DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1), RAIPUR, RAIPUR vs. SHRI RAKESH SARAOGI, RAIPUR

The present appeal filed by the revenue is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 06.02.2023, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 27.03.2016 for the assessment year 2013-14. The revenue has assailed the impugned order on the following grounds of appeal:

During the assessment proceedings, it was, inter alia, observed by the A.O. that the assessee had sold two flats, viz. (i) Flat No. “A-101”; and (ii) Flat No. “A-102” to Smt. Usha Basant Sethi. Although it was the claim of the assessee that it had sold Flat No. “A-102” to Shri Mahendra Kumar Sethia, HUF, but the A.O. observed that the claim was factually incorrect. The assessee had, based on an “Agreement to sell,” claimed that he had sold flat No.” A-102” to Shri Mahndra Sethiya, HUF, but 3 DCIT, Circle-1(1), Raipur Vs. Shri Rakesh Saraogi the same did not find favor with the A.O. On the basis of information that was shared with him by the ITO, Ward-4(3), Raipur, before whom the case of Smt. Usha Basant Sethia (supra) was fixed for scrutiny assessment; the A.O. observed that the assessee had vide a registered sale deed sold Flat No.A-102” to Smt. Usha Basant Sethia (supra). On the basis of the aforesaid facts, the A.O. called upon the assessee to explain that as he had allotted more than one residential unit of his housing project to an individual, i.e., Smt. Usha Basant Sethia (supra), therefore, why his claim for deduction u/s.80IB(10) of the Act may not be declined. As the reply filed by the assessee did not find favor with the A.O., he declined his entire amount of claim for deduction u/s 80IB(10) of the Act of Rs.2,36,00,651/-. Accordingly, the A.O. vide his order passed u/s. 143(3) dated 27.03.2016 determined the income of the assessee at Rs.4,38,98,600/-.

Aggrieved the assessee carried the matter in appeal before the CIT(Appeals). It was, inter alia, the claim of the assessee before the CIT(Appeals) that he had allotted Flat No. “A-102” to Shri Mahendra Sethiya, HUF, and not to Smt. Usha Basant Sethia (supra). Carrying his contention further, it was submitted by the assessee that as Shri Mahendra Sethiya, HUF had entered into a sale agreement for his Flat No. A-102 with Smt. Usha Basant Sethia (supra), therefore, it was only as per his request that he had accommodated him by executing a sale deed in the latter’s name. Referring to the fact that Smt. Usha Basant Sethiya (supra) was neither Karta of Shri Mahendra Sethiya, HUF, nor a member of the same; the CIT(Appeals) found favor with the claim of the assessee that he had not sold more

The Revenue, being aggrieved with the order of the CIT(Appeals), has carried the matter in appeal before us.

We have heard the ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions.

Shri R.B Doshi, Ld. Authorized Representative (for short ‘AR’) for the assessee at the threshold of hearing of the appeal submitted, that there was no 5 DCIT, Circle-1(1), Raipur Vs. Shri Rakesh Saraogi justification for the A.O to have declined the assessee’s claim for deduction u/s. 80IB(10) of the Act for the reason that he had allegedly sold more than one residential flat of his housing project to an individual. The Ld. AR, in support of his aforesaid claim, relied on the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Shreenath Buildcon (2019) 267 taxman. 115 (SC) and CIT Vs. Sarkar Builders (2015) 7 SCC 579. Also, support was drawn by the Ld. AR from the judgment of the Hon’ble High Court of Chhattisgarh in the case of M/s. Kuber Developers, Tax Case No.106-107, 112 of 2017, dated 06.11.2017, and that of the order of ITAT, Raipur, in the case of ACIT-1(1) Vs. M/s. Kuber Developers, dated 29.08.2022.

Apropos the declining of the assessee’s claim for deduction u/s.80IB(10)(f) with respect to Flat No. A-102, it was submitted by the Ld. AR that as the same was based on wrong facts, the CIT(Appeals) had rightly vacated the same. Elaborating on his aforesaid contention, it was averred by the Ld. AR that the assessee had executed an “Agreement to sell” for Flat No. A-102 with Shri Mahendra Sethiya, HUF. Carrying his contention further, the Ld. A.R. submitted that as the aforesaid property, viz. Flat No. A-102 was thereafter sold by Shri. Mahendra Sethiya, HUF to Shri Usha Basant Sethiya (supra), therefore, the said subsequent sale transaction could not have formed a basis for declining the assessee’s claim for deduction u/s.80IB(10) of the Act. The Ld. AR submitted that as Smt. Usha Basant Sethiya (supra) was neither Karta of Mahendra Sethiya, HUF, nor a member of the same; therefore, it was incorrect for the A.O to infer any violation by the assessee of the clause (f) of sub-

Per contra, the Ld. Departmental Representative (for short, ‘DR’) relied on the orders of the lower authorities.

