2021 (7) TMI 896 - AT - Income Tax

Allowability of claim of deduction u/s 80IB(10) - proportionate deduction - flats whose built up area exceeded area prescribed limit of 1000 sq. fit.- CIT held, that assessee was eligible for proportionate deduction u/s 80IB(10) of the Act in respect of 70 flats out of the 106 flats sold during the year under consideration - HELD THAT - We find that CIT(A) while deciding the issue in favour of the assessee had noted that the facts in the year under consideration were identical to that of A.Y. 2008-09 2009-10. We find that against the order of CIT(A) for A.Y. 2008-09 2009-10, the Revenue had carried the matter before the Tribunal. The Co-ordinate Bench of Tribunal in 2016 (5) TMI 1555 - ITAT DELHI and vice versa, vide order dated 30.05.2016, had dismissed the appeal of Revenue. Before us, the Learned DR could not point out any fallacy in the findings of CIT(A). In such a situation, we find no reason to interfere with the order of CIT(A). Thus the grounds of Revenue are dismissed.

Summary

Issues involved:
1. Allowability of claim of deduction u/s 80IB(10) of the Act.
2. Method of accounting followed by the assessee.
3. Compliance with conditions under Section 80IB(10) for deduction.
4. Appeal against the order of CIT(A) by the Revenue.

Detailed Analysis:
1. Allowability of claim of deduction u/s 80IB(10) of the Act:
The case involved a dispute regarding the allowability of a deduction claimed by the assessee u/s 80IB(10) of the Income Tax Act. The Revenue contended that the conditions for claiming the deduction were not met by the assessee. The AO denied the claim based on various grounds, including the size of residential units exceeding the permissible limit and the commercial area exceeding the prescribed limit. However, the CIT(A) found in favor of the assessee, allowing proportionate deduction for certain flats and determining compliance with the conditions under Section 80IB(10). The Tribunal upheld the CIT(A)'s decision, noting that similar issues had been decided in favor of the assessee in previous years and dismissing the Revenue's appeal.

2. Method of accounting followed by the assessee:
The AO observed that the assessee followed the project completion method as its accounting policy, recognizing sales only after the registration of sale deeds with the local authority. The AO raised concerns about the distortion in profits calculated using this method, as it differed from the percentage of completion method used in earlier assessments. The AO adjusted the taxable profit for the year based on his calculations, considering the ongoing dispute regarding the accounting method. The CIT(A), however, directed the AO to accept the method of accounting consistently followed by the assessee, leading to a disagreement between the AO and the CIT(A) on this issue.

3. Compliance with conditions under Section 80IB(10) for deduction:
The dispute also revolved around the compliance of the assessee with the conditions stipulated under Section 80IB(10) for claiming the deduction. The AO raised objections regarding the size of residential units, the approval status of the project, and the commercial area exceeding the permissible limit. The CIT(A, however, found that the assessee had met the conditions under Section 80IB(10) and was eligible for the deduction on a proportionate basis for certain flats. The Tribunal upheld the CIT(A)'s decision, emphasizing the consistency in previous rulings and dismissing the Revenue's appeal.

4. Appeal against the order of CIT(A) by the Revenue:
The Revenue, dissatisfied with the CIT(A)'s order granting relief to the assessee, filed an appeal before the Tribunal. The Revenue raised multiple grounds challenging the CIT(A)'s decision, including the method of accounting, compliance with Section 80IB(10) conditions, and the overall legality of the CIT(A)'s order. However, the Tribunal, after considering the arguments presented by the Revenue, upheld the CIT(A)'s decision, citing consistency in previous rulings and finding no fault in the CIT(A)'s findings. Consequently, the Tribunal dismissed the appeal of the Revenue, affirming the order in favor of the assessee.