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2024 (6) TMI 1283 - AT - Income TaxIssues Involved: 1. Disallowance of deduction under section 80IB(10) for units exceeding 1000 sq. ft. including open sky balcony. 2. Acceptance of "Project Completion Method" for accounting. 3. Deduction under section 80IB(10) for the entire project not satisfying conditions. 4. Compliance with clauses (e) and (f) of section 80IB(10). Detailed Analysis: Issue 1: Disallowance of Deduction under Section 80IB(10) The primary issue was whether the built-up area of residential units should include open sky balconies for the purpose of section 80IB(10). The Tribunal had previously decided in favor of the assessee for AYs 2008-09 to 2011-12, excluding balconies open to the sky from the built-up area calculation. The Tribunal referenced the ITAT Pune Bench decision in Naresh T. Wadhwani vs DCIT, which held that projected terraces open to the sky should not be included in the built-up area. Consequently, the Tribunal directed the Assessing Officer to allow the claim for deduction under section 80IB(10) for units exceeding 1000 sq. ft. excluding the open sky balconies, subject to verification. Issue 2: Acceptance of "Project Completion Method" The Revenue contested the CIT(A)'s directive to accept the "Project Completion Method" for accounting. The Tribunal upheld the CIT(A)'s decision, referencing its previous rulings for AYs 2008-09 to 2011-12, where it was established that the Project Completion Method is a recognized accounting method for real estate developers, as prescribed by the ICAI. The Tribunal noted that the method had been consistently followed by the assessee and there was no valid reason to change it. The Hon'ble High Court had also dismissed the Revenue's appeal on this issue, affirming the Tribunal's decision. Issue 3: Deduction under Section 80IB(10) for Entire Project The Revenue argued that the entire project did not satisfy the conditions of section 80IB(10). The Tribunal dismissed this ground, citing previous decisions where it was held that section 80IB(10) does not require separate approval for each housing unit. The Tribunal referred to the Hon'ble Madras High Court's decision in Vishwas Promoters Pvt. Ltd. vs. ACIT and the Pune Bench of ITAT in Siddhivinayak Kohinoor Venture vs. ACIT, which clarified that a housing project could include both eligible and ineligible units, and deduction is available for the eligible units. Issue 4: Compliance with Clauses (e) and (f) of Section 80IB(10) The Revenue claimed non-compliance with clauses (e) and (f) of section 80IB(10). However, the Tribunal found no specific findings or identifiable additions/disallowances in the assessment order regarding these clauses. The Assessing Officer did not specify which flats violated these clauses, and there was no adjudication on this matter by the CIT(A). Thus, the Tribunal found no merit in the Revenue's ground and rejected it. Conclusion: The appeal of the assessee was allowed, and the appeal of the Revenue was dismissed. The Tribunal directed the Assessing Officer to verify the claim for deduction under section 80IB(10) excluding the open sky balconies and to follow the Project Completion Method for accounting. The Tribunal also upheld the CIT(A)'s decision that the entire project could qualify for deduction under section 80IB(10) and found no merit in the Revenue's claim of non-compliance with clauses (e) and (f).
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