2021 (8) TMI 167 - AT - Income Tax

Denying deduction u/s. 80IB(10) - denial of deduction to sale of one flat in B Wing - eligible units in terms of order of proportionate deduction - CIT(A) held the project in B Wing is incomplete and denied deduction in respect of profits earned on Flat No. 002 in B Wing - HELD THAT - Housing project undertaken by the assessee, consists of A and B Wings totaling to 48 and 20 flats, respectively. In the year under consideration, the assessee claimed deduction in respect of two flats in A Wing and one flat in B Wing. Therefore, we find force in the arguments of ld. AR the assessee is entitled to claim deduction in respect of Flat Nos. 904 and 1001 in A Wing and 002 in B Wing which are covered by the Completion Certificate Part-1 issued by the Compete Authority Municipal Corporation of Pune. DR did not bring on record any evidence showing these flats are not covered by the Part-1 Completion Certificate issued by the Pune Municipal Corporation vide order dated 23-03-2011. Thus, we hold that the assessee is entitled to claim deduction u/s. 80IB(10) of the Act against the Flat Nos. 904, 1001 and 002 in A and B Wings, respectively as eligible units in terms of order of proportionate deduction as laid down by this Tribunal in assessee s own case for A.Y. 2012-13. Thus, the order of CIT(A) is not justified and sole ground raised by the assessee is allowed.

Summary

Issues:
- Denial of deduction u/s. 80IB(10) in respect of sale of one flat in 'B' Wing.

Analysis:
The case involved an appeal by the assessee against the order passed by the Commissioner of Income Tax (Appeals) regarding the denial of deduction u/s. 80IB(10) for the assessment year 2014-15. The primary issue to be decided was whether the CIT(A) was justified in denying the deduction in relation to the sale of one flat in the 'B' Wing of a housing project. The assessee, a partnership firm engaged in the business of promoters, builders, and contractors, had claimed proportionate deduction u/s. 80IB(10) for the sale of flats in both 'A' and 'B' Wings of the project. The AO had denied the deduction, stating that the project completion did not meet the conditions specified under the Act.

Upon examination, it was revealed that the Pune Municipal Corporation had approved the construction of 48 flats in 'A' Wing and 20 flats in 'B' Wing under the project named 'Twin Nest.' The completion certificate Part-1 was issued for 47 flats in 'A' Wing and 16 flats in 'B' Wing by the Pune Municipal Corporation. The assessee had sold flats in both wings and claimed deduction accordingly. The AO had denied the deduction for the sale of a flat in 'B' Wing, citing incomplete project status. However, the Completion Certificate Part-1 clearly showed certification for the flat in 'B' Wing, indicating project completion.

In a similar case for the assessment year 2012-13, the Tribunal had allowed pro-rata deduction for the sale of a flat in 'B' Wing, supporting the assessee's claim. The Tribunal relied on precedents and held that proportionate deduction for eligible units within a composite housing project is permissible. In the current case, the assessee had sold flats in both 'A' and 'B' Wings, covered by the Completion Certificate Part-1. The absence of evidence to refute the certification led to the conclusion that the assessee was entitled to claim deduction u/s. 80IB(10) for the relevant flats in both wings.

Therefore, the Tribunal allowed the appeal, stating that the assessee was entitled to claim deduction u/s. 80IB(10) for the sale proceeds of flats in both 'A' and 'B' Wings, as supported by the Completion Certificate and previous Tribunal decisions. The order of the CIT(A) denying the deduction was deemed unjustified, and the sole ground raised by the assessee was upheld.

In conclusion, the appeal of the assessee was allowed, and the judgment was pronounced on 3rd August 2021.