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Income Tax Appellate Tribunal, RAIPUR BENCH :: RAIPUR
Before: SHRI RAVISH SOOD & DR. DIPAK P. RIPOTE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the Revenue & Cross Appeal by Assessee against the order of ld.CIT(A)-Raipur dated 08.12.2016, emanating from order of the Assessing Officer dated 31.03.2015 & C.O.No.07/RPR/2017 M/s.Karshan Bhai & Brothers passed under section 143(3) of the Act for the A.Y. 2012-13. The Revenue has raised the following grounds of appeal: 1. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs.3,86,70,490/- made by the AO u/s80IB(10) of the Income Tax Act, 1961 when it was established by the AO that there is clear violation of the legal provisions under section 80IB(10) of the I. T. Act?”.
2. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in giving a finding that there is no violation of the legal provisions u/s80IB(10) of the Act, in the absence of report in Form No.10CCB?”.
3. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) having the concurrent powers of the AO u/s250(4) of the Act, was justified in ignoring the violations of section 80IB(10)(c) and section 80IB(10)(f) of the Act, in the process of ongoing sale of several flats in this housing project by the assessee, which is developing and building housing projects as a going concern over the years?”.
4. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in giving a finding which is contrary to the evidence brought on record by the AO, as the ld CIT(A) has accepted that there is no violation of section 80IB(10) of the Act, which is factually incorrect, thereby rendering the decision, which is perverse?”.
Brief facts of the case: In the assessment order the Assessing Officer(AO) has disallowed assessee’s claim of deduction under & C.O.No.07/RPR/2017 M/s.Karshan Bhai & Brothers section 80IB(10) of the Act on the ground that assessee has violated conditions mentioned in section 80IB(10)(d) and (f) of the Act. The AO had deputed Inspector to verify the facts. According to the AO, certain flats are more than 1500 sq.ft and two flats have been sold to one individual and his family member. Therefore, according to the AO, it was violation of 80IB(10)(f).
2.1 Aggrieved by the same, the assessee filed appeal before the ld.CIT(A). The ld.CIT(A) has observed that flat no.G01A and G01B has been sold to Shri Kamal Kishore Agrawal and Smt. Rekha Agrawal. The ld.CIT(A) has also mentioned that there is only one kitchen for these two flats. However, the ld.CIT(A) held that total area of these two flats together is less than 1500 sq.ft, but according to the AO, the total area of these two flats together is 1480 s.ft + 620 sq.ft i.e. 2100 sq.feet.
Aggrieved by the order of the ld.CIT(A), the Revenue filed appeal before this Tribunal.
The ld.Authorised Representative(ld.AR) of the assessee filed a paper book along with additional evidence in the form of affidavit of the partner of the firm to claim that size of the units is less than 1500 sq.ft. Also the ld.AR filed plan for the Block-B. The relevant part of the submission of the ld.AR as under: & C.O.No.07/RPR/2017 M/s.Karshan Bhai & Brothers
It is most humbly submitted that the 2nd paper book has been “3. filed on the directions of Hon’ble Tribunal. During the last hearing, Hon’ble Tribunal had directed to submit copy of sale deed of the flat at ground floor and the map attached thereto, in respect of which the AO has observed in the assessment order that more than one residential unit has been sold by the assessee to the same family.
Apart from this, in the 2nd paper book, the assessee has also 4. submitted certain details and evidences in respect of the area comprised in 6th floor of B block of the residential building constructed by the assessee. During the last hearing, for the first time, Id. DR had raised the issue that in the B block of the residential building, the built up area of the flats is more than 1500 sq. ft. and such argument was advanced on the basis of the layout approved by the Town & Country Planning department. To clarify this issue, evidences were directed to be filed which have been submitted in 2nd paper book.
