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Income Tax Appellate Tribunal, ‘C’ / ’SMC’ BENCH: CHENNAI
Before: SHRI GEORGE MATHAN
: अपीलाथ& क) ओर से/ Appellant by Mr. S.Sridhar, Adv. : Mr. B.Sagadevan, JCIT '(यथ& क) ओर से /Respondent by : सुनवाई क) तार"ख/Date of Hearing 19.04.2018 घोषणा क) तार"ख / : 19.04.2018 Date of Pronouncement आदेश / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER: is an appeal filed by the assessee against the Order of Commissioner of Income Tax (Appeals)-5, Chennai, in dated 21.09.2017 for the AY 2013-14.
Shri B.Sagadevan, JCIT, represented on behalf of the Revenue and Shri S.Sridhar, Adv., represented on behalf of the assessee. :- 2 -:
It was submitted by the Ld.AR that the assessee is a partnership firm doing the business of real estate. The assessee had completed a project “Ocean Heights” at Old Washermenpet. It was a submission that the total area of the land in respect of the project was 40 grounds and 373 sq.ft. After leaving OSR being the compulsory area to be left open, the balance area available for the project was 37 grounds and 1107 sq.ft. which was approximately 1.75 acres of land. The assessee had constructed flats within the specified criteria and had claimed the benefit of exemption u/s.80IB(10) of the Act for the AY 2010-11. There is a violation which had already been considered for the AY 2012-13 leading to the denial of the deduction u/s.80IB(10). For those reasons, the AO had disallowed the claim of deduction u/s.80IB(10) for the relevant Assessment Year also. It was a submission that for the AYs 2010-11, 2011-12 & 2012-13 Tribunal had confirmed the stand of the AO in respect of the denial of the deduction u/s.80IB(10). It was submitted by the Ld.AR that the order of the Tribunal for the AYs 2010-11, 2011-12 & 2012-13 were pending before the Hon’ble Jurisdictional High Court. It was, however, a prayer that the facts have not been properly assimilated and the claim of the proportionate deduction has also not been considered. It was a prayer that the issue may be restored to the file of the AO for assimilating the correct facts and do an independent enquiry regarding the facts and in the event that there is any violation then to such extent proportionate deduction u/s.80IB(10) be granted to the assessee to an extent of such flats where there is no violation. :- 3 -:
In reply, the Ld.DR submitted that the assessee has completed only one project namely “Ocean Heights”. It was a submission that the benefit of deduction u/s.80IB(10) is to be considered for a project as a whole and not for individual flats in the project. It was a further submission that if the issues were being restored to the file of the AO for assimilation of the correct facts and for considering the proportionate or pro-rata deduction u/s.80IB(10), then when proportionate deduction in respect of the flats are considered, then the pro-rata undivided interest in respect of the land in respect of such flats, which are not eligible to be considered for the claim of deduction u/s.80IB(10) must also be excluded.
I have considered the rival submissions.
As has been pointed out by the Ld.AR, the Assessment Order in the present case does not bring out all the facts as are necessary for adjudicating the issue. It is an admitted fact that the benefit of deduction u/s.80IB(10) is in respect of a project and not in respect of a specific unit.
Admittedly, the assessee, herein, has done only one project namely “Ocean Heights” at Old Washermenpet. Though, the AO talks of violation having been done for the earlier Assessment Years, what were the specific violations is not emanating out of the Assessment Order. The said project as per the Assessment Order consists of 154 units. How many of these units have violated the conditions for the claim of deduction u/s.80IB(10) are also not clear from the Assessment Order. This being so, the :- 4 -: assessee’s alternate prayer for the claim of proportionate deduction is directed to be considered by the AO in view of the decision of the Hon’ble Jurisdictional High Court in the case of M/s.Arun Excello Foundations (P)
Ltd, (2012 (12) TMI 415 - Madras High Court). When considering the pro- rata deduction u/s.80IB(10), the AO shall exclude the undivided interest in the land in respect of such flats which have been held to have violated the conditions prescribed u/s.80IB(10). After excluding the undivided interest in the land in respect of the flats which have been found to have violated the conditions u/s.80IB(10), if the balance land falls below the basic requirement of 1.00 acre of land in respect of the project then automatically the claim of deduction u/s.80IB(10) in its entirety would stand denied. In these circumstances, with the above directions, the issues in this appeal are restored to the file of the AO for re-adjudication after granting the assessee adequate opportunity to substantiate its case.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the Open Court on April 19, 2018, at Chennai. (जॉज" माथन) (GEORGE MATHAN) "या"यक सद य/JUDICIAL MEMBER :- 5 -: