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Facts
The assessee claimed deduction under Section 80IB(10) for various housing projects. The Assessing Officer disallowed the deduction, and the CIT(A) allowed it for some projects. The Revenue appealed against the CIT(A)'s order.
Held
The Tribunal held that the issue regarding the claim of deduction under Section 80IB(10) was squarely covered by its earlier decisions in the assessee's own cases for preceding assessment years. The grounds of appeal raised by the Revenue were dismissed.
Key Issues
Whether the deduction under Section 80IB(10) was allowable for the housing projects. Whether the transfer pricing adjustment for interest on loan to AE was justified.
Sections Cited
80IB(10), 115JB
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Income Tax Appellate Tribunal, DELHI BENCH ‘H’: NEW DELHI
Order
: 24.10.2025 O R D E R
PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :
This appeal preferred by the assessees is directed against the order of the ld. Commissioner of Income-tax (Appeals), Delhi-44 dated 13.02.2025 for AY 2014-15 raising following grounds of appeal :- “(i) Whether Ld. CIT(A) has erred in allowing deduction u/s 80IB (10) of the Act to the tune of Rs.5,22,08,123/- in respect of the profits from Housing Project which are Group Housing Scheme of Multi-storied flats in the projects namely M/s Royal Residency, Ludhiana? (ii) Whether Ld. CIT(A) has erred in following the order of Ld. CIT(A) - 19 for the AY 2011-12 wherein it was held that the aforesaid Group Housing Scheme is separately satisfying the conditions laid down in the provisions of section 80IB(10) despite observing that the consolidated approval of the local authority is for the entire project? (iii) Whether the decision of Ld. CIT(A) does not suffer from the vice of perversity? (iv) Whether Ld. CIT(A) has erred in law and on facts by determining the credit spread at 500 basis points, relying upon the guidelines issued by Reserve Bank of India for external commercial borrowing? (v) Whether Ld. CIT(A) has erred in law and on facts by ignoring the judgment of Hon'ble High Court?”
At the outset of the hearing, ld. AR of the assessee submitted that this issue is squarely covered by the decision of the ITAT in assessee’s own case in Revenue’s appeal being for AY 2011-12 order dated 11.07.2023. He pleaded that the issue and facts are identically similar to AY 2011-12 and accordingly, the order of ITAT dated 11.07.2023 may be followed and the appeal of the Revenue may be dismissed.
On the other hand, ld. DR of the Revenue did not controvert the aforesaid proposition.
Considered the rival submissions and material available on record. We observe that the issue involved in the present appeal is squarely covered by the decision of ITAT dated 11.07.2023 (supra) in assessee’s own case in favour of the assessee and against the Revenue. For the sake of brevity, we reproduce the order of the ITAT dated 11.07.2023 :- “10. We have heard both the parties and perused the material available on record. It is found that the issue involved in the Grounds of Appeal
have been decided by the Co-ordinate Bench of the Tribunal vide order dated 12/11/2015 for Assessment Year 2008-09 in and ITA No. 3887/Del/2013 and further the Tribunal vide order dated 13/10/2021 for the Assessment Year 2009-10 and 2010-11 in ITA No. 78/Del/2016 and ITA No. 79/Del/2016 decided the issue against the Revenue. The Co-ordinate Bench of the Tribunal for the Assessment Year 2010-11 in ITA No. 79/Del/2018 held as under:- “8. The Ld. AR submitted that the assessee claimed deduction u/s 80IB in respect of nine different projects as have been in para 6 at page 2 of the assessment order and are being reproduced below: - S.No. Name of the Project Amount of deduction
1. Omaxe Heights, Faridabad 2,44,93,489/- 2. Omaxe Riviera, Pant Nagar 8,77,12,124/- 3. Omaxe City, Palwal 1,01,45,152/- 4. Omaxe City, Jaipur 12,40,19,747/- 5. Omaxe City, Mangaliya 1,37,14,812/- 6. North Avenue, Bahadurgah 1,50,71,498/- 7. Omaxe City, Patiala 18,13,04,205/- 8. Omaxe City, Chakkan, Baddi 15,191/-
