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Income Tax Appellate Tribunal, SMC BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM
PER D. KARUNAKARA RAO, AM :
The Revenue filed the main appeal ITA No.932/PUN/2017 against the
order of CIT(A)-6, Pune, dated 26-12-2016 involving Assessment Year 2012-13.
Assessee also filed the Cross Objection against the appeal filed by the Revenue
vide C.O.26/PUN/2018.
2 ITA No.932/PUN/2017 & CO No.26/PUN/2018 M/s. Sai Drishti Constructions
Grounds raised by the Revenue read as under :
“1. Whether on the facts and in the circumstances of the case and in law the Hon'ble CIT(A) was correct in holding that the assessee is eligible to claim deduction u/s. 80IB(10) on the entire project irrespective of the fact that the project was completed on 30.03.2012 i.e. after clauses (e) & (f) were inserted vide Finance Act, 2009.
Whether on the facts and circumstances of the case and in law the Hon'ble CIT(A) was justified in allowing deduction u/s.80IB(10) even when the assessee has violated the conditions of section 80IB(10) of the I.T. Act, 1961.
Whether on the facts and circumstances of the case and in law the Hon'ble CIT(A) was justified in concluding that the date of execution of sale of flats was prior to effective date of amendment to Finance Act, 2009 despite the fact that the assessee entered into sale transaction in F.Y. 2009-10 relevant to A.Y. 2010-11 from which said amendments are applicable.
Whether on the facts and circumstances of the case and in law the Hon'ble CIT(A) was justified by treating the date of development agreement as point of time of allotment residential units.”
The only Cross Objection raised by the assessee reads as under :
“1. The Ld.CIT(A) erred in law and on facts in computing the pro-rata disallowance of claim u/s.80IB(10) at an amount of Rs.14,80,667/- instead of an amount of Rs.1,16,288/-.”
Briefly stated, relevant facts of the case are that the assessee is an AOP
and is engaged in the business of Promoters and Developers of Housing
Projects. Assessee filed the return of income on 26-09-2012 declaring total
income at Nil. During the course of assessment, AO noticed that assessee has
shown sale of flats for a sum of Rs.99,18,300/- and claimed deduction
u/s.Chapter VI A amounting to Rs.49,23,657/-. It is noticed that Flat Nos. 15
and 16 allotted to Mr. Ajay Kate in Building-B were horizontally merged. Flat
Nos. 5 and 6 on Ist floor of Building-A allotted to Mr. Kishor Pahuja in Building A and Flat Nos. 3 and 4 on 2nd floor were horizontally merged. Flat Nos. 7 and 8 allotted to Ms. Mina Ahuja on 4th floor of Building-A were also horizontally
merged. Rejecting the explanations given by the assessee, the AO came to the
3 ITA No.932/PUN/2017 & CO No.26/PUN/2018 M/s. Sai Drishti Constructions
conclusion that more than one residential units have been allotted to one
person and the area of the merged flats is more than 1500 sq.ft. and therefore,
the assessee has violated the conditions laid down in clause (c) and (e) of
section 80IB of the Act. Thus, at the end of assessment u/s.143(3) of the Act,
the AO disallowed the entire claim of deduction of Rs.49,23,657/- made by the
assessee.
In the First Appellate proceedings, the CIT(A) relying on the order of
Tribunal in assessee’s own case in ITA No.991/PN/2014, dated 15-02-2016 for
the A.Y. 2010-11 granted part relief to the assessee by holding as under :
“5. The ITAT order has been perused and it is found that the issue has been covered in favour of the appellant. The facts of the present case are similar to the A.Y. 10-11. In this A.Y. 12-12, the flat allotted to Mrs. Meena Pahuja (Flat No. A-8) has been taken as a sale during the year, though this flat was allotted to her vide agreement executed on 06-04-2009. The allotment of this flat is contrary to the provisions of clause (e) of sec.80IB(10) and therefore the profit arising on such allotment subsequent to the Finance Act, 2009 is not eligible for deduction u/s.80IB(10). The appellant worked out the profit at Rs.1,16,288/- as a relatable to the flat sold to Mrs. Meena Pahuja. However, the working appears to be erroneous. The total area sold during the year is 3864 sq.ft. and the total profit earned is Rs.49,23,658/-. The profit for per sq.ft. works out to Rs.1,274.24. The flat No.A has an area of 1162 sq.ft. and therefore relatable profits works out to Rs.14,80,667/-. The AO is directed to disallow this amount as not eligible for deduction u/s.80IB(10). The AO is directed to allow the deduction u/s.80IB(10) for the balance amount in view of the Tribunal decision in appellants’ own case for the earlier year.”