5. It is most humbly submitted that page no. 60, 96 to 100 are additional evidences, which have been filed to substantiate that there were four flats in B block of 6th floor and not two flats, as has been claimed by the Department. It is most humbly submitted that the issue as to whether there were two flats or four flats constructed in the B block of 6th floor has been taken up for the first time before Hon’ble Tribunal and therefore, the evidence in support of there being four flats on the 6th floor have been submitted as additional evidence. Since the issue was not raised by the AO or Id. CIT(A), these evidences could not be submitted before them. It is most humbly and respectfully submitted that these may kindly be admitted as additional evidence under Rule 29 of ITAT Rules, 1963.”
& C.O.No.07/RPR/2017 M/s.Karshan Bhai & Brothers
The ld.Departmental Represntative(ld.DR) for the Revenue submitted that as per the lay out plan, size of the flats in Blcok-B is more than 1500 sq.ft. And also the ld.DR submitted that the plan for BG01A & G01B was in page no.10 of the paper book. He explained that the entire flat as appearing on page 10 of the paper book is one, though assessee claims it as two flats, because there is only one kitchen. This flat has independent lawn attached to the flats and there is only one entrance for these so-called two flats. Therefore, the ld.DR stated that the size of these two units if taken together is more than 1500 sq.ft. The ld.DR also argued that since the lawn is exclusively attached to the flat, it shall be taken as part of the flat while calculating built-up area as its projections. These two flats have been sold to Agrawal Family.
We have heard both the parties and perused the records. It is a fact that assessee has claimed deduction under section 80IB(10) for the project called Karsan Tower. It is apparently observed from the lay out plan of flat no.G01A & G01B which is attached at page no.10 of the paper book, that assessee claimed these two as separate flats, but it is observed that there is only one kitchen and there is only one entrance and it is also observed that the lawn is exclusive for the said unit. The assessee has submitted a copy of the sale deed in the paper book at page no. 62 to 92 for unit no.G01A and G01B. On perusal of & C.O.No.07/RPR/2017 M/s.Karshan Bhai & Brothers the same, it is observed that G01A has been sold to Shri Kamal Kishore Agrawal and Smt. Rekha Agrawal jointly vide sale deed dated 23.05.2011. Similarly, flat no.G01B having area 620 sq.ft has been sold vide sale deed dated 23.05.2011 jointly to Shri Kamal Kishore Agrawal and Smt. Rekha Agrawal. Thus, both these flats as per registered sale deed have been sold jointly to Shri Kamal Kishore Agrawal and Smt. Rekha Agrawal on the same day i.e. 23.05.2011. We have already observed that there is only one kitchen and only one entrance for these so-called two separate units. However, in the agreement, the area mentioned is super built-up area, therefore, AO is directed to verify from the Municipal Authorities the total build-up area of these two flats together. If it is more than 1500 sq.ft, then assessee has violated section 80IB10(f).
During the pleadings, the ld.DR also claimed that there are flats more than 1500sq.ft in the Tower-B for which assessee has submitted lay out plan in the paper book. Since this is an additional evidence and it has not been verified by the AO, it is set-aside to the Assessing Officer for denovo verification. The AO shall verify after giving opportunity of being heard to the assessee.
The ld.AR pleaded that even if there is any violation in the form of area being more than 1500 sq.ft, then deduction under & C.O.No.07/RPR/2017 M/s.Karshan Bhai & Brothers section 80IB(10) should have been allowed excluding this excess units at pro-rata basis. We agree with the contention of the ld.AR. It has already been certified by the AO that assessee’s project has fulfilled other basic criteria like date of completion, date of starting the project, therefore, if AO finds that certain units are more than 1500 sq.ft and there is violation of section 80IB(10)(d)(f) then the AO shall re-calculate the disallowance under section 80IB(10) of pro-rata basis. Accordingly, grounds raised by the Revenue are Partly Allowed for Statistical Purpose.
In the result, appeal of the Revenue is Partly Allowed for Statistical Purpose. Cross Objection No:07/RPR/2017 (by Assessee): 10. Since the quantum appeal in issue of the Revenue has decided above paras i.e.para 8 & 9, therefore, this Cross Objection Appeal No.07/RPR/2017 of the Assessee also Partly Allowed for Statistical Purposes.