After having given a thoughtful consideration to the issue in hand, we find that the issue raised in the present appeal is no more res-integra and is squarely covered by the decision of the Hon’ble Jurisdictional High Court in assessee’s own case (supra), wherein the Hon’ble High Court had held as under: “06/11/2017 1. Having perused the materials, we are satisfied that the learned Counsel for the Appellant-Revenue is justified in submitting that these appeals are covered as per the judgment of the Hon’ble supreme Court in Commissioner of Income Tax V. Sarkar Builders; (2015) 7 SCC 579 and therefore, these appeals may be permitted to be withdrawn.

Hence, these appeals are dismissed as withdrawn.”

We, thus, in terms of our aforesaid observations finding no infirmity in the view taken by the CIT(Appeals) who had rightly directed the A.O to restrict the disallowance of the assessee’s claim for deduction under Sec. 80IB(10) proportionately in respect of 8 DCIT, Circle-1(1), Raipur Vs. Shri Rakesh Saraogi

We, thus, in terms of our aforesaid observations, concur with the view taken by the CIT(Appeals), who had impliedly approved the claim of the assessee that there was no justification for the A.O to have declined the entire claim of deduction u/s.80IB(10) of the Act for the reason that he had sold more than one unit of his housing project to one individual.

Apropos, the claim of the assessee that he had not sold more than one residential unit to Smt. Usha Basant Sethiya (supra), we are unable to bring ourselves to agree with the said claim. Before proceeding any further, it would be relevant to cull out Section 80IB(10) of the Act, which reads as under (relevant extract):

Backed by the aforesaid mandate of law, we shall now look into the fact as to whether or not the assessee had violated the aforesaid statutory provision with respect to residential units sold to Smt. Usha Basant Sethiya (supra). As the assessee had vide, registered sale deed sold Flat No. A-102 to Smt. Usha Basant Sethiya (supra), therefore, it can safely be concluded that the residential unit in his housing project was allotted to the said person. Although, it is the claim of the assessee that he had as regards the aforesaid property, viz. Flat No. A-102 executed the agreement to sell in favor of Shri Mahendra Sethiya, HUF, but the same, in our considered view, would not take his case beyond the realm of the infraction contemplated in clause (f) of sub-Section (10) of Section 80IB of the Act. We, say so, for the reason that as Smt. Usha Basant Sethiya (supra) vide a registered deed executed in her favor by the assessee got vested with both the rights and title as that of an allottee for Flat No.A-102; therefore, there is no merit in the claim of the assessee that he had transferred the said property to Shri Mahendra Sethiya, HUF. Also, the claim of the Ld. AR that Mahendra Sethiya, HUF, had signed as a consenting party in the aforesaid registered deed executed by the assessee in favor of Smt. Usha Basant Sethiya (supra) would by no means come to his rescue. Our

Backed by our aforesaid observations, we are unable to bring ourselves to agree with the view taken by the CIT(Appeals), who held a conviction that as Smt. Usha Basant Sethiya (supra) was neither Karta nor a member of Mahendra Sethiya, HUF; therefore, the assessee had carried out independent sale transactions of. Flat No. “A-101” & “A-102” to two different entities. We, thus, in terms of our aforesaid deliberations, set aside the order of the CIT(Appeals) to the extent he had vacated the disallowance u/s.80IB(10) of the Act w.r.t the Flat No. “A-101” and A-102” sold by the assessee to one individual, viz. Smt. Usha Basant Sethiya (supra). Thus, the Ground of appeal No.1 raised by the revenue is partly allowed in terms of our aforesaid observations.

Ground of appeal No. 2, being general, is dismissed as not pressed.

In the result, the appeal of the revenue is partly allowed in terms of our aforesaid observations. Order pronounced in open court on 27th day of October, 2023. Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; �दनांक / Dated : 27th October, 2023