2022 (9) TMI 342 - AT - Income Tax

Proportional deduction u/s.80IB(10) - profit on sale of excluding flats measuring more than 1500 sq. ft. limit when all the flats are forming part of a single project as per the provisions of Section 80IB(10) - HELD THAT - We find that the issue raised in the present appeal is no more res-integra and is squarely covered by the decision of the Hon ble Jurisdictional High Court in assessee s own case 2017 (11) TMI 1999 - CHHATTISGARH HIGH COURT We find that the Hon ble Supreme Court in the case of Commissioner of Income Tax V. Shreenath Buildcon 2018 (12) TMI 1723 - SC ORDER had held, that where the constructed area of some residential units exceeded the specified built up area of 1500 sq. ft, then, deduction claimed could not be denied in respect of the entire housing project. We, thus, in terms of our aforesaid observations finding no infirmity in the view taken by CIT(Appeals) who had rightly directed the A.O to restrict the disallowance of the assessee s claim for deduction u/s 80IB(10) proportionately in respect of allotment of sales transactions which do not comply with the conditions of section 80IB(10) and, allow the remaining deduction as claimed by the assessee, thus, uphold the same. Thus, the grounds of appeal raised by the department are dismissed in terms of our aforesaid observations. Appeal of the department is dismissed

Summary

Issues:
1. Interpretation of deduction under Sec. 80IB(10) of the Income-tax Act, 1961.
2. Application of legal precedents in determining eligibility for deduction.
3. Compliance with conditions under Section 80IB(10) by the assessee.
4. Justification of proportionate disallowance under Section 80IB(10).
5. Adherence to legal provisions and judicial pronouncements.

Analysis:

1. The appeal concerned the eligibility of the assessee for deduction under Sec. 80IB(10) of the Income-tax Act, 1961. The department contested the CIT(A)'s decision to allow deduction proportionately concerning profits from flats exceeding 1500 sq. ft. in a single project. The issue revolved around the interpretation of Section 80IB(10) in the context of a housing project developed by the assessee.

2. The department raised a second issue regarding the application of legal precedents, specifically questioning the ITAT's decision in light of a judgment by the Hon'ble Apex Court in Novopan India Ltd. vs. CCE. The department argued that the ITAT's findings contradicted the legal principles established by the Apex Court, necessitating a review of the decision.

3. Compliance with the conditions under Section 80IB(10) by the assessee was a crucial aspect of the case. The department highlighted violations of Section 80IB(10)(c), (e), and (f) by the assessee during the ongoing sale of flats in the housing project. The contention was that these violations rendered the entire project ineligible for the deduction under Section 80IB(10).

4. The justification for proportionate disallowance under Section 80IB(10) was another key issue. The department argued for a proportionate disallowance based on the violations of the specified conditions, while the assessee sought to uphold the deduction claimed under Section 80IB(10) without any disallowance.

5. The final issue encompassed the adherence to legal provisions and judicial pronouncements in deciding the case. Both parties cited relevant judicial precedents to support their arguments. The ITAT relied on the decision of the Hon'ble Jurisdictional High Court and the Supreme Court to uphold the CIT(A)'s direction to restrict disallowance proportionately and allow the remaining deduction claimed by the assessee.

In conclusion, the ITAT upheld the CIT(A)'s decision, dismissing the department's appeal and affirming the proportionate disallowance of the assessee's claim for deduction under Section 80IB(10). The judgment emphasized the importance of complying with statutory provisions and judicial precedents in determining the eligibility for tax deductions in the context of housing projects.