Aggrieved with the part relief given by the CIT(A), the revenue filed the
present appeal. Further, aggrieved with the pro-rata disallowance of claim
u/s.80IB(10) at an amount of Rs.14,80,667/- the assessee filed the Cross
Objection with the solitary ground .
Ld. DR for the Revenue relied on the order of the AO. Ld. DR submitted
that the assessee has violated the basic conditions stipulation is section
80IB(10) of the Act. He relied on the decision of Hon’ble Apex Court in the
case of B.M. Bhattacharya Vs. Russel Estate Corp. AIR 1993 SC 1632, 1634.
4 ITA No.932/PUN/2017 & CO No.26/PUN/2018 M/s. Sai Drishti Constructions
Ld. DR further stated that the CBDT Circular No.5/10, dated 03-06-2010 would
apply to the transactions after a specified date during the year. The
amendments made are applicable w.e.f. 01-04-2010. Therefore, Ld. DR prayed
for confirming the order of the AO.
Before us, at the outset, Ld. Counsel for the assessee submitted that
the CIT(A) confirmed the portion of the profits which is not correct as per law.
Therefore, the issue needs to be remanded to the file of CIT(A) for
reconsideration of the facts.
I have heard both the parties and perused the orders of the Revenue. I
find the Revenue’s grievance raised in Ground Nos.1 to 4 stands covered by the
order of the Tribunal in assessee’s own case (supra) for the A.Y. 2010-11.
Therefore, the grounds raised by the Revenue stands dismissed. Reliance is
placed on the discussion given in Para No.4.3 of the CIT(A)’s order.
In the result, appeal of the Revenue is dismissed.
C.O.No.26/PUN/2018 (Arising out of ITA No.932/PUN/2017)
In the Cross Objection, the assessee raised a ground identifying the
mistake in quantifying the disallowable amount on pro-rata basis on the flat
relatable to Mrs. Meena Pahuja. The facts include that the assessee quantified
the same at Rs.1,16,288/- on a basis unknown to me. However, the Revenue
quantified the same at Rs.14,80,667/- on the basis of averaging. The
discussion given at Para No.5 of the order of CIT(A) which is already extracted
above is relevant.
On hearing the parties, I find the AO travelled on the basis of
estimations and adopted average methods which is of course not the actuals.
5 ITA No.932/PUN/2017 & CO No.26/PUN/2018 M/s. Sai Drishti Constructions
There is no reason or the logic for the Revenue to reject the actual and adopt
the average figures. Therefore, in my view, the same method adopted by the
AO is unsustainable. I find it relevant to remand this issue to the file of the AO
for identifying the profits, specified to the flat. In the remand proceedings, the
AO shall quantify the same on actual and not the averages. AO shall grant
reasonable opportunity of being heard to the assessee. Accordingly, the cross
objection filed by the assessee is allowed for statistical purposes.
In the result, Cross Objection of the assessee is allowed for statistical
purposes.
To sum up, appeal of the Revenue is dismissed and the Cross Objection
of the assessee is allowed for statistical purposes.
Order pronounced on this 17th day of May, 2018.
Sd/- (D.KARUNAKARA RAO) लेखा सद� / ACCOUNTANT MEMBER पुणे / Pune; �दनांक Dated : 17th May, 2018. Satish
आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to : अ�ेिषत
अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / The CIT(A)-2, Aurangabad 3. आयकर आयु� / The CIT-2, Aurangabad 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” / 5. DR ‘SMC’, ITAT, Pune; गाड� फाईल / Guard file. 6.
आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार आदेशानुसार
स�यािपत �ित //True Copy// //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune