2019 (2) TMI 1411 - AT - Income Tax

Disallowance of claim of the assessee u/s 80IB(10) - the built-up area of the flats are less than 1000 sq,ft or not - reliance of report of DVO - HELD THAT - In view of the report of the DVO filed before us and in view of the law relied upon the Ld. Representative of the assessee in the case of M/s.Nahar Enterprises Vs. DCIT 2017 (4) TMI 913 - ITAT MUMBAI we are of the view that the CIT(A) has wrongly confirmed the finding of the AO which is not liable to be sustainable in the eyes of law. Therefore, we set aside the finding of the CIT(A) on this issue and directed the AO to allow the claim of the assessee u/s 80IB(10) of the Act fully. Accordingly, these issues are decided in favour of the assessee and against the revenue. Addition Car Parking sale - some documents seized during the search notable the hard disc shows that several parking are not mentioned in the agreement to sale - HELD THAT - We noticed that the as per the seized documents, parking places have either been sold along with the flats or separately. When the car parking is sold along with the flats, the same is shown under the column Included . When car parking is not included the said sale is shown under the column Not included . The sale of parking has been shown at ₹ 3,13,30,000/- in the books of account. The assessee has also declared sale of car parking in the next year also. We notice that the CIT(A), after the examination of books of accounts, seized material and submission of the assessee, has allowed the claim of the assessee. The facts were not distinguished before us nor any material was placed to contradict the finding given by CIT(A). Therefore, we are of the view that the finding of the CIT(A) on this issue is upheld. - Decided against Revenue

Summary

Issues Involved:
1. Disallowance of deduction under section 80IB(10) of the Income Tax Act.
2. Addition on account of sale of parking spaces.

Detailed Analysis:

Issue No. 1: Disallowance of Deduction under Section 80IB(10) of the Income Tax Act

The primary issue revolves around the disallowance of the assessee's claim for deduction under section 80IB(10) of the Income Tax Act. The assessee's project, Golden Nest Phase XV, was scrutinized for compliance with the prescribed area limits for flats to qualify for the deduction. Initially, a Government Approved Valuer, Mr. Nitin M. Lele, reported that all flats were below the 1000 sq.ft. limit. However, the Assessing Officer (AO) appointed another Valuation Officer who reported that 24 flats exceeded the 1000 sq.ft. limit. Consequently, the AO disallowed the deduction claim of ?40,41,60,131/-.

The CIT(A) partially confirmed the AO's findings, restricting the disallowance to the 24 flats only. The assessee contested this, arguing that the Valuation Officer incorrectly included areas such as projections and open-to-sky areas in the built-up area calculation.

Upon reassessment, the ITAT directed a joint inspection of the flats, resulting in a report confirming that the flats were indeed below 1000 sq.ft. The ITAT referenced the case of M/s. Nahar Enterprises Vs. DCIT, which excluded certain areas like service ducts and window projections from the built-up area. Consequently, the ITAT found that the CIT(A) wrongly upheld the AO's findings and directed the AO to allow the assessee's full claim under section 80IB(10).

Issue No. 2: Addition on Account of Sale of Parking Spaces

The second issue pertains to the addition of ?8,09,32,500/- made by the AO on the assumption that the assessee sold 305 parking spaces at ?3,50,000/- each, based on seized documents. The CIT(A) deleted this addition, noting that the AO's calculations were arbitrary and not supported by evidence. The seized documents indicated that parking spaces were either sold along with flats (included in the flat's sale price) or separately, with the latter shown as "not included."

The CIT(A) observed that the assessee had recorded the sale of parking spaces in its books and accounted for ?3,13,30,000/- in the sales account for the A.Y. 2013-14. The AO's addition was based on conjecture without concrete evidence of unaccounted cash transactions.

The ITAT upheld the CIT(A)'s findings, noting that the AO's addition lacked satisfactory evidence and the assessee's records were consistent with the seized documents. Thus, the ITAT dismissed the revenue's appeal on this issue.

Conclusion:

In conclusion, the ITAT allowed the assessee's appeal regarding the disallowance under section 80IB(10) and dismissed the revenue's appeal concerning the addition on account of parking space sales. The ITAT directed the AO to allow the full deduction under section 80IB(10) and upheld the CIT(A)'s deletion of the arbitrary addition for parking space sales.