2021 (7) TMI 104 - AT - Income Tax

Denial of deduction u/s 80IB(10) on certain on-money received by the assessee which was also declared as income - HELD THAT - The assessee received a sum as on-money which was not declared in the books of account but offered as additional income during the course of survey in respect of its otherwise eligible housing project. The said money was duly accounted for in the total income at the time of filing of the return - when the issue of allowing the deduction cropped up, the AO came to hold that the said amount could not be considered as business income as the buyers denied having given such on-money. We are at loss to comprehend as to how the sum admittedly received as on-money on the booking of flats, can be construed as not arising from the same source when the question of granting deduction u/s 80IB(10) thereon surfaced. The doctrine of approbate and reprobate does not allow the Department to blow hot and cold in the same breath, thereby accepting one consequence arising from the statement of the assessee while rejecting the other one. When the assessee made a surrender with the clear backdrop of having received 'on money and the Revenue accepted the same while including it in the total income, it cannot later on claim that no deduction u/s 80IB(10) can be granted on the same as the assessee failed to prove that the flat bookers gave such on-money. If we accept the view point of the Revenue that source of the income is unexplained and does not pertain to the housing project, then, in the given facts, when there is no positive material other than the assessee s statement of receiving such an amount as 'on money , then there is no income in the first instance calling for its inclusion in the total income. Once it is agreed to be 'on-money from the flats-bookings at the time of its inclusion in the total income, a fortiori, such an income, being from sale of flats albeit received as on-money, qualifies for the deduction as well. We, therefore, overturn the impugned order on this score and order to allow deduction u/s 80IB(10) on such amount. - Decided in favour of assessee.

Summary

Issues:
Denial of deduction u/s 80IB(10) on on-money received by the assessee.

Analysis:
The appeal pertains to the denial of deduction u/s 80IB(10) of the Income-tax Act, 1961 concerning on-money received by the assessee, which was also declared as income. The assessee, a builder, promoter, and developer, received on-money amounting to ?5.57 crores on flat bookings during a survey. Initially, this amount was not recorded in the books of account but was later offered for taxation. The assessee filed a revised return claiming deduction u/s 80IB(10) amounting to ?5,27,70,356, which was not claimed initially. The Assessing Officer (AO) requested details of the on-money and the persons involved, which the assessee provided. However, the AO concluded that the assessee failed to prove the on-money receipts were related to flat bookings, thus denying the deduction. The CIT(A) upheld this decision, leading the assessee to appeal to the Tribunal.

Upon review, the Tribunal found that the denial of the deduction was solely based on the inability to prove the income source as flat sales. The Tribunal examined the statement of the assessee during the survey, where the assessee acknowledged the on-money receipts. The Tribunal noted that the on-money was declared as additional income and accounted for during the return filing. Rejecting the Revenue's stance that the source of income was unexplained, the Tribunal emphasized that the on-money, being received from flat bookings, qualified for the deduction under section 80IB(10). The Tribunal invoked the doctrine of approbate and reprobate, highlighting the inconsistency in accepting the on-money as income but denying the deduction based on the same source. Consequently, the Tribunal overturned the previous decision and allowed the deduction u/s 80IB(10) on the on-money amount.

In conclusion, the Tribunal allowed the appeal, emphasizing that the on-money received by the assessee, acknowledged and included in the total income, qualified for deduction u/s 80IB(10) as it pertained to the sale of flats. The decision underscored the importance of consistency in tax assessments and the relevance of income sources in determining eligibility for deductions under the Income-tax Act, 1961.