SHAMBHU PROPERTIES ,,PUNE vs. INCOME-TAX OFFICER, WARD - 12(2),, PUNE

This appeal by the assessee against the order dated 22-01-2018 passed by the Commissioner of Income Tax (Appeals)-13, Pune [„CIT(A)‟] for assessment year 2014-15.

The only issue is to be decided is as to whether the CIT(A) justified in denying deduction u/s. 80IB(10) of the Act in respect of sale of one flat in „B‟ Wing in the facts and circumstances of the case.

The brief facts as emanating from the record are that the assessee is a partnership firm engaged in the business of promoters, builders and contractor. The assessee filed its return of income declaring total income at Nil. In the scrutiny assessment proceedings, the AO issued notices u/s. 143(2) and 142(1) of the Act and determined the income of the assessee at Rs.75,87,219/- by denying claim of deduction u/s. 80IB(10) of the Act. The CIT(A) by placing reliance on the decision of this Tribunal held the assessee is entitled to proportionate deduction u/s. 80IB(10) of the Act to „A‟ Wing and denied deduction to „B‟ Wing. Having aggrieved for denial of deduction to sale of one flat in „B‟ Wing, the assessee is before us.

Heard both the parties and perused the material available on record. We note that the Pune Municipal Corporation sanctioned building construction for 48 flats in „A‟ Wing and 20 flats in „B‟ Wing. The assessee named said project as „Twin Nest‟ consisting of above said „A‟ and „B‟ Wings which are separate projects vide approval dated 27-03-2006 by the Pune Municipal Corporation. According to the AO, the said project requires to be completed within 5 years from the date of approval i.e. on or before 31- 03-2011 in order to be eligible for claimed u/s. 80IB(10) of the Act. We note that the Pune Municipal Corporation issued Completion Certificate Part-1 in respect of 47 flats in „A‟ Wing and 16 flats in „B‟ Wing vide order dated 23-03-2011 which is on record at Page No. 132 of the paper book. In the year under consideration, the assessee sold Flat No. 904 in 9th floor and Flat No. 1001 in 10th floor in „A‟ Wing. Further, the assessee also sold Flat No. 002 in „B‟ Wing. The assessee claimed proportionate deduction against these three flats u/s. 80IB(10) of the Act. On perusal of the completion certificate Part-1 at Page No. 132 of the paper book, we find that regarding these three flats, the Pune Municipal Corporation issued completion certificate in 2011. The ld. AR, Shri B.D. Bhide submits that the assessee earned profit on the sale of above said three flats and are covered by the completion certificate Part-1 issued by the Pune Municipal Corporation, without considering the same, the AO denied deduction u/s. 80IB(10) of the Act by holding the assessee has not satisfied the condition laid down u/s. 80IB(10)(a) of the Act and denied deduction concerning the above said three flats. He further submits that the CIT(A) in principle agreed that the assessee is entitled to proportionate deduction concerning the sale of flats in the year under consideration and allowed deduction to „A‟ Wing, but denied such allowance to „B‟ Wing. The ld. DR, Shri Vitthal Bhosale relied on the order of AO and argued the provisions u/s. 80IB(10) of the Act explains, the deduction is available, if the housing project is completed within 5 years from the date of sanction of approval for project construction. The assessee did not satisfy the condition as contemplated under the provisions of section 80IB(10) of the Act. We note that the CIT(A) held the project in „B‟ Wing is incomplete and denied deduction in respect of profits earned on Flat No. 002 in „B‟ Wing. On perusal of the Completion Certificate Part-1 which clearly shows the Completion Certificate issued for Flat No. 002 in „B‟ Wing and there is no dispute regarding this by bringing contrary evidence to that effect. Therefore, in our opinion, the assessee is entitled to claim deduction u/s. 80IB(10) of the Act in respect of sale proceeds of Flat No. 002 in „B‟ Wing.