9. Omaxe City, Bhiwadi-1 11,25,17,254/- Total 56,89,93,472/- The CIT(A) adjudicated the appeal and his findings are in para 6 starting from page 79 of his order. It has been observed by the CIT(A) that all projects undertaken by the respondent company in this year are the same except the project "Omaxe City Bhiwadi-1” on which deduction was claimed at Rs. 11,25,17,254/-. The CIT(A) in para 5.3 at page 89 has concluded as under: - “It may be mentioned that, the above findings are in respect of all projects covered during the year except Bhiwadi-1.1 have examined the facts of Bhiwadi-1 project. This project fall under the category of plotted colony where in some cases only sites are sold and some cases villas are sold. This project is similar to “Omaxe City, Jaipur” Therefore, deduction u/s 80IB(1)) in this project will be allowed as per my direction in respect of Omaxe City, Jaipur, Following my earlier decision for A/Y 2008-09, I direct the assessing officer to allow deduction u/s 80IB(10) in similar manner as provided in that order for all projects. Accordingly, these grounds of appeal are partly allowed. ” In respect of project at Bhiwadi-1, the relevant documents relating to the said project have been filed along with copy of Auditors Report, copy of statutory approvals and copy of completion certificate by the Assessee at the time of assessment proceedings. A chart showing the ultimate deduction allowed by the CIT(A) in respect of various projects is as under: - The CIT(A), while deciding the appeal, relied upon the appellate order for A.Y. 2008-09 decided by the same CIT(A) in the case of the assessee company. Appeal for A.Y. 2008-09 against the order of CIT(A) has already been decided by the Income Tax Appellate Tribunal, New Delhi in and 3887/Del/2013 vide order dated 12.11.2015. The findings of the Tribunal have been recorded in para 12.18 at page 34 of the order. Thus, Ground No. 1 to Ground No. 9 of Revenue’s appeal are covered in favour of the assessee. Thus, in nutshell, the Ld. AR submitted that the issue in principal regarding claim of deduction u/s 80IB is covered by the earlier decision of the Tribunal for A.Y. 2008-09. As already submitted above, except the project at Omaxe City, Bhiwandi-1, all other projects were there even during A.Y. 2008- 09 and as regards projects at Omaxe City, Bhiwandi-1, the facts are absolutely identical to the facts of the other projects on which deduction has already been allowed. In respect of Omaxe City, Bhiwandi-1, also deduction has been allowed separately in as much as where there were on the plots, no deduction has been allowed and where there were constructed flats, deduction has been allowed.
The Ld. AR further submitted that the Revenue has raised additional ground of appeal agitating the issue relief allowed by the CIT(A) on ground of adjustments made in transfer pricing. The Ld. AR submitted that Omaxe set up Rohtas Holdings (Gulf) Ltd. in UAE during FY 2008-09 and entered into a MOU dated 4th June 2009 with Rohtas Holdings (Gulf) Ltd and Golden Crescent Redd & General Trading Ltd, Dubai to the effect that a project was to be undertaken in the company on behalf of Omaxe Limited and Omaxe Limited will provide funds for the same. Thus, a sum of AED 44.5 million was paid towards the first installment for the purchase of the land. Total payment of AED 45 million was made to Rohtas Holdings (Gulf) Ltd out of which AED 0.5 million was toward share capital. As per the MOU Omaxe Limited had agreed to receive interest at LIBOR + 300 basis points after 3 years or commencement of the development activities, whichever is earlier. The matter was referred to the Transfer Pricing Officer who treated this as an international transaction and while benchmarking this transaction, he treated these as Indian Rupee loans and took the prevailing interest rates of 12 percent to make an adjustment to the income of the assessee. The assessee raised various grounds of appeal
