2020 (10) TMI 29 - AT - Income Tax

Proportionate deduction u/s 80IB(10) - Valuation Officer reported the built-up area of the Bunglows / Row Houses are more than 1500 sq.ft - CIT-A allowed proportionate deduction - HELD THAT - Commissioner of Income Tax (Appeals) in his order discussed the issue taking the reference to the decision of this Tribunal in the case of M/s. D.S.Kulkarni Developers Ltd. 2014 (7) TMI 1166 - ITAT PUNE wherein we note that in the claim of the assessee therein, on proportionate basis was allowed relating to eligible units. Therefore, in the light of discussion made by us hereinabove and in view of the findings recorded by the learned Commissioner of Income Tax (Appeals), we are of the view that there is no infirmity in the order of learned Commissioner of Income Tax (Appeals) and it is justified. Thus, the only ground raised by the Revenue is dismissed.

Summary

Issues:
Whether the Commissioner of Income Tax (Appeals) was justified in allowing proportionate deduction u/s 80IB(10) for a partnership firm engaged in developing housing projects.

Analysis:
The appeal was filed by the Revenue against the order passed by the Commissioner of Income Tax (Appeals) for A.Y. 2011-12. The main issue to be decided was whether the Commissioner was correct in allowing proportionate deduction u/s 80IB(10) in the given circumstances. The assessee, a partnership firm developing housing projects, claimed a deduction of ?11,36,15,109 under section 80IB(10) of the Income Tax Act. The Assessing Officer referred the matter to the Valuation Officer to verify the claim, who reported that the built-up area of the Bungalows/Row Houses exceeded 1500 sq.ft. The Assessing Officer disallowed the deduction due to the violations in construction, adding the amount to the total income of the assessee.

Before the Commissioner of Income Tax (Appeals), the assessee raised an alternative plea for the deduction under section 80IB(10) related to eligible units. The Commissioner considered the submissions and previous Tribunal orders, allowing the proportionate deduction for eligible units but denying it for Bungalows/Row Houses exceeding 1500 sq.ft. The Commissioner relied on the decisions of the jurisdictional ITAT and ITAT Mumbai, supporting the pro-rata deduction for eligible units. The Commissioner's order was found justified based on the findings and discussions, leading to the dismissal of the Revenue's appeal.

In conclusion, the Tribunal upheld the Commissioner's decision, dismissing the Revenue's appeal and pronouncing the order on 28th September 2020.