2020 (9) TMI 691 - AT - Income Tax

Deduction u/s. 80IB(10) - principle of consistency - Pro-rata allotment - CIT(A) held that the project is a composite project and cannot be construed that the housing project and commercial establishments are separate projects and confirmed the order of AO in denying the deduction u/s. 80IB(10) - Whether deduction u/s. 80IB(10) of the Act should be automatically granted on pro-rata basis in respect of housing project completed by the assessee? - HELD THAT - Coming to the decision of Hon ble High Court of Bombay in the case of Paul Brothers 1992 (10) TMI 5 - BOMBAY HIGH COURT as pleased to hold when there was no change in the facts which were in existence during the initial assessment year, the claim of exemption cannot be withdrawn. In the present case as discussed above, the fact remains undisputed there was no change in the facts of the case as compared to earlier years. Therefore, in our opinion the decision on the principle of consistency laid down by the Hon ble High Court of Bombay is clearly applicable to the present case. Revenue could not bring on record there was change in the facts of the case in the year under consideration compared to the facts of earlier years in assessee s own case, thereby we hold that the assessee is entitled to claim deduction u/s. 80IB(10) of the Act on pro-rata basis by following the rule of consistency. Therefore, the order of CIT(A) is not justified. Accordingly, the additional ground raised by the assessee is allowed.

Summary

Issues involved:
1. Disallowance of deduction u/s. 80IB(10) of the Act by the Commissioner of Income Tax (Appeals) for assessment year 2013-14.
2. Challenge of the disallowance by the assessee based on consistency in granting deductions in earlier years.

Detailed Analysis:
Issue 1: The Commissioner of Income Tax (Appeals) disallowed the deduction u/s. 80IB(10) of the Act for the assessment year 2013-14. The assessee, a firm engaged in the business of Builder and Developer, conducted a housing project at Talegaon, Pune District. The dispute arose as the built-up area of shops and commercial establishments exceeded the permissible limit under section 80IB(10)(d) of the Act. The CIT(A) held that the project was a composite one, denying the deduction based on the violation of the specified provisions.

Issue 2: The assessee challenged the denial of deduction based on consistency in granting the benefit in earlier years. The Tribunal considered the claim for pro-rata deduction made by the assessee for the year under consideration. It was noted that in previous assessment years, the revenue consistently allowed the deduction u/s. 80IB(10) without any denial. The Tribunal referred to the decision of the Hon'ble High Court of Bombay in a similar case, emphasizing that unless there is a change in facts, the benefit of deduction cannot be withdrawn. Relying on this principle of consistency, the Tribunal allowed the additional ground raised by the assessee, holding that the denial of deduction in the present year was not justified.

In conclusion, the Tribunal allowed the appeal of the assessee based on the principle of consistency in granting deductions under section 80IB(10) of the Act. The Tribunal held that since there was no change in the facts compared to earlier years and the revenue had not shown any reason for denial, the assessee was entitled to claim the deduction on a pro-rata basis. The main grounds of appeal were deemed academic in light of the decision on the additional ground, resulting in the appeal being allowed in favor of the assessee.