DCIT, NEW DELHI vs. M/S. FERROUS INFRASTRUCTURE PVT. LTD., GURGAON

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ITA 4688/DEL/2015Status: DisposedITAT Delhi20 July 2021AY 2011-126 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The CIT(A) allowed the deduction, relying on the percentage completion method and CBDT instructions. The Tribunal upheld the CIT(A)'s order, allowing the AO to verify compliance with Section 80IB(10) requirements.

What were the facts?

The assessee, a real estate developer, claimed deduction under Section 80IB(10) for a housing project. The AO disallowed the deduction as the project was only 30.78% complete after five years, believing the eligibility period had expired.

What were the issues?

Whether deduction under Section 80IB(10) can be claimed based on the percentage completion method for a real estate project, even if the project is not fully completed within the stipulated time.

Which sections of the Income-tax Act were involved?

Section 80IB(10)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘C’, NEW DELHI

Before: SH. N. K. BILLAIYA & SHRI K.NARASIMHA CHARY

For Appellant: Ms. Anima, SR. DR
Hearing: 20/07/2021Pronounced: 20/07/2021

This appeal by the revenue is preferred against the order of the CIT(A)-3, Delhi dated 11.05.2015 pertaining to A.Y.2011-12.

2.

The solitary grievance of the revenue is that the CIT(A) erred in deleting the addition of Rs.28271269/- made by the AO on account of deduction u/s. 80IB (10) of the Act.

3.

Briefly stated the facts of the case are that the assessee company is engaged in the business of Real Estate Development building of housing project etc. During the course of assessment proceedings the AO noticed that the assessee has claimed the following year wise deductions u/s. 80IB for the project at Sector- 89, Faridabad in its Income Tax Return :-

4.

The AO noticed that till now the project is completed only upto the extent of 30.78%. The AO was of the opinion that four years have since lapsed and the assessee needs to complete the project within 5 years the AO accordingly formed a belief that the claim of the deduction of the assessee expires and hence not eligible for the claim of deduction u/s. 80IB (10) of the Act. The AO accordingly disallowed the claim of deduction amounting to Rs.28271269/-.

5.

Assessee carried the matter before the CIT(A). It was strongly contended that the assessee has been regularly following the percentage completion method and for this reason the claim of deduction u/s.80IB of the Act cannot be denied. Strong reliance was placed on the CBDT instruction No.4 of 2009 dated 30.06.2009. Reliance was placed on several judicial decisions.

6.

After considering the facts and the submissions and the CBDT instruction (supra) and also the judicial decisions the CIT(A) concluded as under :-

7.

Before us the DR strongly supported the findings of the AO but could not point out any error or infirmity in the findings of the CIT(A) mentioned here in above.

8.

We have given a thoughtful consideration to the orders of the authorities below. There is no dispute that the assessee has been offering income on project completion method. We find that the CIT(A) while allowing the appeal has given a liberty to the AO to determine the correct profit under the percentage completion method and further given the liberty to withdraw the relief if subsequently the AO finds that the assessee has not complied with any of the requirements of section 80IB (10) of the Act. We do not find any error or infirmity in such finding of the CIT(A) which calls for no interference.

9.

In the result, the appeal filed by the revenue is dismissed.

10.

Decision announced in the open court in the presence of both the representatives on 20.07.2021.

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