craving out an exception in Section 80IB(10)(c) for certain residential units; when the sub-section dearly mandates that the units in the project should have a prescribed size to be eligible for the deduction".
3. On the facts and in the circumstances of the case and in Law, the Ld. CIT(A); erred in importing the concept of proportionate deduction when the tenor of the Section is to grant deduction for the housing project as a whole u/s 80IB(10) of the I.T. Act."
The AO during the course of assessment proceedings noted that the assessee had constructed a project by the name “Prathmesh Heritage”, near Cinemax, Beverly Park, Kanakia, Mira Road (E), Thane. This project consists of two wing I and II (Part stilt + 12 part) In this project 2BHK, 3BHK and 4BHK flats are constructed. It is seen from the computation of income that assessee firm has claimed a deduction of ₹ 47,68,708/- under section 80IB(10) of the Act, against the profit earned from this project. According to AO built up area of flat / unit No3 on 8th and 12th floor is 1042 sq. ft in building No. 1 and flat unit No 1 on 8th and 12th floor is 1020 sq. ft in building No. 2, so the built up area in all the above flats/ units exceeds the permissible limit of 1000 sq. ft. as given in Sec. 80IB(10)(c) of the Act. Assessee claimed calculation of area as per the D.C. Regulation/ Municipal rule is having no material impact on the facts of the case, as the provision of Act is very much clear about the same and no inference is required. Further plea of proportionate calculation of area is not acceptable as no such method/ provision is there in this specific section. In view of these facts, it is held that the assessee has violated the provisions of sect. 80IB(10)(c) of the Act, and therefore, assessee is not eligible for deduction under section 80IB(10) of the Act . Accordingly, assessee’s claim of deduction of ₹ 47,68,708/- under section 80IB(10) of the Act, is disallowed. The CIT(A) following the Tribunals order deleting the addition vide para 3.3 and 3.4 as under: -
“3.3 During the course of appeal proceedings the appellant filed written submission wherein it was mentioned that the appeal filed against assessment order of AY 2010-11 was partly allowed by the then CIT(A) vide his order dated 14.02.2014. In the said order the Id. CIT(A) took a view that pro rata deduction vis-à-vis those four flats in which the built up area is 1000 sq. ft. will not be allowable and rest of the project will be eligible for deduction. The Id. CIT(A) therefore allowed pro rata deduction u/s 801B(10). It was further pointed out by the AR that the order of the CIT(A) was contested before the Hon'ble ITAT, Mumbai and the Hon'ble ITAT Mumbai in its order dated 10.06.2016 dismissed the appeal of revenue filed against the order of the CIT(A) dated 14.02.2014. It was therefore stated by the appellant that the prorata deduction in respect of the eligible flats amounting to Rs. 44,89,959/- should be allowed.
3.4 we I have carefully studied the assessment order as well as the order of the CIT(A) and ITAT of the AY 2010-11. From a perusal of the assessment order of AY 2008-09 it is absolutely clear that this order is completely based on the assessment order of AY 2010-11. It is also clear that the Hon'ble ITAT in its order dated 10.06.2016 has upheld the order of the CIT(A) for AY 2010-11. In its order the ITAT has observed that the assessee would qualify for deduction on a proportionate basis. Since the highest fact finding authority has given a categorical finding that proportionate deduction u/s 8013 (10) should be allowed in the case of the appellant the claim of 80IB(10) from the eligible flats which is amounting to ₹ 44,89,959/- is allowed. Thus, the addition of ₹ 47,68,708/- is reduced to ₹ 2,78,749/- (4768708-4489959).
The grounds of appeal nos. 1,2 & 3 are partly allowed.”
Now, before me the learned Sr. Departmental Representative supported the order of the Assessing Officer.
I have considered the issue and find that the AO has framed assessment for this assessment order based on assessment proceedings for AY 2010-11. I find that the CIT(A) relying on Tribunal’s order for AY 2010-11 deleted the addition of proportionate disallowance. I find no infirmity in the order of CIT(A) and hence, the appeal of Revenue is dismissed.
In the result, the appeal of Revenue is dismissed.
Order pronounced in the open court on 15-05-2018. AadoSa kI GaaoYaNaa Kulao mao idnaMk 15.05.2018 kao kI ga[- .