before the CIT(Appeal). The CIT (Appeal) vide order dated 17.09.2015 at para 7.3 for both A.Ys. 2009-10 and 2010-11 decided the matter with the following findings: "Having held that interest on such loan to AE needs to be determined at Arm’s length price, I do not agree with the finding of the Ld. TPO that benchmarking of interest has to be done keeping in view opportunity cost in India being source country. The benchmarking of the interest has to be done on the basis of application of funds and the currency of loan rather than source funds. On this issue I rely on various judicial pronouncements reported as under: Siva Industries and Holdings Ltd. vs ACIT [ITA No. 2148/Mds/2148] Tata Autocomp Systems Ltd vs ACIT [ITA No. 7354/Mum/2011] Four Soft Ltd. vs DICT 142 TTJ 338 DCIT vs Tech Mahindra Ltd [46 SOT 141 Mum] Tricorn India Ltd. vs ITO [ITA No. 332/Mu m/2014] Aurino Solutions Ltd [ita no. 7872/Mum/2011] Hinduja Global Solutions Ltd vs ACIT [ITA No. 254/Mum/2013] Cotton Natural India Private Limited [TS -304-lTAT-201(DEL)-TP] The decision in the case of cotton natural India private Limited has been affirmed by Hon’ble High Court of Delhi reported at 2015 (1/108 DTR(DEL)1) where it has been held that currency in which loan is to be repaid normally determines the rate of return on the money lent. Loan being given in US Dollars therefore, Indian rate of corporate bonds or PLR of SBI would not be applicable. In the present case also, the loan is to be repaid in USD, therefore, LIBOR rate should be applicable and not the Indian Rate of interest not consider the risk involve as AE being startup company in my view the LIBOR rate should be increased to 500 basis points as per the ECB guidelines of the RBI as the loan given to the AE is for a longer period. Considering the entire facts and circumstances of the case I hereby direct the AO/TPO to charge interest rate at the rate of LIBOR+5 percent on the loan advanced to its AE and delete the balance interest. Accordingly, these grounds of appeal are partly allowed.”
10. Against the said finding the assessee had filed an appeal on the ground that the rate should be restricted to LIBOR. However, the assessee has already availed the benefit under the Vivaad Se Vishvaas Scheme and therefore the ground of the assessee was no longer contested by the assessee. However, against the order of the CIT (Appeals), the Revenue has filed additional grounds. Assessment Year 2010-11 11. The return of income for A.Y. 2010-11 was filed on 13.10.2010 declaring income at income at Rs. 23,01,19,070/- under the normal provisions of the Act. However, book profits at Rs. 79,06,38,634/- were reported u/s 115JB of the Act. Assessment order was passed on 26.05.2014 computing total income at Rs. 75,90,04,900/-. The assessee company had claimed deduction u/s 80IB at Rs. 45,10,61,542/- which was disallowed. In addition to this, deduction of Rs. 7,78,24,252/- was made on account of transfer pricing adjustment. The CIT(A) vide his order dated 17.09.2015, allowed relief u/s 80IB to the extent of Rs. 4,42,27,627/-. The assessee claimed deduction u/s 80IB in respect of ten different projects as have been in para 3 at page 2 of the assessment order and are being reproduced below: - S.No. Name of the Project Amount of deduction 1 Omaxe Heights, Faridabad 4,75,63,294/- 2 Omaxe City, Palwal 1,69,71,062/- 3 Omaxe City, Jaipur 6,47,64,166/- 4 Omaxe City, Manyakhedi 2,48,50,809/- 5 Omaxe City, Manyakhedi 11,67,263/- 6 North Avenue, Bahadurgah 12,86,063/- 7 Omaxe City, Patiala 17,76,30,561/- 8 Omaxe City, Chakkan, Baddi 1,06,67,039/- 9 Omaxe City, Bhiwadi-1 5,39,82,674/- 10 Omaxe City, Bhiwadi-2 5,21,78,612/- Total 45,10,61,542/- Facts in this year are also absolutely identical to the facts of the earlier years. The only new project during the year under appeal was Omaxe City, Bhiwadi-2 on which deduction was claimed at Rs. 5,21,78,612/- which was disallowed by the Assessing Officer and upheld by the CIT(A). Thus, claim of deduction u/s 80IB in respect of Omaxe City, Bhiwadi-2 is also not in dispute before the Tribunal. A list showing the amount of deduction disallowed by the Assessing Officer and amount of deduction allowed by the CIT(A) is reproduced as under:-
12. As regards adjustment made on account of transfer pricing, the Department has not raised any ground agitating the order of the Learned Commissioner of Income Tax (Appeals). Otherwise also, facts of the A/Y 2010-11 are absolutely identical to the facts of A/Y 2009-10. Thus, the Ld. AR prayed that the appeals filed by the Department deserved to be dismissed as the issue relating to claim of deduction u/s 80!B is fully covered by the earlier decision of the Tribunal. As regards the contentions raised by the Revenue are concerned, the Ld. AR took support of the order of the TPO, the assessment order and the order of the CIT(A).
