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2023 (10) TMI 1319 - AT - Income TaxDeduction u/s 80IB(10) - Assessee allotted more than one residential unit of his housing project to an individual - CIT(A) allowed deduction - HELD THAT - It is the claim of the assessee that he had as regards the aforesaid property, viz. Flat No. A-102 executed the agreement to sell in favor of Shri Mahendra Sethiya, HUF, but the same, in our considered view, would not take his case beyond the realm of the infraction contemplated in clause (f) of sub-Section (10) of Section 80IB. Thus for the reason that as Smt. Usha Basant Sethiya (individual ) vide a registered deed executed in her favor by the assessee got vested with both the rights and title as that of an allottee for Flat No.A-102; therefore, there is no merit in the claim of the assessee that he had transferred the said property to Shri Mahendra Sethiya, HUF. Also, the claim of the Ld. AR that HUF, had signed as a consenting party in the aforesaid registered deed executed by the assessee in favor of Smt. Usha Basant Sethiya (supra) would by no means come to his rescue. Our conviction that the aforesaid property, viz. Flat No. A-102 was allotted by the assessee to Smt. Usha Basant Sethiya (supra) can also be gathered from the fact that the profit/income accruing on the transfer of the same had been recognized by the assessee only pursuant to the execution of the aforesaid registered sale deed by him. We are unable to bring ourselves to agree with the view taken by the CIT(Appeals), who held a conviction that as Smt. Usha Basant Sethiya (supra) was neither Karta nor a member of Mahendra Sethiya, HUF; therefore, the assessee had carried out independent sale transactions of. Flat No. A-101 A-102 to two different entities. We, thus, set aside the order of the CIT(Appeals) to the extent he had vacated the disallowance u/s. 80IB(10) Flat No. A-101 and A-102 sold by the assessee to one individual, viz. Smt. Usha Basant Sethiya (supra). Decided in favor of revenue, partly.
Issues Involved:
1. Deletion of disallowance of Rs. 2,36,00,651/- claimed by the assessee under section 80IB(10) of the IT Act, 1961. 2. Any other ground which may be adduced at the time of hearing. Summary: Issue 1: Deletion of disallowance of Rs. 2,36,00,651/- claimed by the assessee under section 80IB(10) of the IT Act, 1961 The assessee, a builder, had filed his return of income for A.Y. 2013-14, declaring an income of Rs. 2,02,97,950/-. During the assessment proceedings, the Assessing Officer (A.O.) observed that the assessee had sold two flats, Flat No. "A-101" and Flat No. "A-102" to Smt. Usha Basant Sethia. The A.O. noted that despite the assessee's claim that Flat No. "A-102" was sold to Shri Mahendra Kumar Sethia, HUF, the registered sale deed indicated it was sold to Smt. Usha Basant Sethia. Consequently, the A.O. disallowed the entire claim for deduction u/s 80IB(10) amounting to Rs. 2,36,00,651/- on the grounds that more than one residential unit was allotted to an individual. The Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, found favor with the assessee's claim that Flat No. "A-102" was initially allotted to Shri Mahendra Sethiya, HUF, and subsequently transferred to Smt. Usha Basant Sethia at the request of Shri Mahendra Sethiya, HUF. The CIT(A) concluded that Smt. Usha Basant Sethia and Mahendra Sethiya, HUF, were distinct legal entities and thus allowed the assessee's appeal. The Revenue, aggrieved by this decision, appealed to the ITAT. ITAT's Decision: The ITAT examined the issue and found substance in the assessee's claim, referencing the Hon'ble Supreme Court's judgment in CIT Vs. Shreenath Buildcon (2019) and CIT Vs. Sarkar Builders (2015), which held that violation attributable to some residential units does not justify denying the entire claim for deduction u/s 80IB(10). The ITAT concurred with the CIT(A)'s decision to allow the assessee's claim for deduction, as the sale of Flat No. "A-102" to Smt. Usha Basant Sethia was a subsequent transaction and did not constitute a violation of Section 80IB(10). However, the ITAT did not agree with the CIT(A)'s view that the sale of Flat No. "A-102" to Smt. Usha Basant Sethia did not violate the provisions of Section 80IB(10). The ITAT held that the registered sale deed executed in favor of Smt. Usha Basant Sethia vested her with the rights and title of an allottee for Flat No. "A-102", thus constituting a violation of clause (f) of sub-section (10) of Section 80IB. Issue 2: Any other ground which may be adduced at the time of hearing This ground was dismissed as not pressed. Conclusion: The appeal of the revenue was partly allowed, with the ITAT setting aside the CIT(A)'s order to the extent it vacated the disallowance u/s 80IB(10) concerning Flat No. "A-101" and "A-102" sold to Smt. Usha Basant Sethia. The order was pronounced in open court on 27th October 2023.
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