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2022 (9) TMI 1366 - AT - Income TaxDeduction u/s 80IB - Disallowance of Deduction as project was not completed as work-in-progress was reflected in the profit and loss account - CIT-A deleted the addition - Whether provisions of clause (e) (f) of section 80IB(10) are not applicable to the flats booked prior to 01.04.2010, even if the sale of the said flats was made after 01.04.2010 (date of insertion of clause e f)? - AO observed that as per l0CCB report the housing project was completed on 30.06.2010 but in the profit loss account work-in-progress was appearing and thus wrong information was submitted by the assessee with regard to completion of project - HELD THAT - There are two phases where the assessee company is engaged both the projects are of residential units, where the 1st Phase is consisted 450 units and 6 shops. This phase-1 was eligible for deduction u/s 80IB(10) of the Act where the project is completed as on 30.06.20210 and the 2nd phase of the project is not eligible for deduction where the phase is under construction during the relevant period of A.Y 2013-14. - CIT(A) has deleted the disallowance taking into consideration the proceeding to assessment year that the claim of the assessee company u/s 80IB(10) was duly examined at the assessment stage and deduction was accordingly allowed except in respect of small proportionate amount for sale of multiple units to the same individual in alleged violation of the condition contained in section 80IB (10) (e) (f) introduced by the Finance Act 2009 w.e.f 01.04.2010. Observing the facts and circumstances of the case that the legal issue of clause (e) (f) is prospective in nature. Taking into consideration, the A.Y 2011-12, applicability of section 80IB(10) and clause (e) (f) held that the amendment introduced clauses (e) (f) and u/s 80IB(10) were prospective in nature. CIT(A) has placed judicial precedence concerning to different two places introduced from time to time in section 80IB(10), wherein the computing the tax for the A.Y 2013-14 did not consider the met credit available to the assessee and that in any addition is sustained and in respect of which further deduction u/s 80IB(10) of the Act is not allowed and based on the identical issue has already been examined by the ld. CIT(A) for the A.Y 2012-13 wherein the issue has also been decided in favour of the assessee. Considering the legal issues, the ld. AR for the assessee has placed reliance on various Supreme Court, High Courts and Co-ordinate Benches which specifically held that clause (e) (f) of the Act introduced in section 80IB(10) of the Act by Finance Act w.e.f 01.04.2010 were prospective in application. Completion of project whether belongs to Phase-01 and Phase-02 from the records available - The statements is showing the details of all flats sold in the project during the different years. It is to be noted that the similar disallowances were made for the assessment year 2011-12 and the assessee has not challenged these additions in this year and has accepted the disallowances. DR argued that the similar circumstances is required to be checked whether that exceed or not and since the issue has not been seen in that light and the ld. CIT(A) as merely followed the order without going into the merits of the facts that the assessee herself accepted the disallowances in past. Therefore, in light of the argument advanced by the ld. DR, we are of the view that looking to the facts before us that the assessee has incurred expenditure after the project is completed whether the terms and conditions as required U/s 80IB is property fulfilled by the assessee or not is required to be checked. AO in the light of the facts and circumstances of the advanced by the ld. DR before us and looking to the interest of justice. The ld. AO is required to check afresh about the admisibilty of the deduction claimed by the assessee u/s 80IB of the Act. We do not give any direction as to the availability of the claim the AO is directed to apply afresh his mind looking to the various aspect argued by the ld. DR with that direction the appeal of the Revenue is partly allowed.
Issues Involved:
1. Justification of the CIT(A) in deleting the disallowance of deduction under section 80IB of the Income Tax Act. 2. Applicability of clauses (e) and (f) of section 80IB(10) to flats booked prior to 01.04.2010. 3. Computation of disallowance under section 14A of the Income Tax Act. Issue-wise Detailed Analysis: 1. Justification of the CIT(A) in Deleting the Disallowance of Deduction under Section 80IB: The Revenue challenged the CIT(A)'s decision to delete the disallowance of deduction under section 80IB, arguing that the CIT(A) relied on decisions from previous assessment years without providing an independent finding. The Assessing Officer (AO) had disallowed the deduction of Rs. 1,54,98,395/- under section 80IB, citing that the project was not completed as work-in-progress was reflected in the profit and loss account. The CIT(A), however, allowed the appeal, holding that the project was completed on 30.06.2010, as evidenced by the completion certificate issued by the Jaipur Development Authority (JDA) and previous assessment orders for A.Y. 2010-11, 2011-12, and 2012-13. The CIT(A) concluded that the AO's action was contrary to the facts and evidence on record. 2. Applicability of Clauses (e) and (f) of Section 80IB(10) to Flats Booked Prior to 01.04.2010: The AO argued that the provisions of clauses (e) and (f) of section 80IB(10) should apply to sales made after the insertion of these clauses, even if the flats were booked before 01.04.2010. The CIT(A) disagreed, holding that these provisions apply prospectively to flats booked on or after 01.04.2009, as established in the assessee's own case for A.Y. 2011-12 and 2012-13. The CIT(A) relied on various judicial precedents, including Supreme Court and High Court rulings, which supported the prospective application of these clauses. The CIT(A) also noted that the total sales during the year consisted only of flats from Phase I, which were not in violation of the provisions of section 80IB(10)(e) and (f). 3. Computation of Disallowance under Section 14A of the Income Tax Act: The AO found that the assessee had made investments in unquoted shares and mutual funds amounting to Rs. 5,29,99,200/- but had not debited any expenditure to the profit and loss account. Consequently, the AO calculated the disallowance under section 14A as per Rule 8D, resulting in a disallowance of Rs. 1,33,746/-. The CIT(A) allowed the assessee's appeal, noting that the disallowance under section 14A was already deleted and, therefore, any further deduction under section 80IB(10) did not arise. The CIT(A) directed that appropriate credit for tax be given in accordance with the provisions of section 115JC of the Act. Conclusion: The Tribunal heard both parties and reviewed the materials on record. It noted that the CIT(A) had allowed the appeal based on previous assessment orders and judicial precedents, which held that the amendments to section 80IB(10) were prospective. The Tribunal observed that the CIT(A) had provided an independent finding and that the AO's disallowance was not justified. However, the Tribunal directed the AO to re-examine the admissibility of the deduction claimed under section 80IB, considering the arguments advanced by the Revenue and the facts of the case. The appeal filed by the Revenue was allowed for statistical purposes.
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