We have heard both the parties and perused the material available on record. As regards to Ground No. 1 to 9 of the Revenue’s appeal, it is pertinent to note that the CIT(A) relied upon the order for A.Y. 2008-09 decided by the same CIT(A) in the case of the assessee company. Appeal for A.Y. 2008-09 against the order of CIT(A) has already been decided by the Tribunal, New Delhi in and 3887/Del/2013 vide order dated 12.11.2015. The findings of the Tribunal have been recorded in para 12.18 at page 34 of the order. Thus, Ground No. 1 to Ground No. 9 of Revenue’s appeal are dismissed. As regards additional grounds in Assessment Year 2009-10 relating to the issue of LIBOR + 100 or 200 is concerned, the issue was settled by the assessee before the Income Tax Authorities thereby filing application under “Vivad Se Vishwas Scheme”. Besides this, the CIT(A) has directed the AO/TPO to charge interest rate at the rate of LIBOR+5% on the loan advanced to its AE and delete the balance interest. There is no need to interfere with the said directions. Therefore, additional grounds taken by the Revenue are dismissed. Hence, is dismissed.
As regards appeal for Assessment Year 2010-11, the facts in this year are identical to the facts of the earlier Assessment Years which was decided by the Tribunal in & ITA No. 3887/del/2013 for Assessment Year 2008-09 as well as ITA Nos. 5373, 4031 & 4032(Assessment Years 2007-08, 2008-09 & 2009-10) order dated 12/11/2015 in favour of the assessee. The new project during the year under appeal was Omaxe City Bhewadi-2 on which deduction was claimed at Rs.5,21,78,612/-. The claim of deduction u/s 80IB in respect of Omaxe City, Bhiwadi-2 was never disputed by the Revenue. There was no distinguishing facts brought out by the Revenue either in assessment order or in the order of the CIT(A). Thus, Ground No. 1 to 9 of Revenue’s appeal are dismissed. As regards additional grounds in Assessment Year 2010-11 relating to the issue of LIBOR + 100 or 200 is concerned, the issue was settled by the assessee before the Income Tax Authorities thereby filing application under “Vivad Se Vishwas Scheme”. Besides this, the CIT(A) has directed the AO/TPO to charge interest rate at the rate of LIBOR+5% on the loan advanced to its AE and delete the balance interest. There is no need to interfere with the said directions. Therefore, additional grounds taken by the Revenue are dismissed. Therefore, ITA No. 79/Del/2016 is dismissed.”
By respectfully following the order in made in Assessee’s own case in Assessment Year 2008-09, 2009-10 and 2010-11 (supra) the grounds of appeal of the Revenue are dismissed.”
5. Respectfully following the decision of the coordinate Bench, we dismiss the grounds raised by the Revenue.
6. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on this 24th day of October, 2025.