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2022 (12) TMI 697 - AT - Income TaxDeduction u/s.80IB(10) - pro-rata basis in respect of the housing project Costa Blanca , Baner, Pune - HELD THAT - In view of the fact that the Tribunal has decided this issue in the case of the assessee, based on the facts peculiar to it only, for the immediately two preceding years granting deduction u/s.80IB(10) on pro-rata basis, which view has, in principle, been approved by various Hon ble High courts, respectfully following the precedent, we uphold the impugned order without going into the details of the case relied by the ld. DR, which the ld. AR rightly distinguished. The impugned order is countenanced on this score. Addition towards deemed rent - Profits and Gains from business or profession OR Income from House Property - AO observed that certain units were unsold with the assessee at the end of the year - AO determined the Annual Letting Value (ALV) of the property and brought the amount to tax, which action was not approved in the first appeal - HELD THAT - Prior to the amendment, the Tribunal considered this aspect in several cases including Cosmospolis Construction 2018 (9) TMI 1621 - ITAT PUNE and held that no income from house property can result in respect of unsold flats held by a builder as stock in trade at the year-end. While disposing of the above referred case, the Tribunal observed that income from unsold flats could be considered only under the head Profits and Gains from business or profession and not Income from House Property . It is but natural that if a particular income is to be taxed under a specific head, the computational mechanism governing that head only can come into play. There is no provision under the head Profits and Gains from business or profession which deems the rental income from unsold flats held as stock as Business income . In the ultimate analysis, the Tribunal eventually deleted the addition. The order of the ld. CIT(A), in deleting the addition made by the AO, does not call for any interference. The same is upheld. Revenue appeal is dismissed.
Issues:
1. Condonation of delay in filing the appeal due to Covid-19 pandemic. 2. Allowance of deduction u/s.80IB(10) on pro-rata basis for the housing project. 3. Deletion of addition towards deemed rent. Analysis: 1. The appeal filed by the Revenue was time-barred by 92 days, but the delay was condoned due to the Covid-19 pandemic, following judgments of the Hon'ble Supreme Court. The appeal was admitted for disposal on merits. 2. The main issue revolved around allowing a deduction of Rs.5,06,85,894/- u/s.80IB(10) for the housing project "Costa Blanca". The Assessing Officer disallowed the deduction as the completion certificate was not obtained by the deadline. However, the ld. CIT(A) overturned this decision, citing that no deduction was claimed for an incomplete project, and the deduction was claimed on a pro-rata basis. The Tribunal upheld the ld. CIT(A)'s decision based on precedents and approved by various High Courts. 3. The other issue concerned the deletion of an addition of Rs.23,04,982/- towards deemed rent. The AO had taxed the Annual Letting Value of unsold units, which was not approved in the first appeal. The Tribunal noted that the Finance Act, 2017 did not apply to the assessment year in question. It held that income from unsold flats held as stock in trade should be considered under "Profits and Gains from business or profession" and not "Income from House Property". Consequently, the Tribunal deleted the addition, upholding the decision of the ld. CIT(A). In conclusion, the Tribunal dismissed the appeal, upholding the decisions on both issues.
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